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EVALUATION
CRITERIA and
SPECIFIC RISK ANALYSIS EXECUTION
When performing Independent Engineer services
for project financing Merlin Associates performs risk analysis of all
the major project implementation activities.
These
normally include the following areas of risk analysis:
TECHNICAL
DESIGN ANALYSIS
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Process System All Project Facilities – Feedgas production, field
processing, gas conditioning, and liquefaction plus supporting utility
systems, shipping distances and available shipping capacity, import
regasification and power generation facilities with review of local
marine facilities.
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Process Technology utilized in the process and utility systems in all
project facilities.
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Foundation and Support Structure Design For Offshore Feedgas Facilities
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Pipeline Feedgas Transfer Systems
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Review of LNG Storage, Loading/Unloading, and Shipping Systems
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Review of Power Generation systems
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Review of Delivery Point Requirements
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Merlin can simulate the total project operation to evaluate how much
excess capacity there is available in each link of the LNG Trade chain.
This will provide an indication of potential future expansion capabilities
as well as determining how much potential there is to make up delivery
shortfalls.
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PROJECT
MANAGEMENT and SYSTEMS
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Project management system and major project participant organizations
to be used relative to the project execution plan.
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Key personnel and their experience on similar projects in similar locations.
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Proposed project staffing levels by operator, project manager, and installation
contractor.
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Proposed short-list of major contractors and sub-contractors if available.
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Project management definitions, procedures, and systems to be used for
progress reporting, cost commitment and expenditure reporting, updating
project cost estimates, change orders, and variance trend analysis.
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PROJECT
SCHEDULE
- Permitting
status and requirements.
- Current
status of the basis of design, design engineering schedule and relationship
with procurement and construction.
- Major
contractual philosophy, procurement methods, proposed sourcing, procurement
scheduling and relationship with engineering, fabrication, and construction.
- Fabrication
location(s), experience history, resource availability, technical competence
of supervision and workforce, transportation scheduling.
- Transportation
and offshore installation, construction, and support vessel capabilities
and availability, and availability of alternate vessels for the offshore
feedgas facility installation.
- Installation,
hookup, and commissioning scheduling for the offshore feedgas system.
- Construction
location, potential infrastructure requirements during construction
and operations.
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Availability of engineering, construction, and supervision labor resources,
major contractor work history, and review of actual contractual agreements.
- Start-up
scheduling.
- Overall
available flexibility and consequences of slippage.
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PROJECT
IMPLEMENTATION
- Review
of the Project Development Plan for the overall project and for each
of the LNG Chain Segments for the project.
- Review
of past performance and experience level of each of the major participants
in each segment of the LNG Chain Project. Includes both Sponsor side
and Contractor/Vendor/Manufacturer side.
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ESTIMATED
CAPITAL COSTS
The actual potential variance for a
project developed 50% probability non-exceedance capital cost budget estimate
is primarily a function of the type of contractual agreement used to supply
the facility. A lump-sum turnkey contract may have almost zero cost overrun
potential, although a significant schedule slippage will usually expose
the Operator to additional non-recoverable costs. A typical reimbursable
fixed fee contract will usually have from 10 to 25% potential cost overrun
variance with 5 to 10% cost underrun potential.
Merlin’s
Capital/Operating Cost Estimating Models produce a high accuracy cost
estimate assuming that similar technology and facility throughputs are
specified for the new project. The models develop their estimates using
actual performance data from existing projects. The model cannot reflect
new technology, significant shifts in competitive bidding, or non-traditional
implementation planning. The estimate produced provides a high accuracy
cost estimate that provides a yardstick against which all significant
variances are rigorously analyzed. On the basis of this analysis the variances
are either confirmed or projected as suspect.
The
Merlin cost estimate also reflects the previous analysis of technical
design, project management, and predicted implementation planning and
schedule. Adjustments are often reflected for additional schedule flexibility,
the state of definition of the project basis of design, historical performance
of the Operator and proposed major Fabricators and Contractors, as well
as previous experience at similar project locations by other projects.
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OPERATING
and MAINTENANCE COSTS
Merlin Associates reviews project operator’s
or technical manager’s proposed staffing methods and levels, proposed
maintenance programs, and predicted maintenance costs.
Merlin
Associates’ Capital Cost Estimators include a database of operating
costs for various type facilities of many different companies to predict
average annual operating costs for proposed new projects. The estimate
basis is operation at design throughput conditions. The estimate is based
upon historical information from other facilities with the same type of
equipment. The estimate is sensitive to basic wage rates, staffing levels,
design throughput, environmental operating conditions, age of the facility,
how heavily loaded the facility is in relation to its design capacity,
and a weighting for technical operating competence and maintenance quality.
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UNIQUE
ASPECTS of the IMPORT TERMINAL CAPITAL
COST ESTIMATING MODEL
Capital cost data for specific LNG import terminals
included in the Merlin LNG Import Terminal Capital Cost Estimating Model
database have been updated to reflect current costs for LNG storage tanks,
unloading systems, relief and blowdown systems, and utility systems derived
from LNG liquefaction plant projects using similar/identical equipment
and from the few actual LNG Import terminal projects which have been implemented
in the recent past.
LNG
import terminals, because of their location and dependency on gas sendout
demand pattern are even more site and project specific than liquefaction
plants. The Merlin LNG Import Terminal Capital Cost Estimating Model is
based on a design philosophy typical for a major international energy
company being installed in Europe or the US and in emerging energy markets
of developing countries, typically supplying a large electric power generation
plant. It does not reflect the highly conservative basis of design used
for Japanese import terminals with their unique safety, security of supply,
environmental, and demand characteristics.
Estimating
methodology is similar to that used in the liquefaction model. A project
specific equipment list is developed using appropriate capacity and escalation
factors. Bulk material costs are calculated from factors against related
equipment costs based on actual installation cost data. Labor manhours
are developed on a US Gulf of Mexico basis and labor costs calculated
based on expected site productivities relative to the US Gulf of Mexico
and site specific "all-in" labor rates.
The
model results have been demonstrated to be within ± 10% of lump-sum
cost estimates prepared by engineering-procurement-construction contractors
using the same basis of design characteristics.
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EVALUATATION
METHODOLOGY
EVALUATION
CRITERIA and SPECIFIC RISK ANALYSIS EXECUTION
PROJECT
EXPERIENCE
RESUMES
of KEY PERSONNEL
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