Leveraging Domestic Shale Gas Production Through Exportsg pPat Outtrim, Vice President, Governmental AffairsCheniere Energy, Inc.gy

Extensive Broad-Based Shale Resource Base

Shale Gas Plays – Lower 48 StatesLower 48

Recoverable Unconventional Reserves (Tcf)

ShaleCBM

Montana Thrust Belt

Cody

Gammon

1,373

700

1400

CBMTight Gas

Total US

WillistonBasin

Bakken

Hilliard Baxter-

MancosGreaterGreenRiverBasin Forest

City BasinIllinoisBasinPiceance

MichiganBasin Antrim

Excello

AppalachianBasin

Marcellus/Utica

366

01996 2009

Proved Reserves

Pierre

Basin

LewisSan Juan

Basin

RatonBasin Anadarko

Basin

PaloDuroBasin

Woodford

NewAlbany

ChattanoogaFayetteville

Arkoma BasinConasaugaBlack Warrior

BasinMarfa

Paradox BasinHermosa

MancosCherokee Platform

Excello-Mulky

Granite Wash

PermianBasinBarnett

Woodford

Pearsall

Barnett TexasLouisianaMississippi Salt BasinFt. Worth

Basin

Basin

MaverickSub-Basin

Shale Gas Plays

Basins HaynesvilleBossier

22

Pearsall

Eagle Ford

Rio GrandeEmbayment

Source: EIA, March 2010

LNG Terminals

U.S. Rig Activity

OilGas

US Rig Count9/23/2011 Week -- 1,991 rigs

vs Year Ago 1 650 rigs

3

vs Year-Ago -- 1,650 rigs

Change -- +341 rigs

Resulting Productive Capacity Estimates Vast

Existing conventional production to continue declining from current 40% share of supply $5.50 to $7.00 HH Priceshare of supplyUnconventional production, led by gains in gas shales, projected to achieve capacity of 50+ Bcf/dTotal North American productive

$5.50 to $7.00 HH Price

Total North American productive capacity 90+ Bcf/d by 2020

Unconventional gas is tl iti l

$6.50 HH Price

currently a critical component of U.S. supply and will continue to grow

into the future

4

Projected U.S. Gas Production Growth

Unconventional gas = 61% of 2010 natural gas productionPotential 11 Bcf/d new production from unconventional gas 2015 vs 2009 (34%)

4 84.9

55 3 57.4 59.3 60.363.9

69.1ForecastBcf/d U.S. Natural Gas Production

3.0 4.4 6.1 9.3 12.2 14.7 19.1 25.14.8 4.8 5.4 5.2 5.2 4.6

4.850.3 52.8 55.3 57.4

71%

15.7 17.0 17.8 17.8 18.9 19.2 19.5 19.3

26.8 26.6 26.0 25.1 23.0 21.8 20.5 19.8

2006 2007 2008 2009 2010 2012 2015 2020

5

2006 2007 2008 2009 2010 2012 2015 2020

Conventional Tight Gas Shale CBM

Source: Advanced Resources International Inc.(Aug 2010), EIA

U.S. Proved Non-Producing Reserves(Tcf)

Non-producing proved U.S. gas reserves +100% since 2003 to 98 Tcf Represents 13 Bcf/d of LNG exports for 20+ yearsRepresents 13 Bcf/d of LNG exports for 20 yearsOver 3,000 gas wells drilled but not hooked up representing

~8-10 Bcf/d of latent 1st -year production

6067

7885

98

49 5160

2003 2004 2005 2006 2007 2008 2009

6Source: EIA, US Crude Oil, Natural Gas and Natural Gas Liquids Proved Reserves, 2009

2003 2004 2005 2006 2007 2008 2009

Oil Production Drives Investment Decisions for Gas

Liquids production from shale plays > 3 million barrels per day by 2020 Associated natural gas > 7 Bcf/d of “costless” supply

Bcf/d MMB/d

g pp y

8 4.0Includes Eagle Ford W Barnett Bakken Shales;

Annual Production from Unconventional Reservoirs

5

6

7

2.5

3.0

3.5Includes Eagle Ford, W. Barnett, Bakken Shales; Granite Wash, Piceance & Uinta Tight Sands

Liquids

3

4

5

1.5

2.0

2.5Gas

0

1

2

0

0.5

1.0

7 Source: Advanced Resource Intl; presentation to Cheniere Board, March 2011; Cheniere Research

02010 2011E 2012E 2013E 2014E 2015E 2020E

0

Energy Consumption by Sector and Source 2011

US Energy Consumption by SourceQuadrillion

40

45

Liquid Fuels

Btus

25

30

35 Natural Gas

Coal

Nuclear

Renewables

Biofuels

10

15

20Biofuels

0

5

2008 2009 2010 2011 2015 2020 2025 2030 2035

8

EIA 2010 Outlook

Productive Capacity Relative to Demand

Bcf/d

2010 Annual Energy OutlookReduction in

estimated demand

Oth

80

90

0 2 .4 21.5

estimated demandBcf/d Projected productive capacity at $6.50

Industrial

Commercial

Electric Generation

Other

50

60

70

-10.

0

-17. -21 -2

Residential

Production

LNG

Pipe Imports

30

40

50

10

20

99Source: Energy Information Administration Annual Energy Outlooks, 2004 and 2010Productive Capacity estimated from EnCana’s projections for North America.

02010 2015 2020 2025

Global Natural Gas Reserves

3,000TCF U.S. Natural Gas Resource Base

• 2,612 TCF of total recoverable reserves700 TCF reco erable shales

2,000

2,500 • 700 TCF recoverable shales

• 400 TCF of shales economical below $6/MMBtu

1,216 Tcf

1,000

1,500

1,216 Tcf Unconventional

1,124 Tcf Conventional

0

500

S a n r n a E a a a q a a a a t y n t

272 Tcf Proved Reserves

US

Rus

sia

Iran

Qat

ar

Turk

men

ista

n

Saud

i Ara

bia

UAE

Vene

zuel

a

Nig

eria

Alge

ria Iraq

Indo

nesi

a

Aust

ralia

Chi

na

Mal

aysi

a

Egyp

t

Nor

way

Kaza

khst

an

Kuw

ait

Unconventional gas is abundant globally but only the U S has

10Source: 2011 BP Statistical Review (Global Reserves); Advanced Resources International US Natural Gas Resources & Productive Capacity,August 2010 (US Resource Base) ; MIT, The Future of Natural Gas, 2009 (shales economic below $6)

Unconventional gas is abundant globally, but only the U.S. has the technical capability to develop at present

Venting and Flaring

The U.S. vented and flared 165 Bcf of natural gas in 2009North Dakota’s share amounted to 27 Bcf; +156% increase on 2007 levelsThere are many “New Bakkens” emerging in liquids rich shale playsThere are many New Bakkens emerging in liquids-rich shale plays (Eagle Ford, Niobrara, Permian, Granite Wash)

Bcf

120140160180

6080

100120

020

40

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

11 Source: EIA

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

North Dakota US Total

Established U.S. Exports of All Energy Sources

2008 U.S. Energy Exports (Trillion Btus)

82

982

50 82Crude & ProductsCoalNatural Gas Piped

3 546

982LNGElectricity

Conversion Rates1 MW hour = 3.41MMBtu

3,5462,119

1 Boe = 5.8 MMBtu1 Mcf = 1.027 MMBtu1 short ton = 24 MMBtu

12 Source: EIA

Global LNG Demand

Natural GasOil Products

2010 Total Global LNG ExportCapacity = ~ 37 Bcf/d

2010 Regional LNG Demand - Bcf/d

LNG Importers - Price Indexation

Japan Crude CocktailAlgeria - 2.7

Norway - 0.6

Qatar - 9.3Russia - 1.3

Egypt - 1.6USA - 0.2

18

AsiaEurope

NorthAmerica

8.6

1.8

Indonesia - 4.6Malaysia - 3.0

South1.3

Australia - 3.1

Brunei - 1.0Indonesia 4.6

Oman - 1.4UAE - 0.8

13

America Yemen - 1.0

Nigeria - 2.9

Trinidad & Tobago - 2.0

Equitorial Guinea - 0.5

Peru - 0.6

Attractive Oil Linked Market Prices

Spread bt oil linked and U.S. natural gas prices averaging $9–$11/mmbtu

~ 12% – 15% of Oil Prices~ 12% – 15% of Oil Prices

Regional Natural Gas & LNG Prices

18

$/MMBtu

$9 51

$14.97$12.45

12

$3 85

$9.51

6

$3.85

0

-04

-04

-04

l-04

-04

v-04 -0

5-0

5-0

5l-0

5-0

5v-

05 -06

-06

-06

l-06

-06

v-06 -0

7r-

07 -07

l-07

-07

v-07 -0

8r-

08 -08

l-08

-08

v-08 -0

9r-

09 -09

l-09

-09

v-09 -1

0-1

0-1

0l-1

0-1

0v-

10 -11

-11

-11

l-11

-11

14Source: PIRA, Platts

Jan

Mar

-M

ay-

Jul

Sep

-N

ov Jan

Mar

-M

ay-

Jul

Sep

-N

ov Jan

Mar

-M

ay-

Jul

Sep Nov Jan

Mar

May Ju

lS

ep Nov Jan

Ma r

May Ju

lS

ep Nov Jan

Ma r

May Ju

lS

ep No v Jan

Mar

May

-Ju

lS

ep-

Nov Jan

Mar

-M

ay Jul

Sep

NBP IFERC HH Monthly Japan avg LNG European Gas Contract

Europe - LNG Import Terminals (Bcf/d)

7.68

UK & Ireland2009 LNG Imports6.8 Bcf/d

23.42

LNG Terminals (Bcf/d)

Existing 16.09Firm 7.50Proposed 19.06

5 46

Mediterranean 5.92

NW Europe2009 2015 Total 42.65

Current Importers

Potential Importers

5.46

2.392.532009 20153.11

Belgium Bulgaria

France Croatia

Greece Cyprus

Italy Germany

10.14

y y

Netherlands* Ireland

Portugal Poland

Spain Romania

152009 2015

Turkey Sweden

UK Ukraine

Regas Terminals in Latin

LNG Terminals (Bcf/d)ExistingFirm 0.5Proposed

6.4PipelinesExistingUnder Construction

0.5

3.4 7.2

Proved Reserves (Tcm)

2009 2015

Current Importers Potential Importers

ArgentinaBrazilChileDominican RepublicMexico

HondurasJamaicaUruguay

0.4

16

Puerto Rico

US Balance of Trade Deficit

• Petroleum imports accounted for 55% of $500 billion US trade deficit in 2010

• LNG exports, domestic shale oil production will improve US trade balance by $130+ billion

$100

$200Other Goods

Billion US$

3 MM B/D UNC Oil Production*

$200

-$100

$0

$100 Petroleum

6 Bcf/d LNG Exports

$500

-$400

-$300

-$200

$800

-$700

-$600

-$500

* Assumes $100/bbl oil

17

-$8002002 2003 2004 2005 2006 2007 2008 2009 2010

Source: US Department of Commerce, US Census Data, Cheniere Research

Assumes $100/bbl oil

Sabine Pass Liquefaction Project

Cheniere owns & operates 4 Bcf/d Sabine Pass LNG terminal in LouisianaCheniere is developing a project to add liquefaction trains, transforming the facility into the g j g yfirst bi-directional LNG terminal that can import & export LNG

– 4 LNG Trains, each 4 mtpa (16 mtpa total project)– 20-yr fixed price contracts for 14 mtpa or 2 Bcf/d of bi-directional service– Begin construction 2012, begin operations 2015g g p

The Company is seeking equity capital to partially fund the project– Equity expected to represent ~20-30% of total funding requirements with the remainder

funded via non-recourse project debt financingLNG value chain:

Expansion Project Current Operations

18

LNG is natural gas cooled to -260ºF in order to be transported by ship to distant markets

Sabine Pass to Become Bi-Directional Import/Export Facility

LNGC UMM SLAL, First QMax Ship received in the U.S.

19

Proposed Liquefaction Project will Transform Sabine into First Bi-directional Import / Export Facility

Current Facility853 acres in Cameron Parish, Louisiana

Existing operational

facility

40 ft ship channel 3.7 miles from coast

2 berths; 4 dedicated tugs

5 LNG storage tanks (17 Bcf of storage)

4 3 Bcf/d peak vaporization

Proposed

4.3 Bcf/d peak vaporization

LNG export licenses approved

Liquefaction ExpansionFour liquefaction trains, each 4.0 mtpa nominal LNG processing capacityProposed

expansionnominal LNG processing capacity

Additional Equipment to include:

– ConocoPhillips’ Optimized Cascade® LNG Trains

– Six GE LM2500+ G4 gas turbine drivenSix GE LM2500 G4 gas turbine driven refrigerant compressors per train

– SAC water injection for emissions control

– Gas turbine inlet air humidification

20

– BASF aMDEA acid gas removal unit

Sabine Pass LiquefactionInfrastructure - Jobs

Infrastructure Investment ~ $6 B$2 3 B M t i l & E i t– $2.3 B Materials & Equipment

– $1.6 B Potential U.S. sourced equipment– $1.0 B Construction wages/benefits

Direct JobsDirect Jobs– 100-200 permanent jobs with an avg annual salary of $120,000– Average construction jobs of 1,800 for four to six years– Peak of 3,000 – 13 million man-hours

Indirect Jobs– Will support 30,000-50,000 permanent jobs in exploration and production

Construction timeline 2012-2018

21

Expanding U.S. Natural Gas Exports Would …

Promote liberalization of the global natural gas trade through the fostering of a global, liquid market, based on prices cleared in free and openly traded natural gas markets;Ad ti l it d th it f U S lli th h di ifi ti fAdvance national security and the security of U.S. allies through diversification of global natural gas supplies; Increase economic trade and ties with foreign nations, including neighboring countries in the Americas, and displace environmentally damaging fuels in those countries;Reduced reliance on foreign sources of oil by promoting domestic production of petroleum and by encouraging the drilling of wells in areas where there is a significant amount of natural gas associated with crude oil and natural gas liquids (“NGL”); Improve U S balance of payments through the exportation of approximately 2 Bcf/dImprove U.S. balance of payments through the exportation of approximately 2 Bcf/d of natural gas valued at approximately $5 billion, and the displacement of $1.7 billion in NGL imports thus furthering the President’s National Export Initiative;Promote stability in domestic natural gas pricing by raising domestic natural gas

d ti it dproductive capacity; andStimulate state, regional and national economies through job creation, increased economic activity and tax revenues, including the direct creation of approximately 3,000 engineering and construction jobs during the course of the project and,

22

indirectly, 30,000-50,000 permanent jobs in the exploration and production sector.

23

ConocoPhillips Optimized CascadeSM LNG Train

Bechtel and ConocoPhillips Collaboration Agreement

– 40-plus year history40 plus year historyProven, Reliable Design

– Template Designs exist for a variety of conditions and compressor configurationsg

– Kenai Alaska, 1969– Atlantic LNG Trains 1, 2, 3 and 4*, 2005*– Egyptian LNG Trains 1 & 2, 2005– Darwin LNG 2006Darwin LNG, 2006– Equatorial Guinea LNG, 2007– Angola LNG, under construction

Process AdvantagesReliability design concept based on– Reliability – design concept based on two 50% compressors for each refrigeration cycle

– Turn-down – Two-in-one concept provides for ~100% efficiency at 60-80%

24

p yutilization

– Intermittency – fast start-up and cool-down

ConocoPhillips-Bechtel – Global LNG Collaboration

2525 ConocoPhillips, Bechtel

LNG Project Support & Regulatory

Very strong local support: Cameron Parish officials, Louisiana state and federal congressional delegations, parish & state agencies Strong support from most gas producing statesCheap ethane by-product means added competitive landscape for chemical industry ($35/Bbl for ethane vs $90/Bbl for naphtha)Job implication 30,000-50,000 Balance of trade improvement ~$7 BPositive foreign policy implications of U.S. role in global gas marketsg p y p g g

Regulatory

FERC: Authorization to Construct Other Environmental Permits• Base site permitted• NEPA pre-filing 7/26/10 for expansion• Some agencies already in agreement• Formal application due after six

months notice period 1/31/11

• DEQ Title V Air Permit - 12/20/11• DNR Coastal Use Permit – 3/28/10• DEQ Water Quality Certification - 6/22/10• USACE Section 404 Wetlands - 1/31/11

26

months notice period – 1/31/11• Estimated approval 2011

Sabine Pass LiquefactionProposed Project Timeline

NEPA Notice

Execute EPCAgreement Begin File DOE

ApplicationsNEPA Notice(beginning of six

month consultation period w. FERC)

Public Announcement

File FERCApplication

ConstructionCommenceBi-directionalService

Applications

DOE Authorization to export natural gas

20102010

Announcement

20112011 20122012 20152015

Application

Initial commercial discussions with

counterparties under CA

FERCAuthorization

to Commence Construction

Obtain construction financing commitments

Initial discussions with local, political,

and regulatory constituents

27NOTE: Timeline represents an estimate of expected events and is continually changing.

Bi-directional Service at Sabine Pass Provides Opportunity to Arbitrage Henry Hub vs. Oil

Worldwide LNG prices predominantly based on a prices of oil = $10 - $25 / MMBtuLNG Contract Price

I d ti % 15%

$ $

at $90/bbl 9.90 13.50at $150/bbl 16.50 22.50

Indexation % 11% 15%$ $ $ $

Low High

Henry Hub 4.00$ 6.50$ Low High

4.00$ 6.50$

Europe Asia($/MMBtu)

Cost to deliver gas from Sabine Pass to Europe & Asia = $7 - $12 / MMBtu

Capacity Charge 1.75 1.75Shipping 1.00 1.00

Fuel 0.40 0.65Delivered Cost 7.15$ 9.90$

1.75 1.752.80 2.800.40 0.658.95$ 11.70$

Current LNG Market

30 – 40 Bcf/d LNG contracts indexed to oil prices – rule of thumb 11% to 15% of crude oil prices

Growth 100 Bcf/d Power generator switching from oil to gas –

28

Growth Market

100 Bcf/d Power generator switching from oil to gas paying $13 to $19 / MMBtu for fuel oil and diesel