Why Do LNG Projects Cost so Much and Take so Long ? – A Root Cause Analysis

A major oil and gas company requested Independent Project Analysis (IPA) to examine the drivers of cost and schedule performance of recent liquefied natural gas (LNG) projects.

A detailed database of LNG projects, which goes back more than 20 years and includes most of the major LNG investments around the globe to the present, allowed IPA to do a deep dive over this time period into the drivers of these changes to LNG project performance. The research study quantified the real growth to cost and schedule over time after controlling for project escalation, project size, complexity, project location, contracting strategy, choice of liquefaction technology, and construction technique.

The value of the study was to separate the technical and other inherent drivers of cost and schedule from the practices employed by the project teams, which help explain the root causes of the growth in costs and lengthening of schedules. This benefited the client by providing insight into the controllable factors that represented the key lessons learned that can be applied to future LNG projects.