Life Cycle Comparison

8/22/2019 Life Cycle Comparison

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THE LNG INDUSTRY IS MOVING TOWARD LIFE CYCLE COSTCOMPARISONS WHEN SELECTING FOR CRYOGENIC

SUBMERGED MOTOR PUMPS FOR APPLICATIONSTHROUGHOUT THE LNG SUPPLY CHAIN

Dennis W Chalmers, PE, BSME, ASMEDirector of Advanced Technology

Michael TanamachiVice-President of Business Development

JC Carter Pump Company671 W 17th Street

Costa Mesa California, 92627

ABSTRACT

In the early days of the Submerged Motor Cryogenic Pump Industry, technicaldevelopment was limited by a lack of competition, with only one supplier, beingqualified, until the mid 1980s.

In the mid-1980s , in spite of a period of low market growth , two additionalsuppliers entered the market

At that time, the technology of each was similar, and in the ensuing contracted

market, competition was based primarily on low initial price.

Since the early 2000s, with the advent of higher gas prices, the incentive to increaseoverall returns through modest Capital Cost increases in return for lower operating andmaintenance costs and or increases in saleable product has increased

Pump Technology advances, imported from other pump market sectors, notably otherenergy sectors, have led to real improvements in pump performance. That improved

performance has improved the utilization of tank storage capacity, possible reductions inTank construction costs, reduced power consumption, and reduced Boiloff gas

production.

Additional competition in a market that has begun to adopt Life Cycle Costconsiderations has resulted in more pump innovations than had occurred in the previous


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Introduction

Driven by competitive forces, rising energy costs and a business environment focusedon improving bottom-line performance, there is an increasing concern about the need to

conserve, improve efficiencies and optimize investments. Life Cycle Cost analysis or,LCC, is a management tool that can help companies in making sound investment and

business planning decisions.

LCC analysis has been used as a basis for Pump Selection in the Power Generation

and Water and Wastewater Industries for many years as a means of maximizing Returnon Investment and energy conservation.

This technique is increasingly applied in the Regasification sector of the LNG Chain,particularly to High Pressure Sendout Pumps. These pumps typically represent more than50% of the power consumpted in these plants.

In the early years of the LNG Cryogenic Pump Industry, there was a predominant

Supplier. In the absence of competition, the pace of technical improvements was slow,being mainly directed to flow and pressure rating increases as the capacity ofLiquefaction Facilities grew. Another factor limiting product improvement was theuncertain nature of the LNG Industry itself.

Keeping pace with that growth while maintaining pump reliability occupied the pump

Designers attention leaving little time for product optimization.

Life Cycle Cost ComparisonsHistory of the LNG Pump Industry

Figure 1

Cryogenic LNG/LPG Industry Pump Sales, Units

400

600

800

1000

1200

1400

1600

veYearTotals-Units


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concentrate on product refinement. This occurred a time when the LNG ContractingIndustry reacted to the pressures of falling gas prices

The pendulum has swung, the rise in energy prices makes room again for LNG on theenergy stage. As national and global markets continue to become more competitive,organizations must continually seek cost savings that will improve the profitability of

their operations. Plant equipment operations are receiving particular attention as a sourceof cost savings, especially minimizing energy consumption and plant down time. It haslong been the practice of plant owners, designers and managers to assess the financial

benefit of the plant by calculating the returns gained from the investment. The concept ofLife Cycle Profit (LCP) has sometimes been used, particularly when analyzing the benefitfrom an investment. LCC examines the cost side of the calculation based on theassumption that reducing cost will improve the LCP, or will improve the competitive

position in the market.

This is especially true for sellers of LNG who are also users of their own product.

Life Cycle Cost ComparisonsLow Cost Procurement Model

Technical acceptance based on achievingminimum criteria

Reliability assured by replication of existingdesigns

Cost escalation minimized by early, multi-phasebidding

Emphasis on firm Lump Sum contracts

Figure 2

From the mid-1980s until 2000, the control of the pace of Submerged Motor PumpTechnology development shifted from the Pump Suppliers to the Customers.

Pump Specifications were standardized and provided to all Qualified suppliers fortendering. Significant deviations were discouraged, to ensure the equipment met alltechnical requirements


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The LSTK contract form transfers risk from the Owner to the EPC contractor. Thiscontract form forces the contractor to inhibit innovation and minimize first cost in order

at the expense of operating cost in order to minimize risk. It also isolates the pumpsupplier from the Owner because the EPC is responsible for all equipment purchases.

Life Cycle Cost ComparisonsLow Cost Procurement Model

Operating Costs not considered Little incentive for product innovation

Little incentive for process change

Only basis for cost reduction is incremental

Incremental cost reductions offset by inflation

Operating Cost differences considered to be

insignificant

Figure 3

One of the key technical requirements under the Low Cost Procurement Model wasthe that three similar machinery applications, in service for a minimum of two, sometimesthree years must be demonstrated.

This requirement had the consequence of limiting not only the incentive for productinnovation, but also the opportunity for process improvement through closercollaboration between the pump supplier and Owner/Operator.

Clearly, plant cost improvements could only occur through price competition andeconomies of scale.

The underlying belief of this model is that Operating Cost benefits of AdvancedTechnology would be small, compared with the benefit of Standard Plant Designs.

This strategy has become less relevant in recent years, due to the need for newpumping systems to meet the requirements of increasing unit size through the LNGChain.


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Life Cycle Cost ComparisonsNew Procurement Models

Increased Owner involvement

Integration of FEED and EPC phases

Open Book Contracts

Greater emphasis on improved process

performance Emphasis on reduced emissions

More emphasis on reduced operating costs

Figure 4

Obviously new procurement models are needed to ensure product reliability as

designs change in response to market requirements.

.The large number of competing projects has placed a premium on reaching themarket quickly in order to secure market share. Two variations of the LSTK contract

form have emerged to address this issue. These are the multi-project acquisition modeland the Procure-Engineer-Procure-Construct model.

In recent years, Owners have played a greater role in the development of LNG

projects. There is also increasing integration across the entire LNG chain. These twodevelopments are helping to shift the emphasis from lowest first cost to lowest LCC.

Some advocate that the relative cost of LNG pumps too low to warrant specialconsideration. The authors intend to show herein that, when the entire LNG chain isconsidered, the potential enhancement to LCP that advanced pump technology can

provide can be substantial. This technology will also contribute to low operating costs incase market prices decline, and will answer environmental pressures.

These changes have had the effect of de-commoditizing LNG Submerged MotorPumps making way for the application of Advanced Technology that addresses the entireLNG Chain.


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Life Cycle Cost ComparisonsWhat is Advanced Technology?

It is any Technology that: Contributes to Reliability through Design,

Advanced Analysis Techniques andqualification testing

Maintains first cost at acceptable levels

Contributes to overall Capex reduction

Contributes to lowest possible OperatingExpense

Figure 5

Carter considers the definition of Advanced Technology to be one based entirely on

utility, rather than Technology for its own sake.

Although important, pure research is a small part of the Carters AdvancedTechnology program. This is because Carter believes there is an abundance of existing,well established technology throughout the general pump and motor industries that can beapplied to LNG Submerged Motor Pumps.

This approach helps ensure that advances in Carter Pump designs occur withoutassuming many of the risks normally associated with new designs.

Although lowest first cost is no longer the absolute driver in Submerged Motor Pumpprocurement decisions, it is still pointed at as being of major importance. AdvancedEngineering and production technologies such as Finite Element Analysis (FEA),Computational Fluid Dynamics (CFD), help assure that untried design concepts do notincrease the risk of schedule failures.

Solid Modeling linked to multi-axis machining assures that the results achieved bysuch advanced Analysis techniques are faithfully implemented in finished designs, andactually help to reduce costs, while contributing to improved quality


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Life Cycle Cost ComparisonsExamples of Advanced Technology

Third Generation RadialCrossover Diffusers

Ensures stable operationover the entire pumpingrange

Lower power consumptionreduces life-cycle cost

Figure 6

Prior to 1995, all multistage SMPs utilized axial diffusers. Carters success inimproving pump reliability in Japan, increasing bearing life from 6,000 - 8,000 hrs to25,000 hrs proved the value of the radial diffuser. This feature was incorporated into allnew high pressure pumps built after 1996. Recently eleven pumps at the Cove Point

terminal in the US were upgraded. These pumps have been in service since early 2003.

In 2003, Carter developed its 3rd Generation Continuous Crossover diffuser, anexample of which is shown on this slide. This diffuser has been proven in test to deliver

much better efficiency and stable, vibration free operation over a wide range of flows.

This type of diffuser is in common use in large boiler feed pumps. It offers anadditional advantage compared to axial diffusers. For a given impeller diameter, the stagelength, and therefore the interstage bearing spacing is reduced more than 40% from 0.85

x Impeller to 0.5 x Impeller.

This has markedly improved rotor dynamics while improving pump efficiency.


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Figure 7

HyperInducer forbetter NPSH

Stable over operatingrange

Increases active tankstorage capacity

Handles high vaporfractionsfrom Re-condenser

In another example of applying existing Technology to Submerged Motor Pumps,Carter adapted the high performance inducer (HyperInducer) to LNG service. Carters

parent, Argo-Tech, has developed and refined this inducer over more than thirty years foruse in aero engine fuel pumps.

The aero engine application requires that theinducer deliver single phase liquid to the

engine even under cavitating conditions or when the fuel contains a high vapor fraction.

This requirement applies at both high flow conditions that exist during takeoff or, underlow flow (


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Figure 8

In-Tank Pumps

Multistage Bowl Diffusers

Long, small diametermotors means maximum

efficiency

reduced columndiameters by two pipesizes

Carters earliest pumps were multistage bowl pumps. They embodied axial flowdiffusers as did all Carter pumps through 1996.

Since 2003, Carter has deployed Vertical Turbine Pump Technology for LNG In-Tank service. This design permits 4-pole speed operation needed for low pump-downwhile retaining the compact size needed for minimum column diameter.

Although never previously applied in LNG Submerged Motor Pumps, this hydraulictechnology first appeared in 1901. It has been proven in Oil & Gas, Petrochemical, andPower Generation applications as well as water supply applications. It is the mostuniversally applied Pump Technology, with over half the worlds pumps being of this

basic family, primarily due to their inherent high efficiency,

This type of pump features hydraulic stability over the full operating range, instability

being a problem with some other designs.

Special electric motors have been developed in partnership with Hitachi Electric to

match the slim profile of the pump element. This further enhances unit efficiency.

Special flow paths are incorporated into the design to quickly deliver liquid to the


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Using Lifecycle Cost Analysis to showhow Advanced Technology SMPs can

increase profits from a10 million Tpa LNG Chain

1.2 Bscfd US (432,000 sm3/h) vaporsendout

Advanced TechnologyIn-Tank Loading Pumps

Figure 9

Intank Loading pumps have been chosen to show how the application of AdvancedTechnology can make a major difference in the Lifecycle cost of an LNG Loading

Facility.

The authors have not addressed reliability in this paper but can report that each ofthese designs have been subjected to formal lifecycle reliability analysis, usingmethodology in common use in the Aero-space Industry. Such analysis has shown there

to be no material difference in reliability when compared with traditional designs with theexception of bearing life. Indications are that bearing life expectancy will be muchimproved over previous designs due to the elimination of the Rotating Stall phenomenafound in axial flow diffuser designs.

The example assumes a Storage Facility of 4 Tanks. In each tank, 4 pumps rated at1300 m3 / hr at 100 m head are installed. The study case compares the LCC of traditionaldesigns with those of Advanced Technology Designs.



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Case 1- Capital cost

Cost Element TraditionalDesigns AdvancedTechnology Design

cost/ (savings)

Initial Pump Costs,2008 Dollars

$7,360,000 $7,920,000 $ 720,000

The Capital Cost will be greater than that of traditional designs due to two factors

1. The cost of an additional stage or two

2. The cost of the high performance inducer, with its Inducer Guide vane. Thosecosts will be limited due to the fact that the pump diameter is much reduced.

These costs will be offset through reductions in Tank Construction Costs

Advanced Technology

In-Tank Loading Pumps

This pump can reduce minimumtank levels by 1.0 to 1.5 meters

It is designed to fit inside a 28inch pump well

Four tank construction costsaving is $19 million

16 well construction cost saving

is $0.95 million

Figure 11

Case 1- Capital Cost

Cost Element Traditional Design Advanced TechnologyDesign

cost/ (savings)

Tank ConstructionCosts, 4 Tanks,2008 Dollars *

$489,983,613 $470,642,154 $(19,341,458)

Pump WellConstruction

$4,646,763 $3,698,211 $( 948,553)


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This pump will reduce powerdemand by 320 kW during atypical Loading Cycle

It reduces installed demand by800 kw

Life Cycle present value powercost is reduced by $1.92 millionover the plant life

Figure 12

Case 1- Operating Cost Issues

Cost Element Traditional Designs Advanced TechnologyDesign

cost/ (savings)

Lifecycle Power Cost $16,015,680 $14,094,320 $(1,921,360)

* In the above comparison, Power consumption is reduced as a result of a 8 pointincrease in pump/motor efficiency. Annual power consumption is reduced from

6,184,000 kWh to 5,566,000 kWh when comparing Advanced Technology pumpswith traditional designs.

For purposes of the analysis, the power cost at the export terminal is based on fuelcosts only. The power cost used is $0.044 / kWh, 2008 dollars. A discount factor of

51% to calculate the present value of the saving discounted at 6.5% per year over 25years.

The application of Advanced Technology Pumps will reduce the installed PowerGeneration capacity at the plant by 400 kW. A value of $4,000 per kW of capacity isused to calculate the present value of power cost savings.

Advanced Technology


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Case 1- Operating Cost Issues

Cost Element Traditional Designs AdvancedTechnology Design

cost/ (savings)

Lifecycle BOG $68,107,305 $61,300,980 $(6,806,325)

* In the above comparison, power consumption is converted to BOG. The resulting lossof sales revenue is calculated at a value of $120 per tonne.

The value of the saved revenue is arrived at by comparing the value of the fuel for

power generation at the Liquefaction plant with the value at the entry to a US pipelineless vaporization and transportation. $120/ tonne corresponds to $2.50/ million BTU.

An alternative perspective is to value the loss of the refrigeration cost.

A discount factor of 51% to calculate the present value of the lost revenue discountedat 6.5% per year over 25 years.

The application of Advanced Technology Pumps will reduce the installed Power

Generation capacity at the plant by 400 kW. A value of $4000 per kW of capacity isused to calculate the present value of power cost savings.


This pump will improve present valueplant lifecycle profits through

Initial Cost Premium $(0.72) million

Reduced Tank ConstructionCosts $19 million

Reduced Pumpwell Cost $ 0.9 million

Reduced Power Costs = $ 1.9 mil lion

Increased BOG Revenue = $ 6.8 mil lion

Net Profit improvement $28 million

Figure 14


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At the LNG plant, there are four (4) Product pumps, including installed spares. Twopumps run continuously, one for each Train.

Each Storage Tank has four (4) Loading Pumps. Product is loaded onto LNG Carriersby 8 pumps extracting product from two (2) Tanks. The loading cycle is 16 hours. Acarrier voyage is begun every 2.6 Days.

The LNG plant is served by twelve (12) LNG Carriers each of 165,000 m3 capacity.Each ship has 8 main cargo pumps, with a combined capacity to discharge the shipscargo in 12 hours.

The Regasification terminal has three (3) Storage Tanks of 165,000 m3 capacity. Eachtank has three (3) In Tank Pumps.

Three pumps are used to send product to the high pressure pumps via a recondenser.Thus their duty cycle is 33%.

There are seven (7) High Pressure pumps including one installed spare. Six (6) pumpsoperate on a 100% duty cycle.

Advanced TechnologyLNG Chain Pumps

Advanced Technology pumps wil l improve presentvalue plant lifecycle profits through

Initial Cost Premium $ 3.1 million

Reduced Tank ConstructionCosts ($33.8 million)

Reduced Pump well Cost ($1.5 million)

Reduced Power Costs = ($66 milli on)

Increased BOG Revenue = ($ 28 million)

Main tenance Cos ts (inc rease) $ 0.3 million

Net Profit improvement ($125 million)

Figure 15


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PO-38.15

Appendix 1

JC CARTER PUMPSADVANCED TECHNOLOGY PUMPSLIFECYCLE COST ANALYSIS

Pump Application Product Loading Cargo Primary Secondary All

Traditional Pump Capex, 2008 Dollars $ 1,840,000 $ 7,360,000 $ 22,000,000 $ 4,600,000 $ 5,140,000 $ 40,940,000

Advanced Technology Pump Capex $ 2,008,000 $ 8,080,000 $ 23,496,000 $ 5,020,000 $ 5,500,000 $ 44,104,000

COST/( Savings)

Advanced Technology Pump Capex $ 166,000 $ 720,000 $ 1,496,000 $ 420,000 $ 360,000 $ 3,164,000

Construction Cost Savings TanksColumns

$ (19,341,458)$ (948,553)

$ (14,506,094)$ 533,087)

$ (33,847,552)$ (1,481,639)

Operating Costs

Lifecycle Power Cost $ (232,440) $ (1,921,360) $ (46,647,548) $ (2,091,750) $ (14,830,085) $ (65,723,183)

Lifecycle BOG Cost at $120/Tonne $ (4,923,022) $ (6,806,325) $ (1,679,554) $ (14,868,186) $ (28,277,087)

Lifecycle Maintenance Cost ($80,449.53) $0.00 $ 1,144,000 $ ( 509,210) $ (161,460) $ 392,880

Total Lifecycle Costs $ (5,067,911)$ (28,297,696)

$ (45,687,103) $ (32,088,326) $ (14,631,545) $ (125,772,581)

Documents

Life Cycle Comparison