Review on Economical Efficiency of Lng Cold Energy Use in South Korea

About 10 years ago, Korea Gas Corporation (KOGAS) carried out a feasibility study on businesses using Liquefied Natural Gas (LNG) for cold power generation, air separation, cryogenic crushing, frozen food storage, and carbonic acid. Recently, an air liquefaction plant started operations near Pyungtaek Receiving Terminal (R/T) and a cryogenic crushing plant is now partially operating near Tongyoung R/T. However, although the business of air separation has already been industrialized, the problem of increasing the amount of gas sales remains. It has been revealed that there is more increased demand in the gas-phase market than the liquid-phase market, and that there exists a different demand pattern between the air separation plant and the LNG plant. Accordingly, the final object of this study is to establish a comprehensive business plan on the use of LNG cold energy in which all situations in South Korea are taken into consideration. Here, this report deals mainly with the economical efficiency of LNG cold energy use in South Korea based on several previously published reports. First, we performed an exergy analysis on the process of LNG receiving terminals and obtained the amounts of exergy available in the present process. From the results, the cold power generation plant was investigated using the Osaka process and the Linde process among four known processes. Economical efficiency was then analyzed by the revenue requirement method and the internal rate of return method. The total cost consisted of return on equity, return on debt, book depreciation, fuel costs, operating & maintenance costs, insurance fees, and so forth. Although their payback periods were thought to be 11.7 years for the Osaka process and 4.2 years for the Linde process according to a KOPEC report in 1989, in actuality, their payback periods were 18.6 years and 17.5 years, respectively, from the results of this study. The air separation plant using 50 T/H of LNG was examined with the rated capacity to produce oxygen, nitrogen, and argon. Its payback period was found to be 5 years from an HDE report in 1996. However, this study revealed that the actual payback period was 14.6 years due to the fact that the liquid-phase market share, which once stood at 80 percent, decreased to 20 percent, and that the plant barely operates during summer due to the Boil-Off Gas (BOG) treatment of receiving terminals. The cryogenic crushing plant is no longer operating under cryogenic conditions but normal temperature. The Ministry of Commerce, Industry and Energy in a report in 2000 stated the payback period to be 3.1 years. But the prospect is not clear due to small market share in South Korea. It may depend on the development of the overseas market which is a larger market than that in Korea. The payback periods of the frozen food storage and carbon acid plants were 7.1 years and 6.6 years, respectively, from the HDE report. Although this work is ongoing, KOGAS has reached certain conclusions, such as the amounts and priority of capital investment. However, some unclear points on the cost and technologies of LNG cold facilities still remain. In the near future, KOGAS will investigate these matters in detail in order to update economical efficiency and establish a new plan on the industrialization of LNG cold facilities.