LNG Storage Tank Cost Analysis

BASIS OF ESTIMATEInterior Gas Utility Fairbanks Gas Distribution Advancement Project Task 3: LNG Storage Tank Cost Analysis July 19, 2013 Michael Baker Jr., Inc. 1400 W. Benson Blvd., Suite 200 Anchorage, AK 99503 907.273.1600 DC-2 Page 1 of 18 Date 0 7/15/13 1 7/19/13 Comments Prepared by: Checked by: Approved by: Draft VDF KRH DMC Rev 01 VDF KRH DMC July 19. 2013 – Interior Gas Utility – LNG Storage Tank Cost Analysis ii DC-2 Page 2 of 18 .BASIS OF ESTIMATE Rev. ......... 1 METHODOLOGY .......................................................................................................................... 1 COST BASIS ..........................................................................................BASIS OF ESTIMATE TABLE OF CONTENTS INTRODUCTION .................................................... 10 COST SUMMARY ..................... 13 CONTINGENCY .................................. 13 QUALITY ASSURANCE ........................... 14 REFERENCES ......................................................... 6 DEVELOPMENT SCHEDULE ................................. 1 PROJECT SCOPE ......................... 2013 – Interior Gas Utility – LNG Storage Tank Cost Analysis iii DC-2 Page 3 of 18 ......... 2 DEMAND VS..................................................................................................... 11 ASSUMPTIONS & DESCRIPTION OF WORK ................................................ 14 July 19...................................................................... REQUIREMENTS ANALYSIS .......................................... cost and number of tanks and idle truck trailers in summer. Estimates encompass the complete scope of work for a project. if required. The project team members that contributed to the estimate development are shown in Table 1. Estimates are a key input to economic analysis to aid decision making at Capital stage gates and are developed throughout the project lifecycle. Develop a model that incorporates the size. Determine the monthly variation of energy consumption for residential and commercial gas users in the Fairbanks area through a statistically significant sample. associated truck offloading facilities and the estimated capital cost for an LNG truck fleet. This cost estimate reports on the total installed costs (TIC) for estimated supply and construction costs for an operationally suitable LNG tank. this is defined as a Class 5 estimate. The Association for the Advancement of Cost Engineering (AACE) classifies estimates by their accuracy and level of detail. Task 3 includes the following: 1.E. Vince Fernandez Position/Role Affiliation Contact Info PM/Estimator QA MBJ 273-1629 Estimator MBJ 273-1665 PROJECT SCOPE The purpose of this estimate is to complete designated Task 3: LNG Storage Tank Cost Analysis. for example a concept screening study or to evaluate feasibility. This task is a component of the request from the Interior Gas Utility (IGU) for updates to the previously submitted cost model provided by NEI for truck-based supply of LNG facilities to be sited at or near North Pole. 2013 – Interior Gas Utility – LNG Storage Tank Cost Analysis 1 DC-2 Page 4 of 18 . Jr. For a project where design is 0-2% complete. LNG supply volumes will be trucked from Deadhorse. Estimates are prepared in Today’s Money (present costs) and later. METHODOLOGY At the time of estimate detailed design was not available. concept evaluation. Project Estimate Team PROJECT ESTIMATE TEAM Name Derek Christianson. an expected accuracy range of +50%/-30% can be assumed. and negotiations with third parties. which has been assigned to Michael Baker. Alaska. North Slope to the North Pole LNG facility. (Baker) by Northern Economics Incorporated (NEI). Inc. P. 2. escalated to Money-of-the-Day (future costs).BASIS OF ESTIMATE INTRODUCTION Total Installed Cost (TIC) estimates are developed for a number of reasons including: assessment of commercial opportunities. Table 1. Instead the design concept for this limited component of the larger scope LNG development project included: July 19. A separate cost estimate was developed for the fleet of LNG truck tankers that would be required to adequately service the LNG storage tank(s) based upon anticipated year-round demand. The remaining step was to develop order of magnitude capital cost (CAPEX) estimates that include supply and construction of the LNG storage tank. and (2) an alternate case that would approximate future peak storage capacity requirement of 30 million gallons. which is the principal cost driver. 2013 – Interior Gas Utility – LNG Storage Tank Cost Analysis 2 DC-2 Page 5 of 18 .5 million gallon capacity. For comparison purposes. as well as development of estimates for the truck unloading facilities and associated infrastructure for the LNG storage facility. Alaska  Phased storage capacity construction including an initial LNG tank to match current demand. Alaska area  Provision for LNG storage at a location within or near Fairbanks.BASIS OF ESTIMATE • Transportation of LNG by specially-built truck tankers from a North Slope gas liquefaction plant via existing surface roads on a seasonal. Thus a selection of the physical facility and rolling stock requirements were established through analysis of anticipated monthly demand data. potentially followed by increased LNG storage if/when demand increase over time develops  Associated ancillary facilities and infrastructure associated with the LNG storage tank(s)  Facilities for offloading LNG truck tankers into the LNG storage tank(s) The order of magnitude estimate approach was to take existing gas consumer demand data. including Heating Degree Day (HDD) and earlier conceptual parameters in order to establish a likely range of storage capacity and optimal number (and schedule) for the fleet of LNG truck tankers.0 million gallons July 19. costs for both Full Containment and Single Containment type LNG tanks were estimated.5 million gallons LNG Storage Tank – Alternate Peak Requirement Case A single LNG Storage Tank capable of meeting peak storage requirement with a capacity of 30. COST BASIS Through analysis of the available demand data. year round basis for delivery to the Fairbanks. Estimates were prepared for (1) the base case which assumed initial installation of a small LNG tank of 7. it was determined that the following were the base case facility and operational requirements: LNG Storage Tank – Base Case Initial Requirement A single LNG Storage Tank with a capacity of 7. civil site work and utility infrastructure Full Containment LNG Storage Tank – The estimate for the LNG tank is based upon a “Full Containment” type as the most conservative cost approach. and provisions to mitigate liquefaction during a seismic event 3.$15 million 25% of full Associated Balance of Plant containment tank Systems 3 cost 1. Full containment tanks are significantly more expensive vs. In addition. manufacturer and constructor of its own line of proprietary-engineered LNG storage tanks systems.5 million $60 million 1. permitting complications may be associated with siting a single containment LNG tank within a populated municipality. surcharging and related soil consolidation measures. Ground conditioning may be required for: subsurface ice/permafrost. walls and cover. For secondary containment a significant amount of land is required on site for the 100% diked containment that must be built and maintained to assure 100% capacity year round. Cost data was estimated from the data points and related factored facility costs as shown in Table 2. but mostly act as primary vapor containment.025 on labor component 44 million $135 million $5 . See description below for full containment and single containment tanks 2. Should client management select a single July 19. and has an outer tank wall of carbon steel. there could be a 38% to 50% cost reduction vs.BASIS OF ESTIMATE Supply and install cost estimates for LNG Storage Tanks were developed from historical total installed costs data points that were provided by a world-scale designer. The concrete outer tank provides primary vapor containment and the secure secondary liquid containment. Full containment LNG tanks are generally configured as: Inner open topped main tank of 9% Ni Steel and a secondary fully enclosed concrete tank bottom. Table 2. There would be mandatory modeling and testing of Vapor Dispersion and Thermal Dispersion and thermal affects studies for a spill event. 2013 – Interior Gas Utility – LNG Storage Tank Cost Analysis 3 DC-2 Page 6 of 18 . even though on the tank cost basis alone. Single Containment LNG Storage Tank – the estimate did not consider the use of single containment LNG configurations. The carbon steel wall does not afford secondary containment. nor do they usually have significant associated siting and permitting risks. Electrical and Structural systems. This cost savings is significantly offset by added infrastructure costs associated with meeting federal and state code requirements for 100% secondary containment. Single containment LNG tanks also have a main open top inner tank made of 9% Ni steel. full containment. Cost Data Points Description LNG Storage Tank – Full Containment 1 w/ cryo pumps LNG Storage Tank – Full Containment w/ cryo pumps LNG Tank Foundation – ground conditioning 2 Capacity (gallons) Cost Data Point Cost Factor 7. single containment LNG tanks but do not require added costs and land areas for external lined earthen dikes needed for regulatory requirement for secondary containment. To include Service Piping. the resulting order of magnitude cost.000 (Full Containment) Estimated 30.000 (Full Containment) Estimated 7. the cost of a berm-type secondary containment system must be added to the cost for a single containment tank. these added costs and risks would need to estimated and analyzed as offsets to the tank cost savings.750.500.0 million Gallon LNG Tank = $109.5 million gallon tank.000 (Single Containment) These costs include in-tank LNG pumps and boil-off gas compression system. are as follows: Estimated 7.983. July 19. As noted below.0 million Gallon LNG Tank = $54. 2013 – Interior Gas Utility – LNG Storage Tank Cost Analysis 4 DC-2 Page 7 of 18 .BASIS OF ESTIMATE containment LNG tank concept.5 million gallon LNG Tank = $30.000 (Single Containment) These costs include in-tank LNG pumps and boil-off gas compression system. LNG Tank Cost – Base Case Based upon the cost data point received for a 7. the resulting order of magnitude costs. after adjustment for union labor. LNG Tank Cost – Alternate Peak Case Based upon the cost data point received for a 44 million gallon tank. is as follows: Estimated 30. the cost of a berm-type secondary containment system must be added to the cost for a single containment tank. As noted below. after adjustment for union labor.5 million gallon LNG Tank = $61.966. This is understood to include LNG gasifier equipment.000 $2. liner costs and civil construction of the berm system. cooling circulation pumps. power distribution center.000 – 30. however a typical two station truck unloading layout was found in a recent study in the public domain.000 LNG Truck Tankers A total of 117 new specially-built LNG truck tankers with a nominal capacity of 10.000 This is for a specially-built truck with a strengthened chassis.5 million gallon tank Berm System Cost = $6. trailer and breaking systems.0 million gallon tank Associated Balance of Plant Systems The firm that provided the LNG Tank cost data points normally estimates Balance of Plant (BOP) Systems at 25% of the full containment tank cost. select gravel fill for berms.800.492.5 million gallon tank – Single Containment Estimated BOP Systems = $27.000 – 30.BASIS OF ESTIMATE Secondary Containment for Single Containment LNG Tanks Separate estimates were developed for installation of the required secondary containment lined berm system that will be mandatory for the optional Single Containment LNG Tanks.300. cooling/auxiliary skid.000 – 7. plant control system.000 – 7. control building. plant firewater systems. yard piping.000 – 30.500 gallons of LNG are required to meet the anticipated demand. The cost estimates were developed based upon estimates of secondary containment volumes. July 19.492.375. odorant storage and injection skid. and with the capability to operate on the Dalton Highway and fueled on natural gas derived from storage tank boil off. Estimated Unit Cost per truck = $400.200.000 $5.620. The estimated secondary containment berm system estimates are as follows: Berm System Cost = $2. The equipment layout included an LNG Fueling Skid. expansion tanks. an order of magnitude estimate value was applied as follows: Materials and freight Construction and testing Total $3.5 million gallon tank – Full Containment Estimated BOP Systems = $15. Based upon the estimator’s previous experience in estimating these facilities. and fueling vapor recovery system. plant electrical and instrumentation systems. 2013 – Interior Gas Utility – LNG Storage Tank Cost Analysis 5 DC-2 Page 8 of 18 .500. Metering Skid.060.0 million gallon tank – Single Containment Truck Unloading Rack/Facility At the time of estimate detailed design was not available for the truck unloading facility.000 – 7.0 million gallon tank – Full Containment Estimated BOP Systems = $27. cooling fin fans.375. flare system. etc. Estimated BOP Systems = $15.000 Total Capital Cost for 117 trucks = $46. site grading. BASIS OF ESTIMATE DEMAND vs. Monthly Demand The annual demand was then converted to a monthly demand with the distribution based on the monthly degree days at the Fairbanks Airport (http://www.000 15. Monthly Demand Distribution Days per Average Month Month HDD Demand (Gal LNG) Gal LNG with Gal LNG with 10 Days Reserve 42 Days Reserve Jan 31 2.000 1.000 Apr 30 1.400.edu/cgibin/cliMONthdd.200. 2013 – Interior Gas Utility – LNG Storage Tank Cost Analysis 6 DC-2 Page 9 of 18 .000 6.400.000 Sep 30 594 5.600.200.700.wrcc.000 29.8 billion cubic feet (bcf) of natural gas (Northern Economics Incorporated.000 Oct 31 1.000 Totals - 13.pl?ak2968).000 5.400.229 20.000.000 3.000 Jun 30 168 1.400.000 7.700.700.000 Mar 31 1.000 6.000 - - July 19.700. June 2012) and converted to 130 million gallons of LNG at a conversion rate of 12 million gallons/bcf.dri.000 13.800.703 15. Two tanks were sized to provide a range of reserve capacity covering potential scenarios.000 400.700.100. Table 3.600. Next. The second scenario provided 42 days of reserve volume and requires a 30 million gallon tank.000 5.500.000 7.860 17.800. REQUIREMENTS ANALYSIS Annual Demand Estimated annual and monthly demand was evaluated to determine the number of trucks required to meet peak demand.000 26. The annual demand for the Fairbanks North Star Borough was estimated at 10.000 500.500. storage tank sizing was determined based on an estimated minimum reserve volume capable of meeting demand for a given number of days during the peak demand month of January.800.500.000 3.000.200.000 28.100.936 130.500.000 May 31 501 4.500.000 24.5 million gallon tank was used as the estimating value).0 million gallon tank (a 7.000 2.000 1.400.900.000 1.000 800.400.100.009 9.700.800.912 17.327 21.700.000 21.000 Aug 31 269 2.400.000 Feb 28 1.000 Nov 30 1. Table 3 shows the monthly demand distribution values. The first scenario provided 10 days of reserve volume and requires a 7.246 11.000 3.000 Dec 31 2.000 6.000 Jul 31 118 1. 000 miles Avg Speed: 30 mph Fbks->Prudhoe Roundtrip Time: 33 hours Load/Unload Time: 8 hours Cycle Time/Truck: 41 hours Round Trips/Day/Truck: 0. Figures 1 and 2 provide examples of the mass-balance graph and data for approach 1 and 2. The second approach indicates 117 trucks are required and this value was used for estimating costs.59 each Volume/Day/Truck: 6. Table 4. while the second calculated the number of trucks required to meet the greatest reserve demand value. Both approaches used a mass-balance calculation which summed the monthly demand and supply values to determine the net storage and resulting number of trucks required per month (it also accounts for the unused balance from the previous month). This volume per day per truck was calculated based on truck capacity and the cycle time per truck. Truck Capacity and Haul Values Item Value Truck Capacity: 10. 2013 – Interior Gas Utility – LNG Storage Tank Cost Analysis 7 DC-2 Page 10 of 18 . July 19.500 Gal Fbks->Prudhoe Roundtrip Dist: 1. The difference in the two approaches is that the first calculated the number of trucks required to meet the minimum monthly reserve value.100 gallons. for the 7.5 million gallon tank scenario. Table 4 shows the values used to estimate truck capacity.100 Gal Trucks Required Two approaches were taken to estimate the number of trucks required. The first approach requires a greater number of trucks and was therefore not used for estimating costs. Another way of comparing the approaches is that the first only fills the storage tank to meet the minimum monthly reserve whereas the second keeps the tank full. The estimated capacity per day per truck is estimated at 6.BASIS OF ESTIMATE Truck Capacity The estimated maximum number of trucks capable of providing the peak monthly reserve demand was then determined. respectively. 000.500.390 116 Dec-14 Nov-14 Oct-14 Aug-14 Jul-14 May-14 Apr-14 Jan-14 Oct-13 Aug-13 Jul-13 6.220 2.756 (1.000.000) (5.100.460.049 3.634 118 6.700.000) Nov-15 Net Mar-15 14.415 Mar-16 934.900.800.943.873.400.000 30.562.659 16 7.561 Jun-15 22.293 Apr-16 2.000) (17. Trucks 5 16 35 Feb-14 Dec-13 Nov-13 Sep-13 12 Mar-14 Trucks/Day 72 Jun-14 105 2.512 150 934.400.756 560.060.991.293 Demand 16 900.244 Oct-15 21.349. Mass-Balance as Required to Meet Monthly Reserve 8 DC-2 Page 11 of 18 .780 6.012.000.000) (1.000.000) G a l l o n s 20.629.500.000) (5.991.000) (2.000) Jun-16 Demand May-16 Supply BASIS OF ESTIMATE Figure 1.171 Sep-15 643.582.854 Trucks/Day Net Supply 35 1.000) (20.195 Jul-15 17.000) (17.991.220 1.478.103.543.171 Apr-15 2.700.543.220 (9.600.686.000) (20.000) (1. 2013 – Interior Gas Utility – LNG Storage Tank Cost Analysis (30.000) (21.000) (4.243.500.000) (15.488 2.049 Feb-15 3.390 78 6.000) (2.800.322.195 91 7.415 Sep-14 Jan-15 (150) (100) (50) - 50 D a y P e r T r u c k s 5 3 100 409.000.600.439 40 5.390 Aug-15 478.268 574.000 118 Jun-13 Max No.244.- 10.012.878 Dec-15 13.488 Feb-16 6.000) (1.341 Jan-16 19.500.600.989.000) L N G (10.100.000.613.000 July 19.000) (11.683 May-15 969. 800.000) (5.600. Trucks 5 14 29 Feb-14 Dec-13 Sep-13 47 Mar-14 Trucks /Da y 63 Jun-14 93 7.500.366 Aug-15 7.756 Feb-15 7.293 Oct-15 20.300.000.561 Trucks/Day Net Supply 30 7.756 Mar-16 Jan-14 8.486.873.700.244 24 9.585 Feb-16 2.512 7.707 1.608.707 Nov-13 Net Dec-13 Dec-14 15.585 Nov-15 17.176.777.617.069.829 7.000) G a l l o n s 20.927 Dec-15 5.400.707 Feb-14 (1.751.854 Jul-15 17.347.000) (2.000) (5.035.000) (20.800.415 50 7.238.386.000) (17.317 Mar-15 May-14 Apr-16 934. 2013 – Interior Gas Utility – LNG Storage Tank Cost Analysis (30.248.000.000 May-15 7.890.634 117 111 Nov-14 Oct-14 Aug-14 Jul-14 May-14 Apr-14 Jan-14 Nov-13 Oct-13 Aug-13 Jul-13 7.138. Mass-Balance as Required to Maintain a Full Tank 9 DC-2 Page 12 of 18 .000) (4.463 Apr-15 Apr-14 Jan-16 11.117.021.000) (1.100.000.178.682.900.366 Jun-15 21.000) (1.000) (2.463 Sep-14 7.000) L N G (10.805 150 1.Oct-13 Sep-13 Aug-13 Jul-13 Jun-13 - 10.000.366 (9.854 85 95 6 9 (150) (100) (50) - 50 100 D a y P e r T r u c k s 7.000) Mar-14 Dema nd May-16 Suppl y Jun-16 Month BASIS OF ESTIMATE Figure 2.060.780 Sep-15 7.000) (20.000 117 Jun-13 Max No.537 Demand 13 7.600.310.100.293 Jan-15 Sep-14 Aug-14 Jul-14 Jun-14 4.878 2.500.000 July 19.000) (17.224.700.186.000) (15.786.760.139.341 7.430.400.600.415 5.000 30.000) (11.121.421.500.000.000) 7.000) (1.561 7.000.349.500.000) (21. Environmental Studies & Permitting 12 mos. 7. and construct the tank and ancillary features was developed. 30 MGal Tank Preliminary Schedule Task Duration 2016 2017 2018 Preliminary and Detailed Engineering 12 mos. Figure 3 shows the schedule for the 7. 7. 2013 – Interior Gas Utility – LNG Storage Tank Cost Analysis 10 DC-2 Page 13 of 18 . permit.BASIS OF ESTIMATE DEVELOPMENT SCHEDULE A preliminary high level schedule to design.5 MGL Tank & Site Construction 30 mos. Bidding & Source Selection 3 mos. Figure 4. Figure 3. Engineering and Permitting efforts were estimated to have 12 month concurrent duration. The schedule assumes the engineering and permitting activities will begin in early 2016.5 MGal Tank Preliminary Schedule Task Duration 2016 2017 2018 2019 2020 2021 2019 2020 2021 Preliminary and Detailed Engineering 12 mos.5 million gallon tank and 42 months for the 30 million gallon tank. Construction is estimated to be complete by the end of 2019. Bidding & Source Selection 3 mos. Environmental Studies & Permitting 12 mos. Procurement was estimated to have a 3 month duration. 30 MGL Tank & Site Construction 42 mos. and Construction was estimated to have a 30 month duration for the 7.5 million gallon tank and Figure 4 shows the schedule for the 30 million gallon tank. July 19. 500.900.000 Contingency @ 20% $26.000 LNG Tank Foundation – ground conditioning lot $5.000 Base Case: Initial 7.100.700.000 Total Cost Range (+50% to -30%) $241.800.500. 2013 – Interior Gas Utility – LNG Storage Tank Cost Analysis 11 DC-2 Page 14 of 18 .000 Subtotal $106.500.000.000 Truck Unloading Rack/Facility lot $5.5 million gallon LNG Tank with Truck Unloading Facility and LNG Truck Tanker Capital Cost – Full Containment Description Quantity Cost Estimate LNG Storage Tank – Full Containment w/ cryo pumps 1 $61.750.000 LNG Truck Tankers 117 $46.000 LNG Truck Tankers 117 $46.835.5 million gallon LNG Tank with Truck Unloading Facility and LNG Truck Tanker Capital Cost – Single Containment Description Quantity Cost Estimate LNG Storage Tank – Full Containment w/ cryo pumps 1 $30.BASIS OF ESTIMATE COST SUMMARY Base Case: Initial 7.000 July 19.000 to $89.000 Associated Balance of Plant Systems lot $15.045.375.620.500.209.000 Truck Unloading Rack/Facility lot $5.800.175.000 Associated Balance of Plant Systems lot $15.000 Subtotal $134.000 to $112.000.000 LNG Tank Foundation – ground conditioning lot $5.000 Contingency @ 20% $21.375.000 Total Cost Range (+50% to -30%) $190.000 Berm System lot $2. 000 Alternate Case: Initial 30.166.060.000 to $163.600.000 July 19.600.952.492.0 million gallon peak LNG Tank with Truck Unloading Facility and LNG Truck Tanker Capital Cost – Single Containment Description Quantity Cost Estimate LNG Storage Tank – Full Containment w/ cryo pumps 1 $54.000.000 Contingency @ 20% $29.800.000 to $122.000 LNG Truck Tankers 117 $46.500.0 million gallon peak LNG Tank with Truck Unloading Facility and LNG Truck Tanker Capital Cost – Full Containment Description Quantity Cost Estimate LNG Storage Tank – Full Containment w/ cryo pumps 1 $109.800. 2013 – Interior Gas Utility – LNG Storage Tank Cost Analysis 12 DC-2 Page 15 of 18 .835.000 Associated Balance of Plant Systems lot $27.000 Subtotal $194.000 Contingency @ 20% $38.500.000.983.000 Truck Unloading Rack/Facility lot $5.492.000 LNG Tank Foundation – ground conditioning lot $5.000 Associated Balance of Plant Systems lot $27.500.758.000 Truck Unloading Rack/Facility lot $5.000 Subtotal $145.000 Total Cost Range (+50% to -30%) $350.000 LNG Tank Foundation – ground conditioning lot $5.966.BASIS OF ESTIMATE Alternate Case: 30.900 Total Cost Range (+50% to -30%) $262.000 LNG Truck Tankers 117 $46.000 Berm System lot $6.500. For the estimates an uplift factor of 1. Adequate funding available for this project. Engineering. Adequate labor supply and life support resources will be available during the development and construction project phases. 3. 6. procurement. 13. 8. 2013 – Interior Gas Utility – LNG Storage Tank Cost Analysis 13 DC-2 Page 16 of 18 . and the anticipated mandatory winter shutdowns. No significant additional facilities or infrastructure will be required from eventually secured construction and operating permits. All materials and equipment will be on the construction site as scheduled. The firm further indicated that the 7. 12.BASIS OF ESTIMATE ASSUMPTIONS & DESCRIPTION OF WORK The following are the assumptions that were applied to the order of magnitude: 1. 11. Estimated costs are based on factored or interpolated costs from prior construction activities. 2. Contractor markup and profit is included in factored price per linear foot for installation. 7.025 has been applied for the final cost estimate in order to account for the labor component of the total cost that is associated with interior Alaska construction productivity and union labor. Therefore for the Fairbanks/North Pole site. it is anticipated that tank construction could be extended by approximately 6 – 12 months. as well as unforeseeable elements of cost within the defined project scope. The data points for LNG tank costs are based upon Lower 48 construction cost using open shop (non-union) labor. All onsite craft labor will be union labor dispatched by local Anchorage or Fairbanks union halls. this firm provided the cost data points noted. 9. CONTINGENCY The contingency calculation is used to cover the uncertainty and variability associated with a cost estimate. including the initial engineering. 5. 15. and freight costs are included in the order of magnitude estimated costs. Cost of land for siting the LNG Tank and related plant systems is not included in this estimate. 4. Weather delay costs are not included. Specialty craft such as Boilermakers and Millwrights may be dispatched from lower 48 jurisdictions. Owner’s Program/Project Management costs are not included. The July 19. A 44 million gallon tank typically has a 36 month duration. permitting. All costs are based on 2013 dollars. This firm is a large corporate entity that is known for its world-scale energy engineered equipment and infrastructure products.5 million gallon LNG tank typically has a 24 month field erection duration on Lower 48 sites. A long established and successful designer/manufacturer/constructor firm was consulted for assistance with the LNG cost data points used in this estimate. Based upon considerable discussion regarding current parameters. 10. 14. estimating methods.g. etc. weather delays. The “Project References and Attachments Log” below includes all major documents associated with the estimate including. the basis of estimate should contain a record of each of these documents. reviewed the estimate to verify that it employs the appropriate. the Baker Chief Engineer communicates the need to correct or improve the estimates to the Baker Cost Estimating Function Lead/Project Manager. technical documents. per Residential Unit July 19. The contingency level used for this estimate is +20%. etc.). methodologies. and estimating data. If the estimate is insufficient or the exclusions are not acceptable. and unforeseen major events such as earthquakes. but not limited to: any design drawings or technical documents (e. Since these documents ultimately form the basis for the resulting estimated cost. the Baker QA lead communicates acceptance of the estimate to the Baker Cost Estimating Function Lead/Project Manager. prolonged labor strikes. Contingency specifically excludes changes in project scope. project review meeting minutes. QUALITY ASSURANCE The Baker estimate Quality Assurance lead. in consultation with the Baker Project Estimating Team members. inadequacies in complete project scope definition. All project plans. 2013 – Interior Gas Utility – LNG Storage Tank Cost Analysis Date Issued 5/3/2013 14 DC-2 Page 17 of 18 . The amount of contingency is based on the AACE estimate class 5. copies of important correspondences. reviewed and referenced during the development of the estimate. Isometrics. and drawings should be itemized and accurately described in the appropriate section of the basis of estimate. etc.BASIS OF ESTIMATE contingency costs cover field uncertainties. appropriate rates and factors and addresses the entire project scope and nothing beyond the approved scope. as well as all the review participants are documented below in the “Project Estimate Review Log”. P&IDs. All reviews of the estimate. assumptions and exclusions. PROJECT ESTIMATE REVIEW LOG Estimate Reviewed by Derek Christianson Position/Role Affiliation Date QA MBJ 7/15/13 REFERENCES Many documents were collected. PROJECT REFERENCES & ATTACHMENTS LOG Document Title or Description Northern Economics Memorandum – Re: Projected Natural Gas Demand. If the estimate is reasonable and adequately addresses the project scope and requirements. LLC. Engineering Brief and Consultant Team Recommendations 4/23/2013 July 19. 2013 – Interior Gas Utility – LNG Storage Tank Cost Analysis 15 DC-2 Page 18 of 18 . LLC Liquefied Natural Gas Project. Vaporization Facility Project. Project Description 10/2013 Northern Economics Report – Fairbanks North Star Borough. Caribou North Pole. Gas Distribution System Analysis 6/29/2012 AIDEA Report: Interior Energy Plan: North Slope / Fairbanks LNG Project.BASIS OF ESTIMATE Northern Economics Memorandum – Re: Estimated Natural Gas Demand for NS LNG Project 6/21/2013 Caribou North Slope.