Strategic analysis of technology and capacity investments in the liquefied natural gas industry

Erkut Sönmez, Sunder Kekre, Alan Scheller-Wolf and Nicola Secomandi

European Journal of Operational Research, 2013, vol. 226, issue 1, 100-114

Abstract: Energy plays a fundamental role in both manufacturing and services, and natural gas is rapidly becoming a key energy source worldwide. Facilitating this emergence is an expanding network of ocean-going vessels that enable the matching of natural gas supply and demand on a global scale. This is achieved through the transportation of liquefied natural gas (LNG) for eventual regasification at its destination. Until very recently, only one type of technology had been available for transporting and regasifying LNG: Conventional LNG vessels coupled with land based LNG regasification. But it is now possible to transport and regasify LNG onboard special LNG vessels. Companies such as Excelerate Energy and Höegh LNG are currently developing LNG supply chains based on this new technology. Motivated by these developments, we engaged executives at Excelerate Energy to facilitate an investigation of issues related to strategic technology selection, as well as choices around technology configuration and capacity for the incumbent and emerging technologies. The resulting analysis brings to light managerial principles delineating the impact of alternative LNG throughput models on decisions regarding how to deploy each technology option and how to configure and size their capacity. Our findings have additional potential relevance beyond our industry specific analysis.

Keywords: OR in strategic planning; OR in energy; Technology selection; Capacity choice (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:226:y:2013:i:1:p:100-114

DOI: 10.1016/j.ejor.2012.10.042

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