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Methodology of life cycle cost with risk expenditure for offshore process at conceptual design stage

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  • Nam, Kiil
  • Chang, Daejun
  • Chang, Kwangpil
  • Rhee, Taejin
  • Lee, In-Beum

Abstract

This study proposed a new LCC (life cycle cost) methodology with the risk expenditure taken into account for comparative evaluation of offshore process options at their conceptual design stage. The risk expenditure consisted of the failure risk expenditure and the accident risk expenditure. The former accounted for the production loss and the maintenance expense due to equipment failures while the latter reflected the asset damage and the fatality worth caused by disastrous accidents such as fire and explosion. It was demonstrated that the new LCC methodology was capable of playing the role of a process selection basis in choosing the best of the liquefaction process options including the power generation systems for a floating LNG (Liquefied natural gas) production facility. Without the risk expenditure, a simple economic comparison apparently favored the mixed refrigerant cycle which had the better efficiency. The new methodology with the risk expenditure, however, indicated that the nitrogen expansion cycle driven by steam turbines should be the optimum choice, mainly due to its better availability and safety.

Suggested Citation

  • Nam, Kiil & Chang, Daejun & Chang, Kwangpil & Rhee, Taejin & Lee, In-Beum, 2011. "Methodology of life cycle cost with risk expenditure for offshore process at conceptual design stage," Energy, Elsevier, vol. 36(3), pages 1554-1563.
    • Handle: RePEc:eee:energy:v:36:y:2011:i:3:p:1554-1563
    DOI: 10.1016/j.energy.2011.01.005
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    References listed on IDEAS

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    1. Aven, Terje & Vinnem, Jan Erik, 2005. "On the use of risk acceptance criteria in the offshore oil and gas industry," Reliability Engineering and System Safety, Elsevier, vol. 90(1), pages 15-24.
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    2. Allahyarzadeh-Bidgoli, Ali & Yanagihara, Jurandir Itizo, 2023. "Energy efficiency, sustainability, and operating cost optimization of an FPSO with CCUS: An innovation in CO2 compression and injection systems," Energy, Elsevier, vol. 267(C).
    3. Eichhorn Colombo, Konrad W., 2023. "Financial resilience analysis of floating production, storage and offloading plant operated in Norwegian Arctic region: Case study using inter-/transdisciplinary system dynamics modeling and simulatio," Energy, Elsevier, vol. 268(C).

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