LNG in North America

Tommy Stone – Vice President, Operations & Engineering

Trunkline LNG Co., Trunkline Gas Co., Sea Robin P/L, Florida Gas Transmission

Lake Charles, LA

Tommy Stone – Vice President, Operations & Engineering

Trunkline LNG Co., Trunkline Gas Co., Sea Robin P/L, Florida Gas Transmission

Lake Charles, LA

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LNG Properties –A Means of Transportation

Liquefied Natural Gas (LNG)• Temperature

– Minus 260 degrees Fahrenheit• Volume reduction of 620 to 1

620 Ships of Gas = 1 Ship of LNG• Composition

– Methane (85 – 98%)– Ethane (2 – 12%)– Propane (0 – 4%)– Butane (0 – 1%)– Others (0 – 1%)

• LNG is nontoxic• Odorless, colorless• Vapor is natural gas – lighter

than air as it warms• Stored near atmospheric

pressure (± 2 psig)

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Rockies

Deep Gulf

$3.60 - $5.85

Arctic Gas

• Supply tightening– Demand growth– Traditional basins

in decline• New supply

must come from new areas

– But will only come at a price that supports development

• LNG has the opportunity to gain market shareLNG

LNG

Nation Needs New Sources of Supply

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LNG Value Chain, Exploration & Production

$0.6 B$2.0 B$2.0 B$1.5 B 1 Bcf/dScenario$6.1 B

$.50 – .75$.60 – 1.60$1.25 – 1.50$1.25 – 2.00 Per Unit$/Mcf$3.60 – 5.85

RegasificationShipping*LiquefactionExploration & ProductionTOTAL

Reserves 9 Tcf

Scope $0.05B

Initial drilling

$0.05B

Develop-ment

$1.4B

Trains required

2

Cost per train

$1.0B

Distance 12,000 nm

Rd. Trip Time

30 days

Ships Required

12

Cost per ship

$0.17B

Port $0.14B

Storage $0.16B

Vaporization .20B

Engineering & Other

.10B

*Shipping: West Africa to U.S. Gulf Coast.

% of Total9%33%33%25%100%

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Proven World Natural Gas Reserves

~ 4.8% of World Reserves

Proved reserves at end 2008Trillion cubic metres

Source: BP Statistical Review of World Energy, 2009

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LNG Value Chain, Liquefaction

$0.6 B$2.0 B$2.0 B$1.5 B 1 Bcf/dScenario$6.1 B

$.50 – .75$.60 – 1.60$1.25 – 1.50$1.25 – 2.00 Per Unit$/Mcf$3.60 – 5.85

RegasificationShipping*LiquefactionExploration & ProductionTOTAL

Reserves 9 Tcf

Scope $0.05B

Initial drilling

$0.05B

Develop-ment

$1.4B

Trains required

2

Cost per train

$1.0B

Distance 12,000 nm

Rd. Trip Time

30 days

Ships Required

12

Cost per ship

$0.17B

Port $0.14B

Storage $0.16B

Vaporization .20B

Engineering & Other

.10B

*Shipping: West Africa to U.S. Gulf Coast.

% of Total9%33%33%25%100%

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0 225,000 450,000 675,000 900,000 1,125,000 1,350,000 1,575,000 1,800,000

Cubic Feet/yr (000,000)

Indo nesia

A lgeria

M alaysia

Qatar

ad & T o bago

N igeria

A ustralia

Oman

B runei

A bu D habi

USA

Libya

Egypt

Iran

B o livia

Yemen

R ussia

Venezuela

A ngo la

N o rway

P eru

Eq. Guinea

B razil

ExistingNew

IndonesiaAlgeria

MalaysiaQatar

Trinidad Nigeria

AustraliaOman

BruneiAbu Dhabi

USALibyaEgypt

IranBoliviaYemenRussia

VenezuelaAngola

NorwayPeru

Eq. GuineaBrazil

Source: G.I.I.G.N.L,

Liquefaction Capacity is Large and Will Continue to Grow

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Res./Liq. (yrs)

Growth Potential inAtlantic Basin Supply

500

1000

1500

2000

2500

Atlantic Basin Middle East Pacific Basin

Tcf R

eser

ves

0

2

4

6

8

10 Bcf/d Liquefaction

Tcf ReservesLiquefaction

1025

9.6

2,595

5.6

523

11.5

AtlanticBasin

293 1,270 125

Source: BP Statistical Review, 2007 & G.I.I.G.N.L.

3000 12

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Abundant LNG Supply

Nigeria

Angola

VenezuelaTrinidad

Algeria Libya

Norway

Middle East

Egypt

EquatorialGuinea

Middle East

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LNG Value Chain, Shipping

$0.6 B$2.0 B$2.0 B$1.5 B 1 Bcf/dScenario$6.1 B

$.50 – .75$.60 – 1.60$1.25 – 1.50$1.25 – 2.00 Per Unit$/Mcf$3.60 – 5.85

RegasificationShipping*LiquefactionExploration & ProductionTOTAL

Reserves 9 Tcf

Scope $0.05B

Initial drilling

$0.05B

Develop-ment

$1.4B

Trains required

2

Cost per train

$1.0B

Distance 12,000 nm

Rd. Trip Time

30 days

Ships Required

12

Cost per ship

$0.20B

Port $0.14B

Storage $0.16B

Vaporization .20B

Engineering & Other

.10B

*Shipping: West Africa to U.S. Gulf Coast.

% of Total9%33%33%25%100%

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LNG FLEET HISTORY CAPACITY

LNG Vessel Historical Capacity

0

50,000

100,000

150,000

200,000

250,000

300,000

1970s 1980s 1990s 2000s Present FutureConstruction Era

Vess

el S

ize

(Cub

ic M

eter

s)

Avg.Capacity (Cu/M)

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LNG VESSEL COST

Avg. Vessel Cost ($MM)

$0

$50

$100

$150

$200

$250

$300

1970s 1980s 1990s 2000s Present Future

Avg. Cost ($MM)

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LNG Vessel Fleet LNG Vessel Fleet

• 328 Vessels - World Fleet • 61 Vessels On Book (New Builds)

– Deliveries Through 2010• 85% Membrane Containment• 15% Moss (Spherical)

– Avg. 10/12 New Orders Each Year

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LNG SHIP TYPES

Membrane Tank DesignMembrane Tank DesignMembrane Tank Design MossMossMoss

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LNG/C LNG/C –– Physical SizePhysical Size

• Length: 950 feet (3 football fields)• Width: 150’• Draft: 37’ (Underwater)

– 2615 m2 (28,000 sq/ft.)• Air Draft: 195’ (Above Water)

– 6,600 m2 (71,000 sq/ft)• Displacement: 110,000 Metric Tons• Two Tractor Tugs Required for Berthing

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VESSEL TRANSIT TO TLNG

• 6-8 Hour Transit –Approx. 52 Miles

• One Way Traffic for Deep Draft Vessels

• 24 Hour Transits• Lake Charles Pilots• Corp of Engineers

ProjectProject Depth = 40 feetOuter Bar = 800 ft. WidthInner bar = 400 ft. Width

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LNG Value Chain, Regasification

$0.6 B$2.0 B$2.0 B$1.5 B 1 Bcf/dScenario$6.1 B

$.50 – .75$.60 – 1.60$1.25 – 1.50$1.25 – 2.00 Per Unit$/Mcf$3.60 – 5.85

RegasificationShipping*LiquefactionExploration & ProductionTOTAL

Reserves 9 Tcf

Scope $0.05B

Initial drilling

$0.05B

Develop-ment

$1.4B

Trains required

2

Cost per train

$1.0B

Distance 12,000 nm

Rd. Trip Time

30 days

Ships Required

12

Cost per ship

$0.17B

Port $0.14B

Storage $0.16B

Vaporization .20B

Engineering & Other

.10B

*Shipping: West Africa to U.S. Gulf Coast.

% of Total9%33%33%25%100%

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0.01.53.04.56.07.59.0

10.512.013.515.016.5

Bcf

/d

2002 2008

GreeceTurkeyBelgiumItalySpainFranceNorth America

North America

FranceSpain North

America

France

Spain

Italy

• North America becomes much more significant in the global LNG community

Atlantic Basin Regasification Capacity Growing

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LNG Imports Relative to U.S. Demand

Quotes from EIA Energy Outlook 2006

• “Imports are expected to play an important role in U.S. natural gas markets, accounting for 21 percent of total U.S. natural gas consumption in 2030”

• “LNG imports are projected to grow from 650 billion cubic feet in 2004 to 4.4 trillion cubic feet in 2030, with net LNG imports rising from 17 percent of net imports in 2004 to 78 percent in 2030”

• “The most rapid growth in LNG import capacity will occur over the next decade, with peak annual capacity increasing from 1.4 trillion cubic feet in 2004 to 4.9 trillion cubic feet in 2015”0%

2%

4%

6%

8%

10%

12%

2000 2001 2002 2003 2004 2005 2006 2007 2015E

Percent of U.S. Demand

Source: EIASource: EIASource: EIA

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Distrigas, TractebelEverett, MA

Current ExpandedSendout:(MMcf/d) 1,035 n/a

Storage:(Bcf) 3.4 n/a

Cove Point LNG, DominionCove Point, MD

Current ExpandedSendout:(MMcf/d) 1,800 n/a

Storage:(Bcf) 14.6 n/a

Elba Island, El PasoSavanna, GA

Current ExpandedSendout:(MMcf/d) 1,200 2,100

Storage:(Bcf) 7.3 15.7

Trunkline LNG, Panhandle EnergyLake Charles, LA

Sustained PeakSendout:(MMcf/d) 1,800 2,100

Storage:(Bcf) 9.0 9.0

SummaryTotal Existing U.S. Regasification

Current ExpandedSendout:(MMcf/d) 13,385 16,935Storage:(Bcf) 79.3 96.6

TLNG Offers Great Flexibility with All Domestic Terminals

Cameron LNG, SempraCameron, LA

CurrentExpandedSendout:(MMcf/d) 1,500 2,650

Storage (Bcf): 16.9 n/a

Sabine Pass, CheniereSabine Pass, LA

Current ExpandedSendout:(MMcf/d) 4,000 n/a

Storage (Bcf): 16.8 20.1

Freeport LNG, FreeportFreeport, TX

Current ExpandedSendout:(MMcf/d) 1,750 3,250

Storage (Bcf): 11.3 16.9

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Source: FERC

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Source: FERC

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Source: FERC

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LNG in U.S. Gulf Coast Region• U.S. Gulf region 45-55% of U.S. supply• Sufficient pipeline infrastructure• Blending and processing allow a broader range

of gas quality• Low cost storage• Deepwater ports• Supportive state &

local govt’s• Reduced NIMBY

issues

*Source: US Department of Energy0105-005

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Texas/Louisiana LNG Projects

Approved by FERC or MARAD/USCGApproved by FERC or MARAD/USCG

Sabine Pass LNGIn-service date: April 2008 – Mid 2009Sendout: 4.0 Bcf/dDeveloper: CheniereCapacity Holder: Total & ChevronTexaco

Sabine Pass LNGIn-service date: April 2008 – Mid 2009Sendout: 4.0 Bcf/dDeveloper: CheniereCapacity Holder: Total & ChevronTexaco

*Freeport LNG Development is composed of a General Partnership which has management control, but zero economic interest (Michael Smith 50% and ConocoPhillips 50%) and Limited Partners which have zero management interest, but have economic interest (Michael Smith 60%, Cheniere 30% and Osaka 10%).

Creole TrailIn-service date: TBDSendout: 3.0 Bcf/dDeveloper: CheniereCapacity Holder: TBD

Creole TrailIn-service date: TBDSendout: 3.0 Bcf/dDeveloper: CheniereCapacity Holder: TBD

Energy BridgeIn-service date: 3/2005Sendout: 0.5 Bcf/dDeveloper: Excelerate Energy

Energy BridgeIn-service date: 3/2005Sendout: 0.5 Bcf/dDeveloper: Excelerate Energy

Freeport LNGIn-service date: April 2008Sendout:1.5 Bcf/d (expand to 3.0 Bcf/d)Developer: Freeport LNG Dev.*Capacity Holder: Dow & ConocoPhillips

& Mitsubishi

Freeport LNGIn-service date: April 2008Sendout:1.5 Bcf/d (expand to 3.0 Bcf/d)Developer: Freeport LNG Dev.*Capacity Holder: Dow & ConocoPhillips

& MitsubishiGolden Pass

In-service date: 2010Sendout: 2 Bcf/dDeveloper: ExxonMobil

Golden PassIn-service date: 2010Sendout: 2 Bcf/dDeveloper: ExxonMobil

Cameron LNGIn-service date: July 2009Sendout: 1.5 – 2.65 (Exp) Bcf/dDeveloper: SempraCapacity Holder: ENI

Cameron LNGIn-service date: July 2009Sendout: 1.5 – 2.65 (Exp) Bcf/dDeveloper: SempraCapacity Holder: ENI

Trunkline LNGIn-service date: 2006

(expansions)Sendout: 1.8 Bcf/dDeveloper: Southern UnionCapacity Holder: BG LNG

Trunkline LNGIn-service date: 2006

(expansions)Sendout: 1.8 Bcf/dDeveloper: Southern UnionCapacity Holder: BG LNG

Corpus Christi Projects (3)In-service dates: TBDSendout: 4.7 Bcf/d (total)Developers: 4Gas, Occidental

Corpus Christi Projects (3)In-service dates: TBDSendout: 4.7 Bcf/d (total)Developers: 4Gas, Occidental

25

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Trunkline LNG Base Facilities• 1.8 Bcf/d of sustained sendout

– 2.1 Bcf/d of peaking sendout• 9.0 Bcf of Storage

Everett24%

Lake Charles33%

Lake Charles33%

Elba Island22%

Elba Island22%

Cove Point19%

Cove Point19%

LNG Imports by TerminalJan – Dec 2007

Total = 771 Bcf/yr

*Source: US Department of Energy.

Shell5%

BG LNG55%

BG LNG55%

Suez LNG24%

Suez LNG24%

BP7%BP7%

LNG Imports by CompanyJan – Dec 2007

3.4% of U.S. Gas DemandExcelerate2%

Excelerate2%

Statoil7%

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TRUNKLINE LNG – LAKE CHARLES, LOUISIANA

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LNG Value Chain – Total Project

$0.6 B$2.0 B$2.0 B$1.5 B 1 Bcf/dScenario$6.1 B

$.50 – .75$.60 – 1.60$1.25 – 1.50$1.25 – 2.00 Per Unit$/Mcf$3.60 – 5.85

RegasificationShipping*LiquefactionExploration & ProductionTOTAL

Reserves 9 Tcf

Scope $0.05B

Initial drilling

$0.05B

Develop-ment

$1.4B

Trains required

2

Cost per train

$1.0B

Distance 12,000 nm

Rd. Trip Time

30 days

Ships Required

12

Cost per ship

$0.17B

Port $0.14B

Storage $0.16B

Vaporization .20B

Engineering & Other

.10B

*Shipping: West Africa to U.S. Gulf Coast.

% of Total9%33%33%25%100%

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REGASIFICATION PROCESSGASLIQUID

LNGLNGSTORAGESTORAGETANKSTANKS

PIPELINEPIPELINECOMPRESSORCOMPRESSOR

VAPORIZERSVAPORIZERS

DESU

PERH

EATE

R

DESU

PERH

EATE

R

BOILBOIL--OFFOFFCOMPRESSORCOMPRESSOR

PIPELINEPIPELINERECO

NDEN

SER

RECO

NDEN

SER

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Trunkline LNG - Infrastructure Enhancement Project (IEP)