LN G T erm inals on C anada’s W est C oast

Kitimat LNGLN G T erm inals on C anada’s W est C oast

Presentation to 17th B.C. TOWBOAT INDUSTRY CONFERENCE

Whistler, BC

Alfred SorensenKitimat LNG

June 3, 2006

Kitim

at LNG

• A privately owned Canadian Company established to develop a LN G term inal on C anada’s w est coast.

• Capitalized with Canadian and U.S. institutional investors, management and private investors

• Management team of 6 individuals.

• Average career of 20 years in energy markets and infrastructure projects.

Kitimat LNG Inc.

Kitim

at LNG

Corporate

What is LNG?

LNG is natural gas that has been cooled such that it condenses to a liquid form

• Temperature -256oF (-160oC) • Atmospheric pressure• Volume is reduced 600 times • LNG is odorless, colorless, non-corrosive and

non-toxic

Kitim

at LNG

LNG Supply Chain

LNG

Gas Reserve

Gas Production& LiquefactionFacilities

(Exploration) Shipping LNG Import &RegasificationTerminals

Exporter Importer

K itim at LN G ’s Area of Operation LN

G S

upply Chain

• Excellent safety record • LNG has been in existence for over 40 years

• 80,000 carrier voyages worldwide with no sea related accidents

• Advances in technology and monitoring have only made LNG safer

• Vessels must meet stringent international, national and regional safety codes

• State-of-the-art LNG double-hulled carriers are used to transport LNG on the ocean

LNG

Safety Record

LNG Safety Record

Kitimat LNGKey Commercial Drivers

Kitim

at LNG

North Am

erican Gas M

arket Dem

andLNG Supplements Canadian Gas Supplies

The Reserve Replacement Treadmill

• overall decline rates are now in excess of 22%.

• from a 16.5 bcf basis that is 3.6 bcf/d to replace annually.

Western C

anada Supply/D

emand D

ynamics

West C

oast LNG

Import Term

inal Locations

A

B

C

F

DE

J I

HG

K

Current West Coast LNG Projects

KitimatKitimatLNGLNG

Kitimat LNG - Terminal Site

Terminal Site Kitim

at LNG

Location

Kitimat Region is a Natural Choicefor an LNG Terminal

• Grass roots community support was garnered early in the process.• Canada has a clearly defined environmental assessment process

that is unified at the Federal and Provincial levels of government.• The site selected is zoned for industrial use.• Kitimat rests on the Douglas Channel which provides a deepwater

all season port. Bish Cove provides a natural jetty and break water.• Bish Cove is 18 km from population centre.• Access to Pacific Basin LNG supplies.• Pacific Northern Gas Pipeline provides access to Westcoast

Pipeline and the North American grid.

Kitim

at LNG

Terminal Location B

enefits

PNG

KLNG Can Access Canadian and US Markets

TCPL

Kitim

at LNG

Market A

ccess

Market Interest in Kitimat Terminal

• Considerable capacity interest has been established• Off-take customers believe their portfolios should contain

LNG supply commensurate with eventual LNG marketshare

• Off-take customers have long term core need in natural gas with few long term supply alternatives

• LNG may provide the long term supply alternatives• Off-take customers include industrials, oil sands, utilities,

independent power projects and energy marketers

Kitim

at LNG

Off-take M

arket

Economic Access to Pacific Basin LNG Supply Sources

Kenai 2.1 days

Sakhalin 7.2 days

Indonesia 14 days

Bolivia 15 daysNW Shelf 16 days

Qatar22 days

Kitim

at LNG

Gas S

upply Options

Supplier Existing Production

(mt/y)

New Production Planned by 2010 (mt/y)

Sail Time to Port of Kitimat

Kenai/Valdez Alaska

1.5 14.0 2.1 days

Sakhalin Island

None 9.6 7.2 days

Malaysia 15.0 6.8 14 daysIndonesia 34.3 21.0 14 daysAustralia 11.7 3.0 16 daysQatar 19.0 40.0 22 daysTotal 81.5 94.4

(4.4 Tcf/yr)

Bringing on the equivalent of a new Alberta

Kitim

at LNG

Gas S

upply Options

Kitim

at LNG

Shipping C

omparison

Shipping Days Comparison to West Coast Terminals

Significant shipping cost advantage at Kitimat LNG

Kitim

at LNG

Shipping C

omparison

Marginal Transport Cost Comparison with Kitimat LNG

Based on Number of Shipping Days and Additional Shipsrequired to move same volume of LNG per year

LNG Carriers

Kitimat LNG Terminal Components

Kitim

at LNG

Terminal C

omponents

Main Components of the Kitimat LNG Terminal

• Offshore LNG tanker berth and unloading jetty capable of handling LNG carriers up to 200,000 cubic meters (approx. 98,500 dwt)

• Construction and tug berth• Two 160,000 cubic meter LNG storage tanks (approximately

6.8 Bcf of natural gas) with the potential for future expansion to three tanks

• NGL separation unit provides flexibility• Send-out pipeline for natural gas (610 MMcf/day) with

potential future expansion to 1 BCF

Kitim

at LNG

Terminal C

omponents

LNG Import Terminal at Kitimat, BCK

itimat LN

G Term

inal Layout

Jetty information and design

• Laterally Braced Dolphin design• Positioned along the steep rocky eastern shore of Bish Cove• Four steel pipe berthing dolphins secured laterally to shore• 840 sq. meter unloading platform• Six shore-based concrete mooring points• Key benefit: small footprint and environmental impact

– Underwater rock blasting and dredging minimized– Reduced amount of steel components in the intertidal and

submerged zones results in long term serviceability and reduced maintenance costs

• Less than $20M capital cost

Kitim

at LNG

Terminal

Membrane carrier

Kitim

at LNG

Advantage

LNG Berth with breakwater

Unloading ArmsK

itimat LN

G

LNG Carriers

• LNG Tankers are large vessels and have substantial windage –similar to container ships and auto carriers

• LNG carriers range from 125,000 to 200,000 cu. metre capacity• A typical LNG ship is approximately 975 feet long and 145 feet

wide with a loaded draft – 39 feet• Capable of sailing at speeds up to 21 knots• LNG ships are most costly cargo vessels built – new LNG ships

cost approxim ately $160M vs $70M for V LC C ’s• LNG ships are equipped with the most-up-date navigation and

communication technology• LNG tankers use natural gas as fuel – so are among the cleanest

ships at sea • 4-5 ships at terminal per month arriving at KLNG terminal

Kitim

at LNG

Carriers

Kitim

at LNG

Carriers

LNG Ship size comparison to Very Large Crude Carrier

• LNG carriers have:– Double hulled construction between 6-10 feet between hulls

– Cargo tanks provide 3rd layer of protection

– Gas detectors and safety alarms for continuous leak detection and monitoring

– Safety and security zones in established port areas

• Excellent safely record: more than 80,000 carrier voyages covering m ore than 100 m illion m iles w ithout a m ajor incident in LN G ’s 40 plus year history

Marine Safety FeaturesK

itimat LN

G M

arine Safety

LNG

Carrier S

afety

Well protected and insulated – 6+ feet between outer barrier and cargo•Outer steel •Ballast•Inner steel hull•Primary insulation and membrane and•Secondary insulation and membrane

Containment Systems

Typical Containment SystemsLN

G C

arrier Safety

Kitim

at LNG

Carriers

Spherical Moss Design

Kitim

at LNG

Carriers

Membrane Containment

Tug Requirements

• Tugboat requirements vary depending on size of LNG vessels • Based on SIGGTO guidelines tugs for LNG carriers require a 150

tonne minimum bollard• Tugs for the larger vessels will be 38 m ( 125 ft) long and 10.7 m (

35 ft) wide with a maximum draft of 5.5 m ( 18 ft).• The minimum required water depth is approximately 7 m ( 23 feet)• Regardless of the size of LNG carrier that will call upon Kitimat –

the existing tug fleet is inadequate and new tugs will be required• Tugs required for:

– Maneuvering and assistance for berthing and departing– Fire fighting requirements and– Escort capability

Kitim

at LNG

Tug Requirem

ents

Kitim

at LNG

Tug Escort

Tug Escorts

Kitim

at LNG

Tug FirefightersFire Fighting Tug FiFi 1

Tugs Required for Kitimat LNG

• Kitimat LNG will require four tugs• Kitimat LNG negotiated a benefits

agreement with the Haisla First Nation this spring

• The Haisla aim to supply tug services to the terminal and are in deliberations with a potential partner

Kitim

at LNG

Tugs

North and South Routes to KLNG Kitim

at LNG

Shipping R

oute Alternatives

• Safe and navigable access by water from Douglas Channel from the coast• Two possible routes :

– from the north via the Principe Channel ( approximately 120 nautical miles) and,– from the South via Squally Channel (95 nautical miles)

• Northern Route preferred by BC Coastal Pilots– Sufficient width allowing 2 ocean going vessels to pass each other at safe and

adequate distance– Sufficient depth – no turns greater than 900

– Underkeel clearance in excess of 15 % of the deepest draft– Additional navigational aides may be required

• Southern Route acceptable if Northern Route has interference• Usual transit time from Triple Island to Kitimat is approximately 16 hours• Pilots will board at Triple Island – situated 21 miles west of Prince Rupert

Navigation routes to Bish Cove Kitim

at LNG

Navigation R

oute Alternatives

• Physical criteria for the safe operation of LNG tankers is based on considerations presented by :– TERMPOL– Society of International Gas Tanker and Terminal Operators ( SIGGTO)– Oil companies International Marine Forum ( OCIMF)– International Navigation Association ( PIANC)– BC Pilots– Canadian Coast Guard

• Safety and security of the ship is paramount at all times – both in transit and at the berth– an exclusion zone of 500 m has been assumed for the KLNG project

• Excellent safety record to date and has to be kept that way.• The safety record is not by accident but by a proactive approach by the

industry• Kitimat LNG will adhere to best practices in both the on-shore and marine

environments• Safety is the KEY

Safe Operation of LNG tankersK

itimat LN

G S

afe Operation

www.kitimatlng.com

Kitim

at LNG