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Poster PO-38

THE LNG INDUSTRY IS MOVING TOWARD LIFE CYCLE COST COMPARISONS WHEN SELECTING FOR CRYOGENIC SUBMERGED MOTOR PUMPS FOR APPLICATIONS THROUGHOUT THE LNG SUPPLY CHAIN
Dennis W Chalmers, PE, BSME, ASME Director of Advanced Technology Michael Tanamachi Vice-President of Business Development JC Carter Pump Company 671 W 17th Street Costa Mesa California, 92627

ABSTRACT In the early days of the Submerged Motor Cryogenic Pump Industry, technical development was limited by a lack of competition, with only one supplier, being qualified, until the mid 1980s. In the mid-1980s , in spite of a period of low market growth , two additional suppliers 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 increase overall returns through modest Capital Cost increases in return for lower operating and maintenance costs and or increases in saleable product has increased Pump Technology advances, imported from other pump market sectors, notably other energy sectors, have led to real improvements in pump performance. That improved performance has improved the utilization of tank storage capacity, possible reductions in Tank construction costs, reduced power consumption, and reduced Boiloff gas production. Additional competition in a market that has begun to adopt Life Cycle Cost considerations has resulted in more pump innovations than had occurred in the previous twenty-five years, innovations that will increase their users returns over the next twentyfive years.

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Poster PO-38

Introduction Driven by competitive forces, rising energy costs and a business environment focused on 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 Return on 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 than 50% 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 of Liquefaction Facilities grew. Another factor limiting product improvement was the uncertain 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 Comparisons


History of the LNG Pump Industry
Figure 1 Cryogenic LNG/LPG Industry Pump Sales, Units 1600 1400 Five Year Totals-Units 1200 1000 800 600 400 200 0 1964 1969 1974 1979 1984 1989 1994 1999 2004 Five Year Period Ending

Figure 1 shows the orders placed for LNG Submerged Motor Pumps since 1961. The large ramp up of orders in the period 1961 to 1980 was followed by a precipitous decline in the market. In this climate, there was increased competition for less business. LNG pump suppliers were forced to realign their businesses leaving few resources available to

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Poster PO-38

concentrate on product refinement. This occurred a time when the LNG Contracting Industry reacted to the pressures of falling gas prices The pendulum has swung, the rise in energy prices makes room again for LNG on the energy 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 source of cost savings, especially minimizing energy consumption and plant down time. It has long 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 of Life Cycle Profit (LCP) has sometimes been used, particularly when analyzing the benefit from an investment. LCC examines the cost side of the calculation based on the assumption 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 Comparisons


Low Cost Procurement Model
Technical acceptance based on achieving minimum criteria Reliability assured by replication of existing designs Cost escalation minimized by early, multi-phase bidding Emphasis on firm Lump Sum contracts
Figure 2

From the mid-1980s until 2000, the control of the pace of Submerged Motor Pump Technology development shifted from the Pump Suppliers to the Customers. Pump Specifications were standardized and provided to all Qualified suppliers for tendering. Significant deviations were discouraged, to ensure the equipment met all technical requirements. During the bid evaluation process, products compliant with the specifications were accepted. Only specified Customer defined characteristics were evaluated. No merit was given for superior performance or features as long as minimum requirements were met. The contractor bidding process is another factor that has the unintended effect of discouraging technology improvements in the LNG Submerged Pump Industry. Process designs have often been frozen during the FEED stage of projects. This can be many years before the pumps will be ordered. When this occurs, the opportunity to take benefit from potential advancements during this interim period has been lost.

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Poster PO-38

The LSTK contract form transfers risk from the Owner to the EPC contractor. This contract 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 pump supplier from the Owner because the EPC is responsible for all equipment purchases.

Life Cycle Cost Comparisons


Low 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 was the that three similar machinery applications, in service for a minimum of two, sometimes three years must be demonstrated. This requirement had the consequence of limiting not only the incentive for product innovation, but also the opportunity for process improvement through closer collaboration between the pump supplier and Owner/Operator. Clearly, plant cost improvements could only occur through price competition and economies of scale. The underlying belief of this model is that Operating Cost benefits of Advanced Technology 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 new pumping systems to meet the requirements of increasing unit size through the LNG Chain. There is no clearer example of this than the growth of LNG carrier size and corresponding increase in voyage times from LNG source to market.

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Poster PO-38

Life Cycle Cost Comparisons


New 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 the market 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 model and 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 two developments 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 special consideration. The authors intend to show herein that, when the entire LNG chain is considered, the potential enhancement to LCP that advanced pump technology can provide can be substantial. This technology will also contribute to low operating costs in case market prices decline, and will answer environmental pressures. These changes have had the effect of de-commoditizing LNG Submerged Motor Pumps making way for the application of Advanced Technology that addresses the entire LNG Chain.

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Poster PO-38

Life Cycle Cost Comparisons


What is Advanced Technology?
It is any Technology that: Contributes to Reliability through Design, Advanced Analysis Techniques and qualification testing Maintains first cost at acceptable levels Contributes to overall Capex reduction Contributes to lowest possible Operating Expense
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 Advanced Technology program. This is because Carter believes there is an abundance of existing, well established technology throughout the general pump and motor industries that can be applied to LNG Submerged Motor Pumps. This approach helps ensure that advances in Carter Pump designs occur without assuming many of the risks normally associated with new designs. Although lowest first cost is no longer the absolute driver in Submerged Motor Pump procurement decisions, it is still pointed at as being of major importance. Advanced Engineering and production technologies such as Finite Element Analysis (FEA), Computational Fluid Dynamics (CFD), help assure that untried design concepts do not increase the risk of schedule failures. Solid Modeling linked to multi-axis machining assures that the results achieved by such advanced Analysis techniques are faithfully implemented in finished designs, and actually help to reduce costs, while contributing to improved quality

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Poster PO-38

Life Cycle Cost Comparisons


Examples of Advanced Technology
Third Generation Radial Crossover Diffusers Ensures stable operation over the entire pumping range Lower power consumption reduces life-cycle cost
Figure 6

Prior to 1995, all multistage SMPs utilized axial diffusers. Carters success in improving pump reliability in Japan, increasing bearing life from 6,000 - 8,000 hrs to 25,000 hrs proved the value of the radial diffuser. This feature was incorporated into all new 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, an example 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 an additional advantage compared to axial diffusers. For a given impeller diameter, the stage length, 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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Life Cycle Cost Comparisons


Examples of Advanced Technology
HyperInducer for better NPSH
Stable over operating range Increases active tank storage capacity Handles high vapor fractions from Re-condenser
Figure 7

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 for use in aero engine fuel pumps. The aero engine application requires that the inducer 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, under low flow (<0.1 BEP), low pressure conditions at cruise conditions. This capability is attained by designing the inducer with sufficient pressure rise to compress any vapor present in the liquid, whether due to cavitation or entrainment. Carter pump engineers recognized that these capabilities could allow In-Tank pumps to maintain full flow nearly all the way to the pump footvalve lip. This quality allows Storage Tank costs to be reduced by reducing tank height by as much as 1,5 meters. (5 feet) without reducing active storage capacity. As in the case of its Continuous Crossover Diffusers, this element is machined from a solid forging. Digital data generated in the CFD program is transferred to a 5-axis machine center through a Virtual Solid Model.

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Poster PO-38

Life Cycle Cost Comparisons


Examples of Advanced Technology
In-Tank Pumps
Multistage Bowl Diffusers Long, small diameter motors means maximum efficiency reduced column diameters by two pipe sizes
Figure 8

Carters earliest pumps were multistage bowl pumps. They embodied axial flow diffusers as did all Carter pumps through 1996. Since 2003, Carter has deployed Vertical Turbine Pump Technology for LNG InTank service. This design permits 4-pole speed operation needed for low pump-down while retaining the compact size needed for minimum column diameter. Although never previously applied in LNG Submerged Motor Pumps, this hydraulic technology first appeared in 1901. It has been proven in Oil & Gas, Petrochemical, and Power Generation applications as well as water supply applications. It is the most universally 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 upper bearing cavity when starting up with low tank levels.

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Poster PO-38

Advanced Technology
In-Tank Loading Pumps

Using Lifecycle Cost Analysis to show how Advanced Technology SMPs can increase profits from a 10 million Tpa LNG Chain 1.2 Bscfd US (432,000 sm3/h) vapor sendout
Figure 9

Intank Loading pumps have been chosen to show how the application of Advanced Technology 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 of these designs have been subjected to formal lifecycle reliability analysis, using methodology 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 the exception of bearing life. Indications are that bearing life expectancy will be much improved over previous designs due to the elimination of the Rotating Stall phenomena found in axial flow diffuser designs. The example assumes a Storage Facility of 4 Tanks. In each tank, 4 pumps rated at 1300 m3 / hr at 100 m head are installed. The study case compares the LCC of traditional designs with those of Advanced Technology Designs.

Advanced Technology
In-Tank Loading Pumps
One of sixteen loading pumps at a 10 mtpa Liquefaction Facility Each rated 1300 m3/h at 100 m head 10% Cost premium over traditional designs First cost including installation is estimated in 2008 dollars at $7.9 million

Figure 10

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Case 1- Capital cost


Cost Element Initial Pump Costs, 2008 Dollars Traditional Designs $7,360,000 Advanced Technology Design $7,920,000 cost/ (savings) $ 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. Those costs 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 minimum tank levels by 1.0 to 1.5 meters It is designed to fit inside a 28 inch pump well Four tank construction cost saving is $19 million 16 well construction cost saving is $0.95 million

Figure 11

Case 1- Capital Cost


Cost Element Tank Construction Costs, 4 Tanks, 2008 Dollars * Pump Well Construction Costs, 16 wells, 2008 dollars ** Traditional Design $489,983,613 $4,646,763 Advanced Technology Design $470,642,154 $3,698,211 cost/ (savings) $(19,341,458) $( 948,553)

In the above comparison, tank cost estimates were arrived at from census of EPC Contractors for the expected cost of a Storage tank of 165,000 m3. The NPSH Capability of the Advanced Technology Designs permits a 1.2 m reduction in tank height, a reduction that applies equally to the Pump Well length The mean value of such estimates was $10.66 million / m of tank height ($3.25 million per foot) for an 80 meter diameter tank. That value was believed to be applicable for incremental cost per meter as well.

** Pump well cost estimates were derived by calculating the weight of the pump wells in each instance, then using a cost of $12 per pound for stainless steel fabrications

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Advanced Technology
In-Tank Loading Pumps
This pump will reduce power demand by 320 kW during a typical Loading Cycle It reduces installed demand by 800 kw Life Cycle present value power cost is reduced by $1.92 million over the plant life

Figure 12

Case 1- Operating Cost Issues


Cost Element Lifecycle Power Cost Traditional Designs $16,015,680 Advanced Technology Design $14,094,320 cost/ (savings) $(1,921,360)

* In the above comparison, Power consumption is reduced as a result of a 8 point increase in pump/motor efficiency. Annual power consumption is reduced from 6,184,000 kWh to 5,566,000 kWh when comparing Advanced Technology pumps with traditional designs. For purposes of the analysis, the power cost at the export terminal is based on fuel costs 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 25 years. The application of Advanced Technology Pumps will reduce the installed Power Generation capacity at the plant by 400 kW. A value of $4,000 per kW of capacity is used to calculate the present value of power cost savings.

Advanced Technology
In-Tank Loading Pumps
This pump will reduce BOG production by 110,000 tonne over the life of the plant At $120 per tonne, the present value of the increased revenue is $6.8 million

Figure 13

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Poster PO-38

Case 1- Operating Cost Issues Cost Element Lifecycle BOG Traditional Designs $68,107,305 Advanced Technology Design $61,300,980 cost/ (savings) $(6,806,325)

* In the above comparison, power consumption is converted to BOG. The resulting loss of 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 pipeline less 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 discounted at 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 is used to calculate the present value of power cost savings.

Advanced Technology
In-Tank Loading Pumps
This pump will improve present value plant lifecycle profits through Initial Cost Premium Reduced Tank Construction Costs Reduced Pumpwell Cost Reduced Power Costs = Increased BOG Revenue = Net Profit improvement $(0.72) million $19 million $ 0.9 million $ 1.9 million $ 6.8 million $28 million
Figure 14

The case study of the application of Advanced Technology to an installation of sixteen (16) Loading Pumps plus one spare, at an export plant can be repeated with similar dramatic Lifecycle Cost Savings at each step in the LNG Chain. The Lifecycle Cost methodology is well known to Engineers and Financial Analysts. The method clearly demonstrates the financial benefits of products embodying Advanced Technology. A typical 10 tonne LNG Chain has been postulated carrying product from an African Plant with two five (5) tonne Trains and four Storage Tanks of 165,000 m3 capacity to a 1.2 Bcfd Send out facility in the Gulf Coast area of the USA.

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At the LNG plant, there are four (4) Product pumps, including installed spares. Two pumps run continuously, one for each Train. Each Storage Tank has four (4) Loading Pumps. Product is loaded onto LNG Carriers by 8 pumps extracting product from two (2) Tanks. The loading cycle is 16 hours. A carrier 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 ships cargo in 12 hours.

Advanced Technology
LNG Chain Pumps
Advanced Technology pumps will improve present value plant lifecycle profits through Initial Cost Premium Reduced Tank Construction Costs Reduced Pump well Cost Reduced Power Costs = Increased BOG Revenue = Maintenance Costs (increase) Net Profit improvement $ 3.1 million ($33.8 million) ($1.5 million) ($66 million) ($ 28 million) $ 0.3 million ($125 million)

Figure 15

The Regasification terminal has three (3) Storage Tanks of 165,000 m3 capacity. Each tank 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) pumps operate on a 100% duty cycle. The attached table labeled Appendix 1 shows how Advanced Technology Pumps, applied across the LNG Chain to an increment of 10 Million tonne per year would save the Owners of the Product, Export Plant, the Ships, and the Regasification plants, and their EPC Contractors would realize over $125 million 2008 dollars during the life of the plant. Some $35 million of that would be realized in construction cost savings before the first tonne of LNG were produced. Of particular interest is the very large potential savings to be gained through efficiency improvements in ship Cargo Pumps. Generating capacity has an associated cost of $4000/ kW. The fleet cost saving from a nine (9) point efficiency improvement could yield a $18 million benefit to the fleet owners.

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Poster PO-38

Appendix 1 JC CARTER PUMPS ADVANCED TECHNOLOGY PUMPS LIFECYCLE COST ANALYSIS


Pump Application
Traditional Pump Capex, 2008 Dollars Advanced Technology Pump Capex $ $

Product
1,840,000 2,008,000 $ $

Loading
7,360,000 8,080,000 $ $

Cargo
22,000,000 23,496,000 $ $

Primary
4,600,000 5,020,000

Secondary
$ 5,140,000 $ 5,500,000 $ $

All
40,940,000 44,104,000

COST/ ( Savings) Advanced Technology Pump Capex Construction Cost Savings Columns Operating Costs Lifecycle Power Cost Lifecycle BOG Cost at $120/Tonne Lifecycle Maintenance Cost Total Lifecycle Costs $ $ (232,440) $ (1,921,360) $ (6,806,325) $0.00 $ (46,647,548) $ $ (1,679,554) 1,144,000 $ (2,091,750) $ (14,868,186) $ ( 509,210) $ (161,460) $ (14,830,085) $ $ $ $ (65,723,183) (28,277,087) 392,880 (125,772,581) Tanks $ 166,000 $ 720,000 $ 1,496,000 $ 420,000 $ 360,000 $ $ $ 3,164,000 (33,847,552) (1,481,639)

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

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

$ (4,923,022) ($80,449.53) (5,067,911)

$ (28,297,696)

$ (45,687,103)

$ (32,088,326)

$ (14,631,545)

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