IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

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

  • Sönmez, Erkut
  • Kekre, Sunder
  • Scheller-Wolf, Alan
  • Secomandi, Nicola
Registered author(s):

    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.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: http://www.sciencedirect.com/science/article/pii/S0377221712008077
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Article provided by Elsevier in its journal European Journal of Operational Research.

    Volume (Year): 226 (2013)
    Issue (Month): 1 ()
    Pages: 100-114

    as
    in new window

    Handle: RePEc:eee:ejores:v:226:y:2013:i:1:p:100-114
    Contact details of provider: Web page: http://www.elsevier.com/locate/eor

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

    as in new window
    1. Achal Bassamboo & J. Michael Harrison & Assaf Zeevi, 2009. "Pointwise Stationary Fluid Models for Stochastic Processing Networks," Manufacturing & Service Operations Management, INFORMS, vol. 11(1), pages 70-89, August.
    2. James T. Jensen, 2003. "The LNG Revolution," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 1-45.
    3. Ronen, David, 1993. "Ship scheduling: The last decade," European Journal of Operational Research, Elsevier, vol. 71(3), pages 325-333, December.
    4. Francesca Gino & Gary Pisano, 2008. "Toward a Theory of Behavioral Operations," Manufacturing & Service Operations Management, INFORMS, vol. 10(4), pages 676-691, March.
    5. Ozelkan, Ertunga C. & D'Ambrosio, Alfred & Teng, S. Gary, 2008. "Optimizing liquefied natural gas terminal design for effective supply-chain operations," International Journal of Production Economics, Elsevier, vol. 111(2), pages 529-542, February.
    6. Schütz, Peter & Tomasgard, Asgeir & Ahmed, Shabbir, 2009. "Supply chain design under uncertainty using sample average approximation and dual decomposition," European Journal of Operational Research, Elsevier, vol. 199(2), pages 409-419, December.
    7. Chamorro Gómez, José Manuel & Abadie, Luis M., 2006. "Monte Carlo Valuation of natural gas investments," IKERLANAK 2006-25, Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I.
    8. Yepes Rodri­guez, Ramón, 2008. "Real option valuation of free destination in long-term liquefied natural gas supplies," Energy Economics, Elsevier, vol. 30(4), pages 1909-1932, July.
    9. Marshall Fisher, 2007. "Strengthening the Empirical Base of Operations Management," Manufacturing & Service Operations Management, INFORMS, vol. 9(4), pages 368-382, December.
    10. Geman, Hélyette, 2005. "Commodities and commodity derivatives : modeling and pricing for agriculturals, metals and energy," Economics Papers from University Paris Dauphine 123456789/607, Paris Dauphine University.
    11. Henn, Vincent & Ottomanelli, Michele, 2006. "Handling uncertainty in route choice models: From probabilistic to possibilistic approaches," European Journal of Operational Research, Elsevier, vol. 175(3), pages 1526-1538, December.
    12. Ronen, David, 1983. "Cargo ships routing and scheduling: Survey of models and problems," European Journal of Operational Research, Elsevier, vol. 12(2), pages 119-126, February.
    13. E. J. Durrer & G. E. Slater, 1977. "Optimization of Petroleum and Natural Gas Production--A Survey," Management Science, INFORMS, vol. 24(1), pages 35-43, September.
    14. Arnoldo C. Hax & Nicolas S. Majluf & Mark Pendrock, 1980. "Diagnostic Analysis of a Production and Distribution System," Management Science, INFORMS, vol. 26(9), pages 871-889, September.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:eee:ejores:v:226:y:2013:i:1:p:100-114. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.