Merlin’s Services

Merlin Advisors provides project feasibility, capital cost estimating, benchmarking, owner’s engineering, investor and lender due diligence and technology assessments. Together, Poten & Partners and Merlin Advisors have an unparalleled depth and breadth of experience across all facets of the LNG business, including market fundamentals, commercial strategy, shipping, and technology and engineering.

A list of Merlin’s core strengths and services are listed below. Please expand each item for additional details.

Technology Evaluation

Merlin Advisors provides technical consulting services across the full spectrum of energy production, transmission and end-user industries. Merlin has developed a massive database through work performed for technology licensors, project developers and project finance institutions. We have a broad and detailed database covering the most LNG process technologies.

Merlin has provided process engineering and cost estimating benchmarking studies for all the major LNG liquefaction licensors as part of their ongoing optimization efforts.

Merlin has utilized and supplemented this proprietary database in project finance support for existing and on-going LNG projects.

The most detailed work involves developing a fully-detailed process simulation for a proposed project for each of the process technologies of interest with capital cost estimates.

At the other extreme, we provide energy and material balances for the envelope around the liquefaction unit, developing only enough information to specify major equipment components to be used for more detailed cost estimates.

These efforts can support project development or simply provide an often needed and strategic “independent” review.

Project Feasibility and Economics 

Merlin Advisors assists project equity and financing participants in evaluating project viability. The analysis and results are tailored to client needs. The most common first step is to develop a preliminary Basis of Design for the specific project being evaluated. Merlin LNG Capital Cost Estimate ModelsTM are fundamental to establishing the preliminary Basis of Design and to preparing an initial cost estimate.

A series of agreed sensitivity tests are then undertaken to optimize the Basis of Design. Sensitivity options include:

  • Greenfield or expansion project;
  • Liquefaction technology;
  • Refrigerant compressor drivers;
  • Power generation;
  • Cooling systems;
  • Storage tanks forLNG and liquids;
  • Liquids extraction facilities;
  • Marine facilities;
  • Labor costs and productivity; and
  • Make up of project team.

These sensitivity studies are conducted quickly and are used to develop an optimized Basis of Design or set of BODs that cover the full range of anticipated project requirements. 

Project Due Diligence 

LNG projects are extremely capital intensive; requiring a very long period of capital expenditure during the design, procurement and construction phases before there is any income. Due to size and complexity, they are almost always multi-participant ventures. Since the large investment exceeds the internal funding capabilities of all but the very largest oil companies, it is very common for ventures to turn to project financing.

The main source of comfort to investing or financing participants are project’s firm long-term Sales and Purchase Agreements. But these alone are not adequate. The producer must be able to meet its sales commitment with agreed upon quality LNG and the buyer must be able to pay for the product. In between, the shipping arrangements must be able to deliver the product in an expeditious and reliable manner. The loan’s only collateral value is essentially the sales revenue generated after the plant begins operation.

  • Technical due diligence assesses the likelihood of an on-time project start-up as well as its subsequent reliability and production capability, which is of particular interest when new technologies are being introduced;
  • Merlin’s LNG ShippingTM model evaluates the adequacy of transportation arrangements; and
  • Our commercial knowledge can assess the quality of contract terms in the Sales and Purchase Agreements and the ability of the buyer(s) to perform.

This is an invaluable service for the financial community and venture shareholders. Merlin is happy to present conclusions in your offices.

Capital Cost Estimation 

Merlin Advisors has a large, detailed database of existing LNG project costs, including actual purchase orders and sub-contract costs. This extensive database provides critical inputs for Merlin’s proprietary LNG Capital Cost Estimate ModelsTM for the entire LNG supply chain, including:

 

  • LNG Capital/OperatingTM;
  • LNG ShippingTM;
  • LNG Import Terminal; and
  • Power Generation.

The Merlin LNG Capital Cost Estimate ModelsTM database includes actual LNG-specific cost data for liquefaction trains ranging in size from as small as 2.5 MMt/y to as large as 6 MMt/y. It includes actual equipment lists for all projects in the database.

  • For train sizes not represented, costs are interpolated between the next smaller and the next larger ones. Given the relatively small increments between train sizes in the database, this methodology has proved to be highly accurate.
  • Actual equipment costs are updated quarterly to a new basis year using industry cost escalation indices, to reflect inflationary cost increases for oil and gas equipment and materials.
  • Site-specific labor rates and productivities are from Merlin’s database supplemented by industry construction labor cost data.

The project-specific input for the Merlin ModelsTM is developed in a short time period allowing a high accuracy cost estimate to be provided quickly and cost effectively.

Benchmarking

Merlin Advisors provides technical consulting services across the full spectrum of energy production, transmission and end-user industries. Merlin has developed a massive database through work performed for technology licensors, project developers and project finance institutions. We have a broad and detailed database covering the most LNG process technologies.

Merlin has provided process engineering and cost estimating benchmarking studies for all the major LNG liquefaction licensors as part of their ongoing optimization efforts.

Merlin has utilized and supplemented this proprietary database in project finance support for existing and on-going LNG projects.

The most detailed work involves developing a fully-detailed process simulation for a proposed project for each of the process technologies of interest with capital cost estimates.

At the other extreme, we provide energy and material balances for the envelope around the liquefaction unit, developing only enough information to specify major equipment components to be used for more detailed cost estimates.

These efforts can support project development or simply provide an often needed and strategic “independent” review.

I am text block. Click edit button to change this text. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.