Licensor Technology Selection

By Jerry Lacatena

Proper refinery or process facility planning often necessitates the use of third-party licensed technology to enhance the client’s project objectives, which typically target optimized performance, safe and reliable operation, and maximized profitability. Most selections are typically handled as separate technical and commercial evaluations by experienced staff proficient in that area.

It is essential to have the plan in place when starting to determine what licensed technology should be utilized in specific applications, which would likely be after initial configuration planning studies are conducted. As such, primary process requirements, basic project data, and economic information are presumed to be readily available. This overview endeavors to discuss a fundamental approach that can be applied to technology selection activities. A technology selection plan typically may consider:

The licensor inquiry should include the design basis tailored to the type of processing technology of interest and timeline available for selection, recognizing that the more information that is asked for, the more time will be required by providers to supply and eventually to assess. Below are some typical questions and considerations only for illustration:

Follow-up dialogue and meetings with licensors can prove beneficial after receipt of their proposal to resolve outstanding questions, obtain missing information, and to better understand licensor claims indicating special advantages that set their technology above the competition.

In addition to capital cost and operating expenses, commercial interests also include the cost of engineering the technology package, any license fees/royalties, and other commercial terms. It would be beneficial to understand the provider’s position on performance guarantees, which are usually set later at the time of contract. Guarantees are frequently considered of greater interest in less conventional applications, assuming specific liabilities are established upfront and a performance test run can be performed with a baseline feed.

If the overall selection process reveals that technical and economic comparisons are close on an overall basis, the ability of the technology provider to respond in a timely manner, flexibility to accommodate the owner’s and/or contractor’s work process, and to deliver their package to meet overall project schedule should be considered.

A non-disclosure agreement may be necessary to get sufficient information to satisfy the inquiry, and as an option, the selection process may be performed by an unbiased independent party to ensure confidentiality of competing proprietary information. Carmagen has experts that can support the selection process and has done this for clients. The depth of screening can be influenced by the extent of criteria, importance of certain parameters to commercial project success, and of course the technology performance. Both technological and commercial areas need attention and are recommended to be explored prior to final technology selection negotiations.