A SYSTEM DYNAMICS FRAMEWORK FOR DEVELOPING A LIFE CYCLE COSTING MODEL FOR LIQUEFIED NATURAL GAS DOWNSTREAM PRODUCTION SYSTEMS
Abstract
Purpose of the study: This study proposes a qualitative System Dynamics (SD) framework for developing an LCC estimation model tailored to LNG operations.
Problem Statement: Life Cycle Cost (LCC) models are employed to enable strategic planning and allocation across all phases of LNG production, from feasibility studies to final investment and operational decisions. However, their development is inherently complex due to a spectrum of multifaceted, complex, dynamic, and interactive cost drivers.
Methodology: The framework utilised the Causal Loop Diagram (CLD) concept of SD to identify key LNG production cost-related variables and establish their interrelationship. The causal interactions of the factors were subsequently investigated after identifying the Feedback Loops (FBLs) generated from the developed CLD.
Results of the Study: At least twenty FBLs were identified in relation to activities spanning - feed gas supply, operation, maintenance, transport, and economics covering multiple cost drivers that include feed gas requirement, plant operation, Equipment Availability, Maintenance Action, total Cost of Production, and profitability. The analysis highlighted the LNG process as inherently goal-driven, with system stability and optimization emerging from the ongoing interplay among its interconnected subsystems.
Conclusion and Recommendation: By recognising the nature of these cost factors, this approach lays the groundwork for further expansion towards building a robust simulation model capable of supporting strategic decision-making and enhancing the accuracy of LNG project evaluations.
Keywords: Life cycle cost, Liquefied natural gas, System dynamics, Causal diagram, Feedback loop.
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