An integrated process for air separation and liquefaction of natural gas was presented，and based on such an original idea a novel combinedcycle using nitrogen expansion refrigeration unit and producing LNG in addition to nitrogen and oxygen was proposedProcess simulation and second law analysis were performed to reveal the influence of flow rate ratio through expandersβon heat transfer temperature difference and consequent exergy loss，and thus the optimalβunder different operation conditions was obtainedHence，the change of temperature difference distribution and exergy loss in the heat exchanger could be investigated conveniently and effectively through the principle of exergy analysis in combination with energy composite curvesSuch information is valuable for optimal design of practical cryogenic systems.