Overview

Poten’s client, on behalf of investment funds and companies it or its affiliates manages and/or advises, is considering an equity investment in the Elba Liquefaction Project, currently being developed by Kinder Morgan at their Elba Island LNG import facility in Georgia, USA.

The Project involves modifying the existing Elba Island import facility for LNG liquefaction and export by installing ten 0.25 million metric tons per annum nameplate capacity liquefaction units at the site, together with their associated supporting utilities and infrastructure.  The Project will be applying Shell’s Moveable Modular Liquefaction System (“MMLS”), whereby the liquefaction trains are manufactured as modules in a workshop setting before being transported and installed at site, potentially enabling a shorter construction schedule compared to traditional large-scale LNG plants.

Poten is undertaking an independent technical due diligence review to assist in the client’s evaluation of the Project.  The review includes evaluation of the design and development plans for the LNG liquefaction facility to evaluate its technology, performance, construction, cost and schedule risks.

Our Approach

Poten is providing a “fatal flaw” type review that presents a high level technical evaluation of the Project.  The review seeks to identify any material technical risks with the overall infrastructure or facilities that may adversely affect the Project’s technical and economic viability, and thus be of concern to Investors.  Poten’s review will encompass the following elements of the Project:

• Feed gas inlet and pre-treatment facilities
• LNG liquefaction process
• Existing LNG storage tanks
• LNG loading facilities
• Marine infrastructure
• Power supplies
• Other LNG Plant utilities
• Liquefaction train manufacturing process
• Project site
• Construction support facilities
• Other onshore infrastructure

Poten’s role involves identifying and addressing material risks with the aim of identifying to the Client the mitigation measures needed.  Based on the analysis, Poten will comment on the likelihood that any aspect of the Project could constitute a fatal flaw and prevent the Project from being built and/or operated in accordance with the Client’s base case assumptions and financial model.  Poten will provide analysis and opinion in the following key areas:

• The capabilities of the principal Project participants, including technology providers and the EPC contractor selected to implement the Project
• The sufficiency of the concept, technology and design to meet the requirements of the Project
• Modular design, manufacturing, transportation and installation
• Project facilities, including the site, proposed layout, process, utilities and offsite facilities, and LNG storage, loading and marine facilities
• Project performance and reliability
• Expected LNG production capacity from the liquefaction trains
• The Project’s key financial model assumptions, including production capacity, capital cost, construction schedule and operating cost estimates
• Preliminary labor risk assessment (cost escalation risk, skilled labor availability, dispute risk, etc.)
• Project infrastructure and interfaces
• EPC/construction contracts and related protections such as LDs, performance guarantees and warranties
• Permitting and approvals, including current status and potential for delays
• Other areas that Poten considers material that the Client should be made aware of.