LNG Economics: Why LNG Benefits Saint John

“Canaport LNG will be a major driver of economic activity in the province for the next few years. While impressive, the longer-term benefits for all Atlantic Canada are even greater.”

“Repsol YPF and Canaport LNG are key additions to Saint John’s and Atlantic Canada’s energy future. Thanks to Irving Oil’s partnership with Repsol, Canaport LNG is one of the few facilities in North America to have long term LNG supply. The supply puts Canaport LNG in a leading position that many other North American projects are still working hard to attain.”

A Perspective by Angela Tu Weissenberger, ATW Associates

THE PROCESSLiquefaction Natural gas is taken out of the ground and converted to its liquid form, LNG, by cooling it to -162 degrees Celsius (-260° F). This process, called liquefaction, reduces the volume by more than 600 times and allows LNG to be transported efficiently and safely by sea.

Transportation LNG is transported by sea in specially designed double-hulled ships.

Unloading Once it reaches its destination, the ship unloads the LNG at import terminals, where it is stored as a liquid.

Storage LNG is stored in specially designed tanks that keep it insulated and contained.

Regasification LNG is safely pumped through a vaporizer where it is slowly warmed in a controlled environment to convert it back to natural gas. This process is called regasification.

Distribution Natural gas is then sent through pipelines for distribution to businesses, hospitals, homeowners and other customers.

will be the first LNG Regasification Plant in

Canada to send natural gas to customers in both

Canadian and U.S. Markets.

LNG Tanker

Jetty

LNG Tank

Natural Gas Pipe

IndustryPower PlantsHomes

Regasification: A Safe ProcessNatural gas is converted from its liquid form to vapor form through a process known as regasification. During this process the liquid is simply heated, which brings it back to its original gaseous form, but its chemical and molecular structures are not changed. Stored LNG is pumped from the tanks into the vapourizers. In the vapourizers, LNG flows through a bundle of pipes that are located inside a gentle warm bath of water. As it flows through the bundle, heat from the bath vaporizes the LNG into its gaseous form and later heats it to 5ºC (41ºF), which Quest Consultants John Cornwell compares to “liquid in an insulated bottle.”

During regasification, careful attention is placed on how much gas is transferred at a time. Controls assure that the amount of natural gas in vapour form is sufficient to match the required customer demand and is continuously watched by the process operators. Vapourizers and required equipments are turned on and off modularly as required matching the gas demand closely. Beyond those controls are fail-safes that can shut down the entire regasification process quickly.

After the LNG is regasified, it is then transported through a pipeline, usually underground and not visible -- as will be the case with the Brunswick Pipeline (www.brunswickpipeline.com) -- to a distributor who directs it via piping into households and businesses for everyday uses.

“Canada is the largest per-capita energy user in the world due to climate, distances and an energy-intensive resource-based economy. Reliable and competitively priced energy sources are critical to the social and economic well-being of all Canadians. Increased gas supplies would offer an environmentally advantageous option for Atlantic Canada’s energy mix.”

“Canadian Business Magazine ranked Saint John as one of the most attractive places to do business in Canada, and many Saint John residents are already beginning to see the economic benefits of the Canaport LNG project. Over the next couple of years, the project will generate over 700 temporary construction jobs, translating into wages and indirect expenditures of more than $39 million (CAD).”

COPYRIGHT 2008 CANAPORTTM LNG LIMITED PARTNERSHIP

I SSUE #5, SPECIAL SAFETY ED IT ION

Canaport LNG Connections is our newsletter for neighbours of Canaport LNG and the Saint John Community. If you have suggestionsor comments about Canaport LNG Connections, please contact Carolyn Van der Veen at (506) 658-6212 or cvanderv@canaportlng.com

Today more than 5 million Canadian residents and businesses rely on natural gas for cooking, heating and power. As natural gas becomes an international fuel of choice, experts continue to explore and, increasingly, extol the safety record of liquefied natural gas – the liquid form of natural gas.

“LNG has been stored and shipped for over 45 years, and there has never been a major incident,” notes Bill Cooper, executive director of the Center for Liquefied Natural Gas. “In LNG history, there has been no loss of life in the community and no loss of cargo. That includes 110 million miles over the high seas and over 80,000 voyages.”

After Canada’s initial discovery of natural gas, Canadians became enthusiastic users of the fuel at home and at work. Canada’s first natural gas transmission pipeline was constructed in 1912 in Alberta and the country’s first interprovincial pipeline began transporting natural gas in 1956. The Maritimes & Northeast Pipeline, the first major natural gas transmission system to operate in the Maritimes, began transporting natural gas safely through Nova Scotia and New Brunswick in 2000.

The Saint John Lateral, the city’s first natural gas pipeline, has been operating safely for over seven years. A component of the Maritimes & Northeast Pipeline, the pipeline runs across the City of Saint John and has been a successful conduit for supplying natural gas to the city’s residences and businesses.

“The LNG business is undergoing unprecedented growth,” confirms ATW Associates’ Angela Tu Weissenberger, a national energy expert. The amount of LNG traded grew by 62 per cent from 1993 to 2003, she points out, and total LNG traded on a global basis is expected to nearly triple by 2015.

Worldwide, there are 24 existing export, or liquefaction, marine terminals in 15 countries, and 60 import, or regasification, marine terminals in 18 countries. In addition to these existing terminals, approximately 76 liquefaction marine terminal projects and

approximately 177 regasification terminal projects are either proposed or under construction all around the world. Both Japan and Spain have safely imported LNG since 1969, followed by the United States in 1971.

“LNG has been the sole source of natural gas in Japan and Korea for 40 years,” says Weissenberger. “To put this in perspective, a ship carrying LNG arrives once every 20 hours in the Tokyo Harbour.

John Cornwell, a risk and consequence analyst for engineering firm Quest Consultants Inc., notes that LNG’s popularity is, in large part, driven by the energy demand and is viewed favourably as a method of “bringing in a very clean-burning fuel.” In fact, “many more countries have entered into the importation of LNG, including China and India.”

Canaport LNG and other energy companies are creating opportunities to address the rising demand for LNG in North America – in safe and environmentally sound ways. Industry experts have spent considerable resources analyzing and assessing the potential risks of LNG over the last five decades, and have either eliminated them entirely or mitigated them significantly.

Frank Bircha, an independent LNG and natural gas risk assessment expert, cites several major advances in risk mitigation. “There have been lots of technological advances in containment, process and instrumentation and controls. We’ve seen at least one major advancement every decade.” He notes, for example, that the spherical “Moss” design pioneered by Norway’s Moss Rosenberg in the 1970s made tanks much safer.

“The LNG industry’s culture has become much more safety-conscious. And the major participants in the industry are large multi-national companies with stellar safety practices”, says Bircha.

“LNG has been stored and shipped for over 45 years, and there has never been a major incident,”

— BILL COOPER, EXECUTIVE DIRECTOR OF THE CENTER FOR LIQUEFIED NATURAL GAS

LNG’s History of Safety Spans Decades and the Globe

In Canada, the first discovery of natural gas was made in New Brunswick in 1859, marking the beginning of one of industry’s most impressive safety records.

SPECIAL EDITION— LNG Safety Review —

Clean. Safe. Energy.

Brunswick Square, Suite 1606 1 Germain Street Saint John, NB Canada E2L 4V1T +1 506 658 6250 F +1 506 658 6257 www.canaportlng.com

Natural gas is converted to liquid

form by cooling it to

-162° Celsius (-260° F)

Safety SnapshotFast Facts About LNG

Myth Fact

LNG might cause an explosion LNG is neither explosive nor combustible, only its vapours can be explosive.

LNG might cause environmental or health hazards

The LNG terminal does not produce excessive amounts of waste, and LNG itself is odorless and colourless. As a result of the regasification process, carbon dioxide, a common and non-reactive gas, is produced.

LNG terminals are potential sites for terrorist attacks

The design and security systems of liquefied natural gas tanks are very difficult to breach. Safety modeling done as part of Canaport LNG’s environmental approval process showed that even during a worst-case scenario of an LNG spill or a vapour cloud, there should not be danger to the community.

LNG could leak into our communities

Leaks are extremely rare in the LNG industry — not just in Canada but in the world, with facilities designed to fully contain potential leaks on site. In addition, when LNG vaporizes in air, the resulting methane is lighter than air and will thus rise and dissipate harmlessly.

LNG ships could spill LNG into our waters

The ships that carry LNG are double hulled to prevent leaks from the inside as well as punctures from the outside. The captains of each ship are well qualified and experienced sailors who understand the strict procedures required for safely navigating our coastline as well as keeping other maritime traffic safe.

The LNG Industry Maintains Rigorous Safety StandardsStrict Government Oversight and StandardsGovernment and industry standards together have helped the industry achieve an outstanding safety record. The safety standards and regulatory process in Canada are very similar to that around the world and especially in the United States.

Companies proposing to build an LNG facility must submit the project to a rigorous environmental assessment, which must be approved by a number of regulatory bodies, including the Canadian Environmental Assessment Agency, the National Energy Board, Fisheries and Oceans Canada, the Canadian Coast Guard and provincial regulators. Canaport LNG has successfully obtained all major environmental and regulatory approvals required to date.

LNG Tank Safety Modern LNG full containment tanks, which use a nine per cent nickel-steel container encased inside another concrete tank, have never had a crack failure in their 35-year history and represent the safest type of LNG tank. These tanks are being constructed at Canaport LNG, marking the first time that full containment tanks have been used in Canada. In case of a failure of the inner nickel-steel tank, the LNG and its vapours are contained inside the outer concrete tank and not exposed to the atmosphere (therefore the name full containment).

State-of-the-Art TechnologyLeaks are extraordinarily uncommon in the LNG industry around the world. The last recorded leak was over 25 years ago and was caused by a valve defect that has long since been corrected . Today LNG terminals use state-of-the-art facilities including full containment tanks, methane detectors, and monitors that oversee LNG levels, temperatures and vapor pressure. Behind each of these safety measures are fail-safes that lock down containment should anything happen. Compared to other forms of energy, an improbable LNG spill “would be smaller in diameter and, if ignited, would burn for a shorter period of time,” said John Cornwell, a risk and consequence analyst for engineering firm Quest Consultants Inc. “It would also have little to no environmental impact.”

Sophisticated Safety SystemsSophisticated alarms and multiple back-up safety systems, which include emergency shutdown (ESD) systems, are core components of LNG facilities. ESD systems can identify problems and shut down operations, limiting consequences. They are normally linked to automated gas, liquid and fire detection equipment. Other safety devices include detectors for monitoring LNG levels and vapor pressures within storage tanks and closed-circuit television equipment for monitoring all critical locations of LNG facilities. Facility safety systems combined with special operating procedures, training and equipment maintenance minimize the risk of an accident.

LNG Carrier Safety: A Long Record of Safe OperationTransportation of LNG by marine carriers has a long record of safe operation. In LNG’s 45-plus year shipping history, LNG carriers have traveled more than 160 million kilometres (100 million miles) without any major incidents.

The outstanding LNG shipping safety record is attributable to continuous improvement of technology, safety equipment, comprehensive safety procedures, training, equipment maintenance by responsible ship owners and operators and effective government regulation and oversight.

Over the history of LNG shipping, there have been no collisions, fires, explosions or hull failures resulting in a loss of containment for LNG ships in ports or at sea. According to the Sandia National Laboratories’ 2004 report to the U.S. Department of Energy, over the 45-plus year life of the industry only eight marine incidents worldwide have resulted

in accidental spillage of LNG, and none of the spills have been as a result of a failure or breach of a containment system. In the few cases of accidental spillage, no fires occurred and only minor structural damage was noted. Seven additional marine-related incidents have occurred with none resulting in release of cargo.

No explosions or fatalities from a cargo spill have ever occurred aboard an LNG carrier.

According to Cornwell, “Many safeguards are in place to prevent potential LNG incidents, and the historical record of LNG shipping is excellent. Tens of thousands of trans-ocean voyages have occurred in LNG ships, and there have been no spills affecting members of the public. The double-hulled design of the ships provides added strength to prevent any potential leakage. By comparison, ships carrying crude oil and gasoline are often only single-hulled.”

For more information about LNG safety visit our website at www.canaportlng.com and watch the online video,

“LNG The Safe, Clean Energy Choice,” by the Center for LNG.

Double-hulled LNG carriers feature primary and secondary cargo containment systems to prevent leaks or ruptures in the unlikely event of a grounding or collision.

The primary and secondary cargo containment systems are protected by the outer and inner hulls, and separated from the inner hull by layers of heavy insulation.

LNG carriers have emergency shutdown systems that significantly diminish the risk of an accidental release of LNG. Fire and gas detection systems provide warnings to crews and can automatically activate fire-fighting systems in case of fire.

Says Bill Cooper, Center for LNG: “The ships have a robust safety design. Throughout the ships, there are leak detection monitors that can detect a leak that is the size of a pinhole. They have sophisticated fire suppressant

equipment on board. The ships are also protected by having the most highly trained staff on the seas.”

LNG carriers are also fitted with sophisticated equipment to enhance safe navigation.

The navigational safety features include anti-collision radar, automated information systems (AIS) and global positioning systems (GPS) that enable the crew to monitor the ship’s position, traffic and other hazards. A global maritime distress system automatically transmits signals if an onboard emergency requiring external assistance should occur.

Additional systems, such as approach velocity meters and automatic mooring line tension monitoring ensure carrier operation safety when berthing and unberthing.

LNG: The Liquid Form of Natural GasLNG is the liquid form of natural gas, a clear, colorless, odorless, liquid composed mainly of methane. Extracted from the ground as natural gas, it is turned into a liquid by being cooled to –162 C° (–260 F°) and can then be kept at almost normal atmospheric pressures in specially designed tanks that work on principles similar to a thermos container.

LNG is not explosive and non-combustible in its liquid form. If an LNG leak resulted, a fire could only occur within a tight range of conditions. For LNG to ignite, there would have to be the right concentration of LNG vapor in the air (5%-15%) and a source of ignition.

In LNG’s 45-plus year shipping history,LNG carriers have travelled more than

100 million miles without any major incidents.

LNG Economics: Why LNG Benefits Saint John

“Canaport LNG will be a major driver of economic activity in the province for the next few years. While impressive, the longer-term benefits for all Atlantic Canada are even greater.”

“Repsol YPF and Canaport LNG are key additions to Saint John’s and Atlantic Canada’s energy future. Thanks to Irving Oil’s partnership with Repsol, Canaport LNG is one of the few facilities in North America to have long term LNG supply. The supply puts Canaport LNG in a leading position that many other North American projects are still working hard to attain.”

A Perspective by Angela Tu Weissenberger, ATW Associates

THE PROCESSLiquefaction Natural gas is taken out of the ground and converted to its liquid form, LNG, by cooling it to -162 degrees Celsius (-260° F). This process, called liquefaction, reduces the volume by more than 600 times and allows LNG to be transported efficiently and safely by sea.

Transportation LNG is transported by sea in specially designed double-hulled ships.

Unloading Once it reaches its destination, the ship unloads the LNG at import terminals, where it is stored as a liquid.

Storage LNG is stored in specially designed tanks that keep it insulated and contained.

Regasification LNG is safely pumped through a vaporizer where it is slowly warmed in a controlled environment to convert it back to natural gas. This process is called regasification.

Distribution Natural gas is then sent through pipelines for distribution to businesses, hospitals, homeowners and other customers.

will be the first LNG Regasification Plant in

Canada to send natural gas to customers in both

Canadian and U.S. Markets.

LNG Tanker

Jetty

LNG Tank

Natural Gas Pipe

IndustryPower PlantsHomes

Regasification: A Safe ProcessNatural gas is converted from its liquid form to vapor form through a process known as regasification. During this process the liquid is simply heated, which brings it back to its original gaseous form, but its chemical and molecular structures are not changed. Stored LNG is pumped from the tanks into the vapourizers. In the vapourizers, LNG flows through a bundle of pipes that are located inside a gentle warm bath of water. As it flows through the bundle, heat from the bath vaporizes the LNG into its gaseous form and later heats it to 5ºC (41ºF), which Quest Consultants John Cornwell compares to “liquid in an insulated bottle.”

During regasification, careful attention is placed on how much gas is transferred at a time. Controls assure that the amount of natural gas in vapour form is sufficient to match the required customer demand and is continuously watched by the process operators. Vapourizers and required equipments are turned on and off modularly as required matching the gas demand closely. Beyond those controls are fail-safes that can shut down the entire regasification process quickly.

After the LNG is regasified, it is then transported through a pipeline, usually underground and not visible -- as will be the case with the Brunswick Pipeline (www.brunswickpipeline.com) -- to a distributor who directs it via piping into households and businesses for everyday uses.

“Canada is the largest per-capita energy user in the world due to climate, distances and an energy-intensive resource-based economy. Reliable and competitively priced energy sources are critical to the social and economic well-being of all Canadians. Increased gas supplies would offer an environmentally advantageous option for Atlantic Canada’s energy mix.”

“Canadian Business Magazine ranked Saint John as one of the most attractive places to do business in Canada, and many Saint John residents are already beginning to see the economic benefits of the Canaport LNG project. Over the next couple of years, the project will generate over 700 temporary construction jobs, translating into wages and indirect expenditures of more than $39 million (CAD).”

COPYRIGHT 2008 CANAPORTTM LNG LIMITED PARTNERSHIP

I SSUE #5, SPECIAL SAFETY ED IT ION

Canaport LNG Connections is our newsletter for neighbours of Canaport LNG and the Saint John Community. If you have suggestionsor comments about Canaport LNG Connections, please contact Carolyn Van der Veen at (506) 658-6212 or cvanderv@canaportlng.com

Today more than 5 million Canadian residents and businesses rely on natural gas for cooking, heating and power. As natural gas becomes an international fuel of choice, experts continue to explore and, increasingly, extol the safety record of liquefied natural gas – the liquid form of natural gas.

“LNG has been stored and shipped for over 45 years, and there has never been a major incident,” notes Bill Cooper, executive director of the Center for Liquefied Natural Gas. “In LNG history, there has been no loss of life in the community and no loss of cargo. That includes 110 million miles over the high seas and over 80,000 voyages.”

After Canada’s initial discovery of natural gas, Canadians became enthusiastic users of the fuel at home and at work. Canada’s first natural gas transmission pipeline was constructed in 1912 in Alberta and the country’s first interprovincial pipeline began transporting natural gas in 1956. The Maritimes & Northeast Pipeline, the first major natural gas transmission system to operate in the Maritimes, began transporting natural gas safely through Nova Scotia and New Brunswick in 2000.

The Saint John Lateral, the city’s first natural gas pipeline, has been operating safely for over seven years. A component of the Maritimes & Northeast Pipeline, the pipeline runs across the City of Saint John and has been a successful conduit for supplying natural gas to the city’s residences and businesses.

“The LNG business is undergoing unprecedented growth,” confirms ATW Associates’ Angela Tu Weissenberger, a national energy expert. The amount of LNG traded grew by 62 per cent from 1993 to 2003, she points out, and total LNG traded on a global basis is expected to nearly triple by 2015.

Worldwide, there are 24 existing export, or liquefaction, marine terminals in 15 countries, and 60 import, or regasification, marine terminals in 18 countries. In addition to these existing terminals, approximately 76 liquefaction marine terminal projects and

approximately 177 regasification terminal projects are either proposed or under construction all around the world. Both Japan and Spain have safely imported LNG since 1969, followed by the United States in 1971.

“LNG has been the sole source of natural gas in Japan and Korea for 40 years,” says Weissenberger. “To put this in perspective, a ship carrying LNG arrives once every 20 hours in the Tokyo Harbour.

John Cornwell, a risk and consequence analyst for engineering firm Quest Consultants Inc., notes that LNG’s popularity is, in large part, driven by the energy demand and is viewed favourably as a method of “bringing in a very clean-burning fuel.” In fact, “many more countries have entered into the importation of LNG, including China and India.”

Canaport LNG and other energy companies are creating opportunities to address the rising demand for LNG in North America – in safe and environmentally sound ways. Industry experts have spent considerable resources analyzing and assessing the potential risks of LNG over the last five decades, and have either eliminated them entirely or mitigated them significantly.

Frank Bircha, an independent LNG and natural gas risk assessment expert, cites several major advances in risk mitigation. “There have been lots of technological advances in containment, process and instrumentation and controls. We’ve seen at least one major advancement every decade.” He notes, for example, that the spherical “Moss” design pioneered by Norway’s Moss Rosenberg in the 1970s made tanks much safer.

“The LNG industry’s culture has become much more safety-conscious. And the major participants in the industry are large multi-national companies with stellar safety practices”, says Bircha.

“LNG has been stored and shipped for over 45 years, and there has never been a major incident,”

— BILL COOPER, EXECUTIVE DIRECTOR OF THE CENTER FOR LIQUEFIED NATURAL GAS

LNG’s History of Safety Spans Decades and the Globe

In Canada, the first discovery of natural gas was made in New Brunswick in 1859, marking the beginning of one of industry’s most impressive safety records.

SPECIAL EDITION— LNG Safety Review —

Clean. Safe. Energy.