Sustainable Energy Technologies and Assessments 35 (2019) 220–229

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Sustainable Energy Technologies and Assessments

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Feasibility study of the small scale LNG plant infrastructure for gas supply in T
north of Iran (Case Study)
⁎
Laleh Shirazia, Mehran Sarmada, , Roholah Moghadasi Rostamib, Peyman Moeina,
Marziyeh Zarec, Khashayar Mohammadbeigya
a
Gas Research Division, Research Institute of Petroleum Industry (RIPI), Tehran 14665-1998, Iran
b
Islamic Azad University, Central Tehran Branch, Iran
c
Research & Technology Directorate of National Iranian Gas Company, Iran

A R T I C LE I N FO A B S T R A C T

Keywords: More than 85% of urban and 40% of rural areas of Iran are connected to the national gas pipeline network. For
LNG remaining areas of Iran, this method of gas transportation is not possible due to the great distance to the gas
Small scale transmission lines, low population and mountainous areas. In order to reduce energy transportation cost, it is
Feasibility study possible to use other methods such as CNG and LNG. For the first time, use of LNG for the purpose of gas supply
Gas supply
to about 43,000 households in the north of Iran has been considered. In this paper, a techno-economical study
Case study
has been carried out. The scope of study includes natural gas liquefaction plant, LNG storage tanks, LNG trucks
and re-gasification stations. Choosing the proper capacity, cost estimation and calculation of operating fees for
the implementation of this study is done. The calculations show that the cost of investing is 124 million Euros,
(61 million Euros for refrigeration-liquefaction unit and 63 million Euros for the rest). The case study will be
implemented as B.O.T. and the fee paid to investor per cubic meter of gas delivered to local gas networks is 14
cent Euro/m3 for 20 years plant operation and 13% IRR.

Introduction
Currently, by development of gas distribution network in Iran, more
than 90 percent of Iran’s population has been covered by natural gas as
the main source of energy supply. More than 85 percent of the urban
and 40 percent of the rural areas of Iran are connected to the national
gas pipeline network [1]. Many of the remaining areas have scattered
and low population, mountainous location or impassable regions and
gas supply by pipelines is not acceptable technically and economically.
In such situation, the National Iranian Gas Company (NIGC) is planning
suitable alternatives for the pipeline by providing new gas supply so-
lutions such as Compressed Natural Gas (CNG) and Liquefied Natural
Gas (LNG).
At present, gas supply to the cities and villages of Iran except for a
few cases which is supplied by mother and daughter’s compressed
natural gas (CNG), has been carried out by pipelines. By looking at the
new methods of gas supply in other countries known as “Virtual
Pipelines”, mother and daughter compressed natural gas and small
scale liquefied natural gas (Mini LNG), can replace with pipelines in
special circumstances and by protecting the environmental, and reduce
gas supply costs. These methods also can be used for gas supply to
remote industrial plants, small power plants and compressed natural
gas stations.
CNG has some disadvantages including low safety (due to high
pressure of transferred gas near to 250 barg), high number of CNG
trucks on the road (in case of high consumption of the gas at the des-
tination) and the impossibility of gas storage for several days’ con-
sumption. Therefore, the use of this method is not recommended in
conditions where road blocking due to natural disasters such as heavy
snowfall. Also, this method is not practicable for large distances be-
tween mother-to-daughter station and high gas consumption, due to
need for high number of CNG trucks.
In LNG method, by constructing a natural gas liquefaction plant
along with the main gas transmission line, natural gas is cooled down to
temperature of −162 °C at atmospheric pressure and became liquid
(600-fold volume reduction) and stored in LNG storage tanks. The
produced LNG by using LNG trucks (similar to oil products) is sent to
regasification stations at consumption areas (one or more destinations).
In regasification stations, the stored LNG is vaporized and after me-
tering, the natural gas is injected to the urban-rural (local) gas dis-
tribution network [2]. In this way, the gas transmission pipeline is re-
placed with LNG trucks moving between the liquefaction plant and the

⁎
Corresponding author.
E-mail address: sarmadm@ripi.ir (M. Sarmad).

https://doi.org/10.1016/j.seta.2019.07.010
Received 16 March 2019; Received in revised form 13 July 2019; Accepted 13 July 2019
2213-1388/ © 2019 Elsevier Ltd. All rights reserved.
L. Shirazi, et al.
regasification station(s).
The initial investment cost of LNG method is high. So, it can only be
used in cases where using the gas pipeline is not possible due to reasons
such as excessive consumption points to gas transmission lines, gas
supply for mountainous areas and crossing the gas pipeline from pro-
tected areas and environmental degradation (similar to this case study).
This feature can ensure gas supply even in the cold months of the year
(peak consumption) without any problem because of the possibility of
LNG storage [3].
This method (LNG) is used in Belgium, France, Spain, Portugal and
Turkey [4]. In China and United States, it is currently used to gas supply
to distant areas, to provide fuel for compressed natural gas and lique-
fied natural gas stations, peak shaving of gas consumption, gas supply
for industrial and power plants, fuel for heavy vehicles and other ap-
plications (Naslund [5]; Maynitskiy [6]; Biscardini et al., [7], World
Gas Conference [8]). For example, in Norway, the liquefied natural gas
produced by the Snurrevarden plant, with a capacity of 60 tons per day,
is transported by tankers to consumption destinations [5]. In China,
there are currently about 200 small-scale LNG plants [9], which pro-
duced LNG used for fuel of heavy vehicles [10] and gas supply. China
has the largest market for small-scale LNG plants. The difference in the
price of gas and diesel, as well as the government's rule to reduce air
pollution, has been caused development of this industry in China [11].
In the United States, at least 14 small-scale LNG production plants have
been built to produce fuel of vehicles [12]. Other applications of small-
scale LNG plants are the use of LNG fuel in rail and sea transportation
which is implemented in Argentina, Canada, China and European
countries. For example, Galileo's company in Argentina, by producing
85 tons per day of liquefied natural gas, is responsible for providing fuel
for high-speed passenger ships. Also, Canada is developing 3 Passenger
ships with Dual LNG/Diesel motors [13]. Among the projects that have
been seriously addressed in the National Iranian Gas Company in recent
years, is gas supply to the impassable regions (about 43,000 house-
holds) in the north of Iran and for 4 main zones by LNG method. So, a
detailed techno-economic study should be done focusing on the cost
estimation to evaluate this method. In literatures, there are several
feasibility studies on LNG projects in different countries [14–20]. Raj
et al. [21] did a techno-economic assessment of LNG production in
western Canada. Javanmardi et al. [22] presented a feasibility of
transporting LNG from South-Pars gas fields in Iran to potential mar-
kets. Tan et al. [23] proposed a small-scale liquefaction process to li-
quefy a part of natural gas in the pressure-reduction station. They de-
termined the optimal design conditions for the proposed system. He and
Ju [24] presented a novel process for small-scale pipeline natural gas
liquefaction. They adopted the thermodynamic analysis and optimized
the process to approach the maximum liquefaction rate. He and Ju [25]
proposed four configuration strategies of expansion liquefaction cycle
for distributed-scale LNG plant, namely multistage expanders, single
precooling cycle, regeneration and mixture working fluid. They con-
figured sixteen feasible liquefaction cycles based on the configuration
strategies and then optimized by genetic algorithm to maximum FOM
(figure of merit) for optimal synthesis. Nguyen et al. [26] investigated
three configurations suitable for small-scale applications because of
their simplicity and compactness: the single-mixed refrigerant, single
and dual reverse Brayton cycles. They identified the most promising
cycle layouts by performing multi-objective optimization procedures.
Ancona et al. [27] proposed two different LNG production layouts and
investigated within a thermodynamic analysis: a Joule-Thompson LNG
expansion process and a new layout with a turbo-expander. They
showed that the new proposed solution allow to optimize the LNG
production process and to minimize the process energy consumption.
Chen et al. [28] established skid-mounted Coal-bed methane (CBM)
liquefaction processes based on Claude cycle. Cryogenic turbo-expander
with high expansion ratio was employed to improve the efficiency of
CBM liquefaction process. The process optimization was performed and
optimum operation range of the liquefaction processes was obtained.
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Sustainable Energy Technologies and Assessments 35 (2019) 220–229
Qyyum et al. [29] investigated the effect of replacing the JT valve with
hydraulic turbine (HT) in the energy efficiency enhancement of a single
mixed refrigerant (SMR) process. They showed the proposed HT based
liquefaction technology can be extended to other natural gas liquefac-
tion processes as an attractive option for enhancing the energy effi-
ciency. He et al. [30] presented a comprehensive optimization and
comparison to show quantitative results on modified mixed refrigerant
liquefaction process (MSMR) and parallel nitrogen expansion lique-
faction process (PNEC) from the perspectives of specific energy con-
sumption, exergy efficiency, techno-economy and operational flex-
ibility. The comparison results showed that MSMR had a lower specific
energy consumption, higher exergy efficiency, lower total investment,
and higher flexibility than PNEC. In conclusion, MSMR is a better
choice for small-scale mobile LNG plant from the four perspectives.
Also, the multiplicity of public and infrastructure projects in de-
veloping countries causes financial constraints and timing of project
implementation. In recent decades, in order to overcome liquidity
shortages and make better use of the private sector, project implement
methods with title of Public-private partnership have become common
practice.
The general characteristics of these contracts are:
• Long-term contracts are concluded between the public sector and
the private sector
• These contracts are designed by the private sector for the design,
construction, financing, commissioning and operation of buildings
and facilities.
• Payments are made to the private sector during the project life time.
Public-private partnership is not solely for the purpose of project
financing and the use of other private sector capacities, such as
knowledge and expertise, management skills, incentives for optimal use
of resources, is also the goal of creating such contracts.
By considering the new approach of the NIGC in order to use the
private sector's investment potential, use of this contract model, which
is known as the Build, Operate & Transfer (BOT) is considered for this
case study.
In this contractual method, in order to compensate the investment
and operation costs of the project by the private sector and to provide
the necessary profit, the calculated charge for a reasonable rate of re-
turn is paid by the National Iranian Gas Company (NIGC). In this way,
natural gas is available to the private sector at the liquefaction plant.
The private sector after gas liquefaction, storage, transfer, regasification
and injection into the distribution gas network, the fee for these ser-
vices is received per cubic meter of delivered gas to the network from
NIGC.
This investigation presents a techno-economical study of the small
scale LNG plant as well as a wide transportation, distribution and re-
gasification network of produced LNG for the first time in Iran. In this
paper, a complete overview of the technical and economic aspects has
been studied as a case study. The case study was considered in a region
at the north of Iran.
Case study description
The feed gas for small scale LNG plant is supplied from the national
Iranian gas pipeline network by pressure near to 33 barg and 37,000
normal cubic meter per hour gas flow rate. This is a lean and sweet gas
(with total sulfur less than 20 ppmv) but for LNG production we need
post treatment because the mole percent of CO2 is more than 1%. Also a
low amount of heavy hydrocarbons must be separated during the li-
quefaction process to prevent freezing problem in LNG heat exchangers.
The LNG plant is located in Noor city and beside the Caspian Sea. The
plant schematic is shown in Fig. 1.
L. Shirazi, et al.
Fig. 1. Plant Schematic.
Amine and adsorption units
The Amine and Adsorption units include one train with 50% and
110% turn down and over design ratios respectively. For LNG pro-
duction it is needed to reduce CO2 content less than 50 ppmv and H2O
less than 1 ppmv. For this reason, the formulated amine
(MDEA + activators) and 3A absorber has been used. A schematic
diagram for Amine & Adsorption unit is shown in Fig. 2.
Refrigeration and liquefaction unit
The single mixed refrigerant liquefaction process has been used for
gas liquefying. This liquefaction process is used in many small scale
LNG plants in the world. The refrigeration and liquefaction unit in-
cludes 2 parallel trains with similar capacity for LNG production flex-
ibility during the plant operation in a year. A schematic diagram for
Refrigeration and liquefaction unit is shown in Fig. 3.
LNG storage and loading facilities
For LNG storage in this study, double wall cryogenic storage tanks
(inner wall is 9% nickel stainless steel and external wall is carbon steel
and between two walls is filled with vacuum perlite) are used. The LNG
storage volume is considered for 7 days of plant production, which will
be 10,000 m3. A schematic diagram for LNG Storage and loading fa-
cilities is shown in Fig. 4.
LNG trucks
Similar to LNG storage tanks, double wall cryogenic vessels with
20 m3 nominal capacity is considered for LNG transportation to re-
gasification units. Near to 70 LNG trucks is required for LNG trans-
portation for the peak gas consumption.
Regasification units
Due to extreme cold weather in gas consumer areas (less than 15 °C
in winter), the indirect LNG vaporizer (hot Water & Glycol system) is
recommended instead of using ambient air vaporizer for LNG re-
gasification. In order to ensure the continuous supply of gas, a tem-
porary LNG storage tank is considered in the re-regasification units. A
schematic diagram for Regasification units is shown in Fig. 5.
The scope of feasibility study
The scope of feasibility study includes techno-economical studies as
the following categorization:
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Sustainable Energy Technologies and Assessments 35 (2019) 220–229
A: Gas liquefaction Plant:
• Receiving, filtration and gas measurement facility
• Amine unit with amine solvent to remove carbon dioxide.
• Adsorption unit including dehydration and mercury removal (to less
3
than 10 Nano gram/Nm )
• Refrigeration and liquefaction unit
• LNG Storage and loading facilities
• Utilities
B: Road distribution network; including LNG trucks for LNG dis-
tribution to main consumption centers
C: Regasification units:
• Temporary LNG storage tanks for 3–5 days backup
• LNG Vaporizer
• Odorizer and gas measurement system
This case study is divided to 4 zones for gas supply. It should be
noted that the number of regasification units in this case study was 23,
with distribution as follows for each zone:
• Zone 1: 8 Regasification units
• Zone 2: 6 Regasification units
• Zone 3: 8 Regasification units
• Zone 4: 1 Regasification unit
The total number of end users (households) in the mentioned areas
is 42,880, which its distribution is given in Table 1.
Analysis of the case study technical aspects
Determine the liquefaction plant proper capacity
Due to high investment cost of natural gas liquefaction plants in Iran
and other countries, the selection of optimal capacity according to
consumption patterns is one of the most important steps in conceptual
design and feasibility studies. In baseload LNG plants which designed
and constructed for the purpose of gas export, LNG production rate is
constant over the year, independent of changes in weather conditions.
But in the present case study, which aims to gas supply to the moun-
tainous and impassable regions and the main consumers are the
households, the rate of gas consumption is different throughout the
year and its amount is dependent to the weather condition and popu-
lation living in these areas. Table 2 presents the estimated gas con-
sumption for the intended area.
Estimation of hourly peak for gas consumption is commonly used in
L. Shirazi, et al. Sustainable Energy Technologies and Assessments 35 (2019) 220–229

Fig. 2. Schematic Diagram of (a) Amine Unit (b) Adsorption Unit.

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Fig. 3. Schematic Diagram of Refrigeration and liquefaction Unit.

the design of gas networks. But when we use LNG technology for gas
supply, due to the possibility of LNG storage for some days, the use of a
daily peak is appropriate. If the plant is designed based on the hourly
peak, the capacity of the plant and the investment cost have been in-
creased sharply and the bulk of this capacity will not be utilized
throughout the year. In Fig. 6, the gas consumption pattern (one year) is
presented based on daily peak.
In Table 3, the required LNG capacity is shown based on the daily
peak at each month of the year.
As seen, the lowest consumption is for July and August (123 tons per
day) and the highest consumption is for January and February
(617 tons per day). Accordingly, at first glance, the design and con-
struction of a LNG plant with a capacity of 600 tons per day can be used
for this study. But, the required LNG capacity in the summer is less than
50% of the nominal capacity of the plant (∼20%), and technically it is
not possible to reduce the production capacity to this amount.
Therefore, the design of two parallel production trains with a capacity
of 300 tons per day (capable of increasing capacity (over design) by
10% and reducing capacity (turn down) to 50%) would be a proposed
solution for this project. In this case, the LNG production profile will be
in accordance with Table 4.
As shown in Table 4, in fact, during 6 months of the year, one train

Fig. 4. Schematic Diagram of LNG Storage and loading facilities.

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Fig. 5. Schematic Diagram of Regasification units.

Table 1 liquefaction plant, equivalent to 7 days of plant production, which will

Areas for gas supply and No. of household. be 10,000 m3.
Area No. of household
Regasification units’ capacity determination
Zone 1 12,412
Zone 2 12,513
Zone 3 15,090 Regasification units must be designed for hourly peak of gas con-
Zone 4 2865 sumption. Therefore, the capacity of LNG vaporizer should be con-
Total 42,880 sidered equal to the hourly peak specified for gas consumption at each
of the 23 regasification units. The capacity range of the LNG vaporizers
is estimated between 500 and 5500 m3 per hour due to the gas con-
Table 2 sumption of each regasification unit. In order to ensure the continuous
Estimated gas consumption for gas supply to the intended area. supply of gas, a temporary LNG storage tank is considered between 3
and 5 days in the re-regasification units. The number of storage days
Month Hourly peak (m3) Daily peak (m3)
has been optimized based on site visits and the status of road access.
April 36,019 576,307 Table 5 shows the regasification units capacity and recommended LNG
May 20,528 329,318 storage tanks.
June 12,864 205,824
July 10,291 164,659
August 10,291 164,659 Capacity and No. of LNG trucks
September 14,408 230,523
October 18,010 288,154
LNG trucks are used to transport LNG from liquefaction plant to
November 36,019 576,307
December 46,310 740,966 consumption areas. Permissible capacity for LNG trailers depends on
January 51,456 823,296 access road conditions. With regard to road transport restrictions, the
February 51,456 823,296 nominal capacity of the LNG trailers is considered to be maximum
March 41,165 658,637
20 m3. Due to the time of loading and unloading of each trailer, path
length, the duration of the working per day and the average speed of
the trailer, the number of required LNG trucks for the peak consump-
(300 tons per day) is withdrawn from the production cycle and in the
tion is estimated to 70, which is the share of each area is as follows:
summer, the same one operating unit will reach less than 50% of pro-
duction capacity; In order to prevent technical problems in the gas li-
quefaction unit, it is possible to make overall maintenance of the plant • Zone 1: 22 LNG trucks
and temporary shutdown of the production in the months of July and • Zone 2: 20 LNG trucks
August. • Zone 3: 23 LNG trucks
• Zone 4: 5 LNG trucks
Selecting the right capacity for LNG storage tank in liquefaction plant Obviously, the number of LNG trucks for summer is much lower
than required LNG trucks for peak consumption.
Due to the necessity for continuous gas supply to the 42,880
households, it is necessary to take the appropriate predictions in order Cost estimation
to prevent interrupt in gas supply. For this purpose, and by considering
the LNG storage capability, the storage volume is considered in the In order to accurately estimate the investment cost in the feasibility

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Fig. 6. Gas consumption pattern (one year) based on daily peak.

Table 3 Table 5
Estimated required LNG capacity in different months of the year. Regasification units’ capacity and recommended LNG storage tanks.
Month LNG capacity (tons per day) Regasification Capacity LNG Storage Capacity Regasification Zone/No.
(Nm3/h) (m3)
April 432
May 247 Zone 1
June 154 1600 210 1
July 123 1960 260 2
August 123 1930 260 3
September 173 2200 180 4
October 216 2090 170 5
November 432 3630 480 6
December 556 540 70 7
January 617 960 80 8
February 617
Zone 2
March 494
690 90 1
1630 130 2
3400 270 3
Table 4 1800 140 4
LNG plant Production profile (one year) with 2 parallel LNG production trains 5410 430 5
equal to 300 tons per day for each one. 2080 170 6

Zone 3
Month The required LNG (tons proposed LNG production capacity
2350 190 1
per day) (tons per day)
3430 460 2
April 432 2 × 300 (Reduce production: ∼70%) 1180 90 3
May 247 1 × 300 (Reduce production: ∼80%) 1400 110 4
June 154 1 × 300 (Reduce production: ∼50%) 4130 330 5
July 123 1 × 300 (Reduce production: ∼40%) 3760 300 6
August 123 1 × 300 (Reduce production: ∼40%) 880 120 7
September 173 1 × 300 (Reduce production: ∼60%) 980 130 8
October 216 1 × 300 (Reduce production: ∼70%) Zone 4
November 432 2 × 300 (Reduce production: ∼70%) 3440 460 1
December 556 2 × 300 (Reduce production: ∼90%)
January 617 2 × 300 (Reduce production: ∼3%)
February 617 2 × 300 (Reduce production: ∼3%)
March 494 2 × 300 (Reduce production: ∼80%)
In this paper the cost estimation was performed by combination of
the following methods.
The capital cost of a plant or process unit can be related to capacity
study, the following actions were done: by the following equation.
n

• Simulation and optimization of process units

S
C2 = C1 ⎛ 2 ⎞
⎜ ⎟

• Provide list and size of the main equipment ⎝ S1 ⎠ (1)

• Price inquiry and cost estimation of the main equipment or packages where C1 and C2 are capital costs of the plant with capacity S1 and S2 ,
• Estimation of engineering costs, equipment supply and construction respectively. The exponent n is typically about 0.6 Averaged across the
(EPC cost) for different parts of the plant (process units, LNG sto- whole chemical industry [31]. The capital cost per unit of production of
rage, loading and utilities), LNG trucks and regasification units se- product could be expressed by economy of scale as follow:
parately.
C2
= aS2n − 1
S2 (2)

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Table 6
Amine unit main equipment list and price.
No. Equipment
1 Amine absorber column
2 Amine regenerator column
3 Treated gas K.O. Drum
4 Rich amine flash Drum
5 Amine sump Drum
6 Reflux Drum
7 Amine HP pump
8 Reflux pump
9 Amine sump pump
10 Precoat filtration pump
11 Amine/amine exchanger
12 Regenerator reboiler
13 Lean Amine Air cooler
14 Regenerator condenser
15 Filtration Package
16 Antifoam Package
Equipment Cost = 1,667,000 Euro
Table 7
Adsorption unit main equipment list and price.
No. Equipment
1 Absorption columns
2 Mercury removal column
3 Pre-cooling heat exchanger
4 Gas K.O. Drum
5 Regeneration gas air cooler
6 Regeneration gas heat exchanger
7 Regeneration gas separator
8 Filters & Strainers
Equipment Cost = 1,500,000 Euro
Table 8
Refrigeration and liquefaction unit main equipment list and
price.
No. Equipment
1 Cold Box
2 Compressor package
3 End flash drum
4 Refrigerant separator
Equipment Cost = 22,593,000 Euro
Table 9
LNG storage and loading facilities main equipment list and
price.
No. Equipment
1 LNG storage tanks
2 Refrigerant make-up tanks
3 Refrigerant vaporizers
4 Cryogenic pumps
5 Loading facilities
Equipment Cost = 6,364,000 Euro
Towler and Sinnott [31] listed values of the parameters a and n for
some fuels and commodity chemical processes. The another correlation
for preliminary cost estimation of equipment is shown in Eq. (3).
Ce = a + bS n
where Ce is purchased equipment cost on a U.S. Gulf Coast basis. a and b
are cost constants. S is the size parameter and n is an exponent for that
type of equipment. These parameters are listed for various types of
equipment in a range of capacity by Towler and Sinnott [31].
Sustainable Energy Technologies and Assessments 35 (2019) 220–229
Table 10
LNG storage and loading facilities main equipment list and price.
Item Investment cost (million Euros)
Gas Receiving and treatment unit 9
Refrigeration and liquefaction unit 61
LNG storage and loading unit 14
Regasification units 21
Utilities 8
LNG trucks 11
Total 124
Couper et al. [32] are collected the prices of classes of the most
frequently used equipment in the form of correlating equations. The
prices are given in terms of appropriate key characteristics of the
equipment, such as sqft, gpm, lb/h, etc. Factors for materials of con-
struction and performance characteristics other than the basic ones also
are provided.
In the cost estimation of a plant it is always necessary to get a real
price quotation from an equipment vendor. In addition to the above
correlations in this paper cost of the some equipment was estimated by
inquiry from vendors. Price inquiry was performed for process packages
such as amine anti-foam, amine filtration and other packages.
Cost estimation of Inlet facility and Amine unit
For cost estimation of Amine unit, following the process simulation,
the list of main equipment was determined according to Table 6. The
main equipment cost was 1.67 million Euros and the EPC cost was 4.4
million Euros with conversion factor 2.63 in order to convert the main
equipment cost to EPC (Engineering, procurement & construction) cost.
The EPC cost of inlet facility (metering & filtration) was estimated
0.4 million Euros given the experiences of similar projects.
Cost estimation of adsorption unit
The main equipment list of Adsorption unit is shown in Table 7. The
main equipment cost was 1.5 million Euros and the EPC cost was 4.2
million Euros with conversion factor 2.80.
Cost estimation of Refrigeration and Liquefaction unit
The main equipment list of Refrigeration and liquefaction unit is
shown in Table 8. The main equipment cost was 22.6 million Euros and
the EPC cost was 61.0 million Euros with conversion factor 2.70.
Cost estimation of LNG storage and loading facilities
The main equipment list of LNG storage and loading facilities is
shown in Table 9. The main equipment cost was 6.36 million Euros and
the EPC cost was 14.0 million Euros with conversion factor 2.2.
Cost estimation of LNG trucks
It is considered 157,000 Euros for each LNG truck. For this study,
the total cost for 70 LNG trucks will be 11 million Euros.
Cost estimation of regasification units
(3)
In this case study there are 23 regasification units. Each re-
gasification unit has a small LNG storage tank, LNG vaporizer and
metering system. The main equipment cost for this 23 units was 10.82
million Euros and the EPC cost was 21.0 million Euros with conversion
factor 1.94.
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Fig. 7. Investment cost distribution.

Table 11
Assumptions for economic calculations.
Item Assumption value

LNG plant capacity 600 tons per day

Total investment cost 124 million Euros
Annual operating costs 4.48 million Euros per year
Discount Rate 5.56% per year
Long-term inflation rate for Euro 1.5%
Construction period 3 years
Operational period 20 years
Gas Consumption* 169 million cubic meters per
year
Accepted Internal Rate of Return with private 13%
sector

* According to the estimates made by NIGC.

Table 12 Fig. 8. Sensitivity analysis of IRR with investment cost changes.

Results of economic calculations.
Item Value Table 14
Sensitivity analysis of IRR with annual operating cost changes.
Fee paid to the investor per cubic meter of gas delivered to local gas 14
networks (cent Euro/m3) Item Changes percent
Total revenue (million Euros) 550
Dynamic payback (year) 6.3 Operating cost +15% +10% +5% 0% −5% −10% −15%
Net Present Value (million Euros) 87.5 changes
Internal Rate of 12.43 12.61 12.79 12.96 13.14 13.31 13.49
Return (%)

Table 13
Sensitivity analysis of IRR with investment cost changes.
Item Changes percent

Investment cost +15% +10% +5% 0% −5% −10% −15%

changes
Internal Rate of 10.99 11.60 12.26 12.96 13.72 14.55 15.45
Return (%)

Total capital investment cost

According to the above calculations, the total investment cost was

estimated 124 million Euros, which the breakdown of the costs is shown
in Table 10 and Fig. 7.
As can be seen, the major investment cost is for the refrigeration &
liquefaction unit. Subsequently, LNG regasification (23 points) and LNG
storage units (in the liquefaction plant) have the largest share.
Fig. 9. Sensitivity analysis of IRR with annual operating cost changes.

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L. Shirazi, et al.
Economic evaluation
In order to economic evaluation, the assumptions which are shown
in Table 11 have been used. The annual operating costs are including
human resources, repair and maintenance, utilities and etc. The dis-
count rate was estimated by considering the choice of the Euro as a
monetary unit and the interest rate of the long-term deposits of this
currency and the long-term inflation rate at the time of preparing the
paper. The Comfar III software was applied to economic evaluating. The
construction duration, duration of the plant operation, discount rate,
investment cost and operating cost which was calculated in previous
sections, was entered to software as input data. To calculate the fee paid
to the investor, the annual income was entered to software in the form
of guess and error to calculate the required IRR (13%) which mentioned
in Table 11. Then the final calculated income divided to total gas flow
(169 million cubic meters per year) and the fee paid to the investor was
calculated 14 cent Euro/m3. The results of the economic calculations
based on BOT projects are presented in Table 12.
The result show that the payback period is near to 6 years with 87.5
million Euros net present value and the 13% internal rate of return
which has been adjusted for economic calculations. Also, total revenue
is calculated to 550 million Euros.
Sensitivity analysis
Sensitivity analysis of investment cost
According to the studies, the sensitivity of internal rate of returns to
investment cost changes is significant so that with an increase of 15% in
investment cost, the internal returns decrease to 11% (Table 13 &
Fig. 8).
Sensitivity analysis of annual operating cost
The internal rate of returns to annual operating cost changes are not
very sensitive, so that with an increase of 15% in operating costs, the
internal returns decrease to 12.4% (Table 14 & Fig. 9).
Conclusion
In this case study, the technical and economic aspects of gas supply
to some 43,000 households in the impassable regions in north of Iran
have been studied. For this purpose, due to the predicted gas con-
sumption pattern for these areas, first, the suitable capacity of natural
gas liquefaction plant is determined equal to 600 tons per day. After
that, the number of required LNG trucks and the capacity of re-
gasification units were determined based on the amount of their gas
need. The primary design and estimation of the investment costs shows
that an investment near to 124 million Euros is required for the im-
plementation of this study.
According to the method of case study implementation in the form
of investment (BOT), the calculated paid salary to the investor is esti-
mated at 14 cents Euro per each cubic meter of gas injected to dis-
tribution gas networks. In the sensitivity analysis section, the results
also show that the Internal Rate of Return with a 15% increase in in-
vestment cost, decreases by about 2%. Therefore, accurate estimation of
the investment cost is crucial for NIGC and private sector. This im-
portance is less sensitive to estimating annual operating costs.
Acknowledgments
We would like to thank the National Iranian Gas Company’s re-
search and technology management support for carrying out this study.
229
Sustainable Energy Technologies and Assessments 35 (2019) 220–229
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