MEMORANDUM
TO:
File;
Carey
Johnston,
USEPA/
EAD
FROM:
Mary
Willett
and
Mark
Briggs,
ERG
DATE:
July
28,
2004
SUBJECT:
Costing
Analysis
Regarding
LNG
and
New
O&
G
Extraction
Facilities
This
memo
documents
the
"
sensitivity
analysis"
that
was
conducted
to
determine
the
cost
impacts
to
new
Liquified
Natural
Gas
(
LNG)
terminals
and
new
Oil
and
Gas
(
O&
G)
Extraction
facilities
to
comply
with
possible
impingement
and
entrainment
requirements
in
the
proposed
CWA
316(
b)
Phase
III
rulemaking.
The
sensitivity
analysis
estimated
capital
and
operating
costs
for
new
impingement
and
entrainment
equipment
and
then
compared
these
costs
to
the
total
capital
cost
for
the
entire
facility
to
determine
if
the
proposed
CWA
316(
b)
rule
would
have
an
impact
on
a
facilities
decision
to
move
forward
with
construction.

LNG
Cooling
Water
Intake
Pipe
Design
The
five
proposed
LNG
import
terminals
selected
for
this
sensitivity
analysis
were
Compass
Port,
GMO
Energy
Bridge,
Gulf
Landing,
Port
Pelican,
and
Main
Pass.
To
estimate
a
"
sensitivity
level"
cost
for
installation
of
impingement
and
entrainment
equipment,
EPA
determined
design
information
on
the
type,
size
and
number
of
the
CWISs.
The
primary
source
of
design
information
for
the
five
LNG
terminals
mentioned
above
is
the
US
Coast
Guard
Docket1,2,3,4,5.
Information
in
the
docket
indicates
that
the
Compass
Port
LNG
terminal
will
use
a
caisson
with
submersible
pumps
for
cooling
water
collection,
Main
Pass
Energy
Hub
will
use
sea
water
lift
pumps
with
screened
intakes,
and
the
other
LNG
import
terminals
mentioned
above
will
use
either
sea
chests
or
simple
pipes
for
cooling
water
intake.
Table
1
shows
the
design
flow
rate
for
each
facility,
the
type
of
CWIS
that
will
be
used,
and
the
number
of
intake
structures.
Memorandum
28
July
2004
Page
2
Table
1.
Number
and
Type
of
Cooling
Water
Intake
Structures
at
Five
Proposed
LNG
Terminals
LNG
Project
Name
Location
Total
Design
Flow*
(
MGD)
Intake
Structure
Type
Number
of
Intake
Structures
Conoco
Phillips
(
Compass
Port)
Mobile
Block
910
88o12'
West,
30o5'
North
182
Caisson
with
Submersible
Pumps
6
Excelerate
(
GMO
Energy
Bridge)
LA,
116
miles
South
of
Cameron
133
Sea
Chest
4
Shell
(
Gulf
Landing)
LA
(
West
Cameron
Block
213)
south
of
Lake
Charles
136
Simple
Pipes
16
Chevron
Texaco
(
Port
Pelican)
LA,
36
miles
S­
SW
of
Freshwater
City
176
Simple
Pipes
5
Freeport
McMoran
(
Main
Pass
Energy
Hub)
LA;
17
miles
east
of
Pass
a
Loutre
200
Sea
Water
Lift
Pumps
with
Screened
Intakes
6
*
Total
design
intake
flow
for
the
entire
LNG
terminal
LNG
Impingement
and
Entrainment
Equipment
Options
According
to
Hatch,
the
primary
options
for
preventing
impingement
and
entrainment
on
caissons,
simple
pipes,
and
suction
lines
on
sea
water
lift
pumps
are
velocity
caps
and
screens.
Velocity
caps
prevent
impingement
of
marine
life
against
the
CWIS,
where
cylindrical
wedge
wire
screens
prevent
both
impingement
and
entrainment
of
marine
life
into
the
cooling
water
system.
For
sea
chests,
flat
panel
wedge
wire
screens
prevent
entrainment,
and
horizontal
flow
diverters
prevent
impingement
by
changing
the
direction
of
flow
through
the
sea
chest.
Typically,
stainless
steel
is
used
in
the
manufacture
of
these
types
of
equipment,
however
new
copper­
nickel
(
CuNi)
alloys
are
showing
excellent
bio­
fouling
resistance.
In
addition,
air
sparging
can
be
included
with
screening
equipment
to
remove
bio­
fouling.
EPA
costed
the
following
options
for
the
proposed
off­
shore
LNG
import
facilities
included
in
the
sensitivity
analysis:

°
Cylindrical
copper­
nickel
alloy
wedge
wire
screens
with
air
sparging
on
caissons
and
simple
pipes;

°
Cylindrical
copper­
nickel
alloy
wedge
wire
screens
on
sea
water
lift
pumps;
and
°
Flat
panel
copper­
nickel
wedge
wire
screens
on
sea
chests.
Memorandum
28
July
2004
Page
3
These
costs
should
be
on
the
high
end
and
only
the
GMO
Energy
Bridge
LNG
terminal
will
require
the
installation
of
horizontal
flow
diverters
to
lessen
impingement.

LNG
Cost
Estimates
for
Impingement
and
Entrainment
Options
Installed
capital
costs
for
each
option
above
were
estimated
for
the
five
LNG
import
terminals
selected
for
this
analysis.
Costs
for
equipment
were
developed
by
regression
analysis
of
the
cost
information
provided
by
Hatch
Associates6.
Table
2
shows
the
cost
equations
for
each
option
and
the
design
variable.

Table
2.
Cost
Equations
and
Design
Variables
for
Entrainment
and
Impingement
Equipment
at
LNG
Terminals
Equipment
Intake
Structure
Type
Cost
Equation
Variable
Cylindrical
coppernickel
alloy
wedge
wire
screens
with
air
sparging
Simple
pipes
and
caissons
$
=
1360.3(
x)+
4087.2
(
1st)
$
=
883.67(
x)
­
5742.8
(
additional)
Pipe
Diameter
(
inches)

Cylindrical
coppernickel
alloy
wedge
wire
screens
Sea
water
pump
intakes
$
=
564.71(
x)
­
1389
Pipe
Diameter
(
inches)

Flat
panel
copper­
nickel
wedge
wire
screens
Sea
Chests
$
=
6.7734(
x)
­
0.273
Flow
(
gpm)

Horizontal
Flow
Diverter
Sea
Chests
$
=
3.4995(
x)
+
0.001
Flow
(
gpm)

Table
3
shows
design
information
and
the
estimated
cost
to
install
impingement
and
entrainment
equipment
at
each
LNG
terminal.
Examination
of
the
data
in
Table
3
shows
that
most
new
LNG
facilities
can
be
expected
to
spend
between
$
0.2
million
and
$
0.9
million
to
prevent
impingement
and
entrainment
of
marine
life
in
CWIS.
Memorandum
28
July
2004
Page
4
Table
3.
Estimated
Total
Costs
for
Impingement
and
Entrainment
Equipment
at
Five
Proposed
LNG
Import
Terminals
Proposed
LNG
Flow
(
MGD)
No.
of
Intakes
Intake
Type
Design
Variable*
Equipment
Costed
Estimated
Installed
Capital
Cost
Conoco
Phillips
(
Compass
Port)
182
6
Caisson
Intake
diameter:
47"
Cylindrical
coppernickel
alloy
wedge
wire
screens
with
air
sparging
$
247,000
Excelerate
(
GMO
Energy
Bridge)
133
4
Sea
Chest
Flow
Rate:

23,000
gpm
Flat
panel
coppernickel
wedge
wire
screens
and
horizontal
flow
diverters.
$
945,000
Shell
(
Gulf
Landing)
136
16
Simple
Pipes
Intake
diameter:
60"
Cylindrical
coppernickel
alloy
wedge
wire
screens
with
air
sparging
$
795,000
Chevron
Texaco
(
Port
Pelican)
176
5
Simple
Pipes
Intake
diameter:
90"
Cylindrical
coppernickel
alloy
wedge
wire
screens
with
air
sparging
$
422,000
Freeport
McMoran
(
Main
Pass
Energy
Hub)
200
6
Sea
Water
Lift
Pumps
with
Screened
Inlets
Intake
diameter:
52"
Cylindrical
coppernickel
alloy
wedge
wire
screens
$
168,000
*
Docket
information
for
Main
Pass
Energy
Hub
did
not
contain
the
sea
water
lift
pump
intake
diameter
so
diameter
was
estimated
from
Compass
Port
data
Memorandum
28
July
2004
Page
5
Overall,
the
costs
for
installation
of
impingement
and
entrainment
equipment
on
CWIS
at
LNG
import
terminals
is
very
small
relative
to
the
total
cost
to
construct
an
entire
new
facility.
For
example,
Ann
Jones
in
ERG's
Lexington
office
estimated
the
total
cost
to
construct
the
Gulf
Landing
LNG
facility
at
$
700
million,
the
Main
Pass
LNG
facility
at
$
500
million,
and
the
Port
Pelican
LNG
facility
at
$
800
million.
If
the
costs
for
impingement
and
entrainment
equipment
for
these
facilities
is
between
$
0.2
and
$
0.9
million,
then
compliance
with
the
CWA
316(
b)
rule
will
add
less
than
0.1
percent
to
the
overall
cost
of
the
new
facility.

Options
for
Closed
Loop
Water
Systems
at
LNG
Terminals
One
additional
option
for
reducing
impingement
and
entrainment
of
marine
life
at
LNG
terminals
is
to
convert
from
Open
Rack
Vaporizers
(
ORV)
to
Submerged
Combustion
Vaporizers
(
SCV).
In
general,
the
ORV
system
uses
ambient
seawater
as
its
sole
source
of
heat
in
an
open,
falling
film
type
arrangement
to
vaporize
LNG
passing
through
tubes.
SCV
vaporize
LNG
contained
inside
stainless
steel
tubes
in
a
submerged
water
bath
with
a
combustion
burner
and
require
no
sea
water
intake.
The
ORV
system
has
a
lower
operating
cost
then
the
SVC,
but
normally
a
higher
capital
cost
because
of
the
larger
equipment
size,
the
added
seawater
intake/
outfall
system,
the
pumping
system,
the
large
diameter
seawater
pipes,
and
the
seawater
treating
system.
The
SCV
requires
fuel
for
the
LNG
vaporization,
and
the
fuel
consumption
amount
is
about
1.5%
of
the
send­
out
gas.
Thus,
it
has
a
higher
operating
cost
than
the
ORV
as
the
fuel
has
a
significant
economic
value
at
LNG
terminals10
.
In
addition,
the
SCV
system
contributes
significant
amounts
of
green
house
gas
emissions
due
to
the
combustion
of
fossil
fuels.

A
recent
options
study
prepared
for
ConocoPhillips
Compass
Port
LNG
receiving
terminal10
examined
both
the
capital
and
operating
costs
for
an
ORV
and
SCV
process.
The
study,
prepared
by
Foster
Wheeler
USA,
indicated
the
capital
cost
for
the
ORV
and
SCV
processes
at
this
7.5
million
tonne
per
year
(
MMTPA)
gas
send
out
LNG
receiving
terminal
would
be
approximately
$
45.3
million
dollars
and
$
34.3
million
dollars,
respectively.
Operating
costs
for
the
ORV
and
SCV
processes
at
the
Compass
Port
LNG
receiving
terminal
were
estimated
to
be
$
2.3
millon/
year
and
$
17.1
million/
year,
respectively.
Although
the
capital
cost
for
the
ORV
process
is
predicted
to
be
higher
than
the
SCV
process
at
Compass
Port,
Foster
Wheeler
USA
recommended
to
ConocoPhillips
that
an
ORV
process
be
installed.

EPA
used
a
ratio
of
the
gas
send­
out
capacities
to
relate
the
SCV
costs
derived
for
the
Compass
Port
LNG
receiving
terminal
to
the
Gulf
Landing,
Port
Pelican,
and
Main
Pass
Energy
Hub
LNG
receiving
terminals.
The
Compass
Port
LNG
terminal
is
expected
to
have
a
7.5
MMTPA
gas
send­
out
rate
when
completed.
Predicted
peak
natural
gas
send­
out
rates
for
Gulf
Landing,
Port
Pelican,
and
Main
Pass
are
9,
15,
and
22.5
MMTPA,
respectively.
Table
4
presents
estimated
ball
park
capital
and
operating
costs
for
SCV
systems
at
these
facilities.
Memorandum
28
July
2004
Page
6
Table
4.
Ball
Park
Cost
Estimates
for
LNG
Terminals
to
Construct
and
Operate
SCV
Systems
Compass
Port
(
SCV)
Gulf
Landing
Port
Pelican
Main
Pass
Energy
Hub
Gas
Send­
out
Rate
(
MMTPA)
7.5
9
15
22.5
Ratio
to
Compass
Port
1
1.2
2
3
Capital
Costs
(
Million
$)
34.3
41.2
68.6
102.9
Annual
Operating
Costs
(
Million
$)
17.1
20.5
34.2
51.3
The
GMO
Energy
Bridge
LNG
receiving
terminal
is
currently
designed
for
either
closed
loop
heating
or
once­
through
sea
water
heating.
This
terminal
is
expected
to
send
out
approximately
4.1
MMTPA
of
natural
gas
when
completed.
Using
a
ratio
of
the
gas
send­
out
rates,
the
GMO
Energy
Bridge
LNG
terminal
is
estimated
to
have
operating
costs
for
an
ORV
and
SCV
system
of
$
1.3
million/
year
and
$
9.4
million/
year,
respectively.

Oil
and
Gas
Extraction
Facility
Cooling
Water
Intake
Pipe
Design
Cooling
water
intake
structures
on
oil
and
gas
extraction
facilities
differ
based
on
the
type
of
equipment.
For
example,
fixed
platforms
and
jack­
ups
typically
use
simple
pipes
and
caissons
to
withdraw
sea
water
for
cooling.
Drill
ships,
drill
barges,
submersibles
and
semi­
submersible
facilities
use
sea
chests
through
which
sea
water
is
drawn
for
cooling.
For
new
facilities,
this
equipment
is
installed
over
the
CWIS
during
manufacturing
or
in
dry­
dock,
significantly
reducing
the
capital
costs
as
compared
to
retrofitting
equipment
on
operating
oil
and
gas
extraction
CWISs.

According
to
Hatch,
the
primary
options
for
preventing
impingement
and
entrainment
on
simple
pipes
and
caissons
are
velocity
caps
and
cylindrical
wedge
wire
screens.
Velocity
caps
prevent
impingement
of
marine
life
against
the
CWIS,
where
cylindrical
wedge
wire
screens
prevent
both
impingement
and
entrainment
of
marine
life
into
the
cooling
water
system.
For
mobile
oil
drilling
units
(
MODUs)
having
sea
chests
rather
than
simple
pipes
and
caissons
for
cooling
water
intake,
flat
panel
wedge
wire
screens
and
horizontal
flow
diverters
are
used
for
entrainment
and
impingement,
respectively9.
Typically,
stainless
steel
is
used
in
the
manufacture
of
these
types
of
equipment,
however
new
copper­
nickel
(
CuNi)
alloys
are
showing
excellent
biofouling
resistance.
In
addition,
air
sparging
can
be
included
with
screening
equipment
to
remove
bio­
fouling.
In
some
cases,
extending
the
intake
pipe
to
depths
less
inhabited
by
marine
life
can
Memorandum
28
July
2004
Page
7
also
lessen
the
amount
of
impingement
and
entrainment
caused
by
CWIS
(
e.
g.,
depths
greater
than
200'),
preventing
the
need
for
air
sparging8.
The
options
costed
in
the
analysis
for
existing
oil
and
gas
extraction
facilities
include:

°
Stainless
steel
wedge
wire
screens
with
and
without
air
sparging;
°
Copper­
nickel
wedge
wire
screens
with
and
without
air
sparging;
°
Stainless
steel
velocity
caps;
°
Copper­
nickel
alloy
velocity
caps;
°
Flat
panel
wedge
wire
screens
over
sea
chests
°
Horizontal
flow
diverters
associated
with
sea
chests.

To
estimate
a
"
sensitivity
level"
cost
for
installation
of
impingement
and
entrainment
equipment
on
new
oil
and
gas
extraction
facilities,
EPA
used
the
most
conservative
costs
(
most
expensive)
for
equipment.
For
example,
on
simple
pipes
and
caissons
a
copper­
nickel
cylindrical
wedge
wire
screen
with
air
sparge
cleaning
was
costed.
For
sea
chests,
the
most
expensive
equipment
is
flat
panel,
copper­
nickel
wedge
wire
screens
and
horizontal
flow
diverters.
Table
4
presents
cost
equations,
developed
from
the
Hatch
Associates
data6,9,
for
each
of
these
types
of
equipment.

Table
4.
Cost
Equations
and
Design
Variables
for
Impingement
and
Entrainment
Equipment
on
New
Oil
and
Gas
Extraction
Facilities
Equipment
CWIS
Control
Cost
Equation
Design
Variable
(
x)

CuNi
Cylindrical
Wedge
Wire
Screen
with
Air
Sparging
Caisson
or
Simple
Pipe
Impingement
and
Entrainment
$
=
1360.3(
x)
+
4087.2
single
$
=
883.7(
x)
+
5742.8
added
Diameter
of
CWIS
(
inches)

CuNi
Velocity
Cap
Caisson
or
Simple
Pipe
Impingement
$
=
291.33(
x)
+
21423
Diameter
of
CWIS
(
inches)

Flat
Panel
CuNi
Wedge
Wire
Screen
Sea
Chest
Entrainment
$
=
6.249(
x)
­
1.35
Flow
Rate
(
gpm)

Horizontal
Flow
Diverter
Sea
Chest
Impingement
$
=
2.38(
x)
+
0.40
Flow
Rate
(
gpm)

To
determine
the
number
of
CWISs,
EPA
used
the
diameter
of
the
CWIS
for
caisson
and
simple
pipes
and
the
cooling
water
flow
rate
for
sea
chests.
Examination
of
the
database
indicates
the
largest
platform
rig
with
the
greatest
number
of
CWIS
and
flow
is
the
Arguello
Point,
California
facility
owned
by
Arguello.
This
rig
has
eight
CWIS,
each
with
an
estimated
diameter
of
30
inches.
For
sea
chests,
one
of
the
largest
facilities
is
the
ENSCO
64
jack­
up
located
in
the
Gulf
of
Mexico.
This
facility
has
two
sea
chests,
each
with
a
flow
of
1,200
gpm.
Memorandum
28
July
2004
Page
8
Oil
and
Gas
Extraction
Facility
Cost
Estimates
for
Impingement
and
Entrainment
Options
Table
5
presents
the
estimated
costs
to
install
impingement
and
entrainment
equipment
on
new
oil
and
gas
extraction
facilities
of
equal
size
to
those
mentioned
above.
Examination
of
the
data
in
Table
5
shows
that
new
fixed
platforms
and
jackups
are
expected
to
spend
approximately
$
0.3
million
on
equipment
to
prevent
impingement
and
entrainment
of
marine
life
in
CWIS.
Semisubmersibles
submersibles,
drill
ships
and
drill
barges
having
sea
chests
are
expected
to
spend
less
than
$
50,000
on
equipment
to
prevent
impingement
and
entrainment.

Overall,
the
costs
for
installation
of
impingement
and
entrainment
equipment
on
CWIS
at
new
oil
and
gas
extraction
facilities
is
very
small
relative
to
the
total
cost
to
construct
an
entire
new
facility.
For
example,
Ann
Jones
in
ERG's
Lexington
office
estimated
the
total
cost
to
construct
a
new
deep
water
platform
can
range
between
$
114
million
and
2.3
billion
dollars
from
information
in
the
Synthetic
Drilling
Fluids
ELG.
If
the
costs
for
impingement
and
entrainment
equipment
for
these
facilities
is
less
than
$
0.3
million
then
compliance
with
the
CWA
316(
b)
rule
will
add
between
0.01
and
0.3
percent
to
the
overall
cost
of
the
new
facility.

Table
5.
Estimated
Cost
for
Impingement
and
Entrainment
Equipment
Installed
on
New
Oil
and
Gas
Extraction
Facilities
During
Construction
Facility
Type
CWIS
Type
No.
of
CWIS
Size
Total
Cost*

Fixed
Platform
or
Jackup
Caisson
or
Simple
Pipe
with
cylindrical
CuNi
wedge
wire
screen
and
air
sparging
8
30
inch
diameter
$
267,000
Submersible,
Semi­
submersible,
Drill
Ship
or
Barge,
Jackup
Sea
Chest
with
CuNi
flat
panel
wedge
wire
screen
and
horizontal
flow
diverter.
2
1,200
gpm
$
20,700
*
Equipment
installed
during
dry
dock
construction.
Memorandum
28
July
2004
Page
9
References
1.
U.
S.
Coast
Guard,
2002.
Port
Pelican
Environmental
Report,
Version
1.0,
Port
Pelican
L.
L.
C.
Deepwater
Port
Licence
Application,
Docket
No.
USGS­
2002­
14134
2.
U.
S.
Coast
Guard,
2003.
Draft
Environmental
Assessment
of
the
El
Paso
Energy
Bridge
Gulf
of
Mexico,
L.
L.
C.,
Deepwater
Port
License
Application,
Docket
No.
USCG­
2003­
14294,
September
2003.

3.
U.
S.
Coast
Guard,
2004.
Draft
Environmental
Impact
Statement
Section
2
(
Detailed
Description
of
Proposed
Action
and
Alternatives)
for
The
Gulf
Landing
LLC
Deepwater
Port
License
Application,
Docket
No.
USCG­
2004­
16860­
30,
July
2004.

4.
U.
S.
Coast
Guard,
2004.
Compass
Port
Application
for
Deepwater
Port
License,
Docket
No.
USCG­
2004­
17659,
March,
2004.

5.
U.
S.
Coast
Guard,
2004.
Deepwater
Port
License
Application
for
the
Main
Pass
Energy
Project,
Docket
No.
USCG­
2004­
17696,
February
2004.

6.
Hatch
Associates.
Draft
Offshore
and
Coastal
Oil
and
Gas
Extraction
Facilities
Seawater
Intake
Structure
Modification
Cost
Estimate:
Caisson
and
Simple
Pipe.
March
12,
2004.

7.
Memorandum
from
Carey
Johnston,
USEPA/
OW/
OST
to
David
Moses,
USDOE/
OFE.
"
CWA
316(
b)

Phase
III
Rulemaking
Data
Needs
for
LNG
Import
Terminals
­
Attachment",
March
24,
2004
8.
Telephone
conversation
between
Ms.
Linda
Cook,
Johnson
Screens
and
Mark
Briggs,
ERG.
May
18,
2004.

9.
Hatch
Associates,
Draft
Offshore
and
Coastal
Oil
and
Gas
Extraction
Facilities
Seawater
Intake
Structure
Modification
Cost
Estimate:
Mobile
Offshore
Drilling
Units
(
MODUs).
March
12,
2004.

10.
Foster
Wheeler
USA
Corp,
LNG
Vaporizer
Options
Study
for
ConocoPhillips
Compass
Port
GBS
LNG
Receiving
Terminal,
First
Draft.
October
25,
2003.
