Right-sized LNG solutions

The opportunity for mid-scale LNG

Roland Fisher, CEO, Gasfin Development SA

19th April 2012

Gasfin introduction

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Gasfin: Right-sized LNG solutions

Gasfin and its subsidiaries have a unique track record in the design and delivery of mid-scale LNG plant

Designed and delivered the first mid-scale mixed use LNG carrier - Coral Methane, 7,500m3 (2009)

Designed and delivered the first mid-scale LNG liquefaction plant - Xinjiang, 400,000ktpa (2004)

Market leading provider of gas plant to 120+ cryogenic gas carriers

Designed and delivered 50+ LNG & petrochemical terminals

This document is being furnished on a confidential basis and the information contained herein may not be reproduced or provided to others without the prior written consent of Gasfin

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Gasfin controls the resources to design, finance, deliver and operate mid-scale LNG infrastructure: ….LNG at every step, in every size, on land or sea, across the globe.

Developing LNG projects requires technical expertise, equity capital and project management

Gasfin

• Dedicated multi-disciplinary project development team

• 50% shareholding TGE Marine

• 40% shareholding in TGE Gas

TGE Marine• Market leader in cryogenic

gas handling systems for ships and offshore units

Caledonia Investments• UK equity investor

• 49% TGE Marine

TGE Gas• Leading contractor for bulk storage of cryogenic gases

CIMC• World leading infrastructure

equipment manufacturer

• Majority shareholding in TGE Gas

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Small/Mid scale LNG requires combining disciplines from LNG and Pet-chem markets

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Required experience Rationale Gasfin / TGE

Designed & delivered : LNG receiving (Regas) terminals

Core activity for LNG importation

Designed & delivered: Mid-scale LNG production

Could offer supply alternative for LNG outside the oil major cartel

Designed & delivered: ‘Type C’ LNG cargo tanks

Only tank design able to withstand pressure build up from LNG storage

Designed & delivered: Floating cryogenic storage

Floating plants ideal for fast build, quick approval, and scarce land

Designed & delivered: Shallow draft gas carriers

Design critical for delivering LNG to shore in shallow waters

Turnkey, fixed price service, with full EPC bonding

Ensures risk for equipment performance remains with TGE/Gasfin

Integrated project developer and gas engineer

Improves design flexibility and accelerates project timeline

Mid-Scale today

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Liquefaction

• Small scale liquefaction common – eg >100 peak-shave plants in US

• Multiple mid-size liquefaction plants in China

• First mid-scale in 2004 -TGE’s 430ktpa plant, near Urumuchi, NW China,

• Choice of technologies for liquefaction – Chart, Linde, Air Products, Black & Veatch, all proven in operation

Mid-scale LNG works and is nothing new...

Shipping

• Small ships not new...1st LNG shipment on a 5,000m³ vessel, old ships of ~35,000m³ serve in Med

• Several 20,000m³ LNGCs in ‘international’ service –eg. Malaysia to Japan

• Japan & Norway pioneers of small ships – eg. vessels of 1,000m3 to 7,5000 m3

• Vessels fit world scale terminals but use safe, simple cylindrical tanks

Receiving and Consumption

• Distribution sites designed to receive cargoes from 5m3 up

• Commonest tanks for small terminals are Type’C’ for 500m3

• Most small scale deliveries made by truck – Boston trucks 100’s ktpa LNG

• Floating receiving infrastructure is only area not proven at the small/ mid-scale

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Switching to gas for power generation can be economical.... but case by case analysis required

Lo-Su HFOGas

US$

/MW

hEl

ectr

icity

Base Case Oil Price

Analysis of Total generation costs:~400MW running baseload

LNG vs .5% HFO (LNG priced @ 14% Brent bbl/mmbtu)

Value of CO2 credits depends on jurisdiction. Some EU clients use $50/tonne, UNCDM nearer $15/tonne

When sourced in small quantities LNG can be expensive, however so too is LFO

Savings attributable to lower maintenance are material, and may be overlooked

Cost of conversion of D/F ready engines is material, but adds only 25% to costs of major overhaul

Infrastructure cost sensitive to distance to source, volumes, location

HFOLNG

This document is being furnished on a confidential basis and the information contained herein may not be reproduced or provided to others without the prior written consent of Gasfin

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Optimising configuration can be critical

Key Issues Considerations

Supply

• Distance to market – affects scale, energy consumption

• Availability of jetty space – fixed costs and frequency limit may affect size choice

• Compatibility - Mooring configuration and loading rates

Route • Point to point or multiple customers – simple contract vs aggregation advantage

Storage Location• Onshore is most stable, but not always cheapest or possible

• Jetty moored FSRU cheaper than offshore but permitting/regulation tougher

Tank system• Type ‘C’ Cylindrical tanks dominate the smaller LNG market – allows longer

storage times (i.e. pressures), no license, and de-skills yard/site work• Membrane tanks limited by license costs, sloshing and yard limitations

Regas technology

• Using sea-water as heating agent may spur environmental objections

• Air vaporisors increase visual impact and wind exposure

• Shell & tube (glycol loop) optimum but requires storage to be near plant

• Submerged combustion is last resort but energy intensive

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EDF project:1 x 25,000m3 LNG carrier, 2 x 25,000m3 FSRUs

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Operational details• Proven, reliable components, high

redundancy with minimal maintenance

• Side-by-side LNG carrier unloading using conventional hard arms

• Regasification using air vaporizers

• 25+ year docking interval

• Tank design increases operational flexibility

Environmental details• Air vaporizers have no impact on sea

• Leak proof tank rules out gas venting

• “Clean ship” per classification rules

• Electricity generated with gas fuelled gen sets

Technical specifications: FSRU• Length: 114m; Width: : 32m

• Depth: 18m; Draft: : 7m

• Containment: 2 x IMO type “C“ cylindrical tanks

• Max. send out capacity: 50t/h

• Spread moored, 12 anchors

25,000m3 FSRU for Martinique/Guadeloupe

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FSRU breakdown into known components –Designed by specialists - reviewed by 3rd parties

HULL AND MACHINERY

Design led by:TGE Marine Gas Engineering

Design reviewed by:Bernhard Schulte Shipmanagement

Design similarity to:Ship hulls and machinery equipment

SPREAD MOORING

Design led by:Promoor Limited

Design reviewed by:Tecnitas

Proven design for:Several FPSOs / MODUs

PROCESS PLANT

Design led by:TGE Marine Gas Engineering

Design reviewed by:Bernhard Schulte Shipmanagement, TGE Gas Engineering

Design similarity to:LNGC and receiving terminal

RISER

Design led by:Technip

Design reviewed by:Risertec

Proven design existing for:FSPOs and FSRU‘s

This document is being furnished on a confidential basis and the information contained herein may not be reproduced or provided to others without the prior written consent of Gasfin

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Commercial model for ‘right-sized’ services

Commercial approach is as specialised as the technical one

• Market depends on customised, right-size infrastructure to optimise storage and logistics costs

• Purpose built equipment needs long term contracts to offset limitations on alternative use

• Configuration of custom ships and FSRU means integrating of multiple steps and parties

• Sequential risk and interdependency is a BIG issue, especially given weak credits

• Mix of small markets and weak counterparties has been very detrimental to growth

Contract length • ~20+ years post ~30month construction

Payment type • Fixed availability based payment with indexation protection

Performance hurdles • Take or pay agains pre-agreed availability criteria

Other key considerations • Permitting risk largely borne by customer

Typical Contract terms

What next for Mid-scale?

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EDF pioneering LNG for Martinique and Guadeloupe• Project development agreement signed with Gasfin• 3,000 page permitting dossiers submitted Q4/2011• FID anticipated in 2012, first gas 2015.• Volume ~400,000tpa,

BIG hurdles remain for next ‘repeat’ project!• Supply: Appetite of World-scale LNG producers

• Volumes too small to move the needle• Perceived as adding risk to global operations• Unfamiliar with infrastructure or counterparties• Ask unreasonable prices or terms for new buyer, expect US players to take up market• Jetty space limited – need dedicated mid-scale jetty (eg Singapore)

• Demand: Realism on LNG pricing and value chain

When will mid-scale LNG “really” happen?

1 x

2 x

LNGC Size 25.000 m3

FSRU Size 25.000 m3

This document is being furnished on a confidential basis and the information contained herein may not be reproduced or provided to others without the prior written consent of Gasfin

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Economics add up, but market price cost plus... need policy and private sector to join the dots

Cost base for Mid-Scale LNG Value Chain (US$/mmbtu – Volumes .3-.6mtpa)

1. Feed Gas Costs (e.g. 115% x H.Hub @$3.00)

$3.50*

2. Liquefaction Cost(est. for .500,000ktpa plant)

$3.50*

3. Shipping(depends on size/distance)

$1.00-$3.00

4. Storage and Regas(depends on size/distance)

$1.50-$3.50

Total Cost – Delivered Gas(alternatively = HH + $6-10)

$9.50-13.50

* Note costs for Steps 1 & 2 v.similar for either mid-scale or world scale volumes

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IF LNG cost HH+$4.00 FOB Trinidad ... Gas is economic for all these markets

Potential New Smaller Carib Customers: Ranked by attractiveness of LNG

Island Alt Fuel LNG Vol (tpa)Puerto Rico LFO 500,000 x2

Jamaica (N) LFO 250,000

St Lucia LFO 100,000

Mart/Guad HFO+ 400,000

Bermuda LFO 100,000

Cayman LFO 100,000

Bahamas Mix 500,000

St Barts/St Martin LFO 30,000 x2

Jamaica (S) (ex.Alu) HFO 600,000+

Dom Rep HFO 300 – 900,000

Barbados HFO 150,000

Aruba/Curacao (excl. refineries)

HFO 100,000 x2

Grenada et al... Mix 50,000

Gasfin’s next step for Caribbean?

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Mid-scale LNG production plant dedicated to Caribbean LNG sales?

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Above: Example of mid-scale LNG production plant developed by Gasfin affiliate, TGE in Urumuchi, China (2004)

This document is being furnished on a confidential basis and the information contained herein may not be reproduced or provided to others without the prior written consent of Gasfin

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Why Mid-scale LNG production might work for Trinidad?

• Captures long term premium market for T&T gas in Caribbean, before lost to US exports

• Demonstrates genuine T&T commitment to fuel the region

• Stimulates jobs and new investment

• Provides unique opportunity for direct local participation in LNG chain

• Will spur incremental exploration, will not crowd out other projects

• Allows gradual regional gas adoption – LNG production added as demand grows

• Positions Trinidad as global pioneer in mid-scale LNG export

• Financeable by private sector, with proven technology, 2.5 year build time

• Has support of suppliers, investors, customers –awaits sanction for 70mmscf/d gas

Contacts:

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Fax: +44 20 3369 9695Email: info@gasfin.netWeb: www.gasfin.net