Liquefied Natural Gas – The Australian Race

Source: Woodside – NWS LNG Plant

Peter Behrenbruch

This presentation has been put together from many s ources: company ASX releases and reports, reports by commer cial banks and advisors, encyclopedias, journal articles and p rivate communication. While care has been taken in assembl ing the information, there is the possibility that some of the information is incorrect. There is also some interpretation by the author. It is believed that the expectations reflected in various graphs and

Disclaimer

2

believed that the expectations reflected in various graphs and statements are reasonable, but they may be affected by a variety of variables and changes in underlying assumptions which could cause the future LNG situation or trends to differ materially including, but not limited to: increased demand or loss of market; price and currency fluctuations; drilling and produ ction results; reserve estimates; industry competition and competi ng technology developments; environmental and physical risks; legislative changes; fiscal and regulatory developm ents; economic and financial markets; project delays and cost escalation; government and corporate approvals.

• Introduction

• Global Scene

• Asia -Pacific Situation

Presentation Outline

2,500

2,000

1,500

3,000

PJ/a Eastern Australian Gas Demand (PJpa)

Liquefied Natural Gas – The Australian Race

~ 22Mtpa

Demand for Eastern Australian gas to triple by 2020 :LNG will alter market fundamentals!

Source: Santos, assuming 6 LNG trains

• Asia -Pacific Situation

• Commercial Aspects

• Australian Scene

• Technical AspectsDomestic Power Generation LNG

2012 2013 2014 2015 2016 2017 2018 2019

1,000

500

02011 2020

1 PJpa ~ 0.018Mtpa1Bcf ~ 1.18 PJ

Introductionand

Recent News

• Natural gas, including LNG met more than 21% of the

world’s energy needs in 2010

• In 1980, LNG trade represented just 2% of global ga s

consumption; in 2010, LNG trade represented more

IntroductionSome Interesting Facts and Figures

than 10% of global consumption

• LNG is one of the world’s fastest growing energy

industries, with trade increasing by ~9% pa, 2004-2 010

• Asia is the largest LNG market with more than 60% o f

total worldwide imports in 2010

IntroductionRecent NEWS and Future Wildcards for LNG

� Unconventional (shale) gas in US & Canada etc.

� Japan – quake hit: worries about nuclear plant safet y

� Asian demand continuous to be buoyant

LNG Demand

� Asian demand continuous to be buoyant

� European oversupply waning: 22 to less than 10 bcm in 2011

� Middle East upheaval (8 bcm removed due to Libyan c ivil war)

� Other unplanned outages continue?. e.g. Algeria, Ni geria

� Imports to Middle East (20 Mtpa by 2020?)

Current LNG Bubble Will Burstin European Winter of 2012?

IntroductionLNG SWOT Analysis

StrengthClean fuelHigh supply-demand potentialDownward trend in CAPEXAbundant resourcesProven technology

WeaknessHigh CAPEXAsian premiumLong-term and firm contractsLong implementation scheduleDifficulties in regulatory approvalsProven technology Difficulties in regulatory approvals

OpportunityEnvironmental protectionDelay and curb in nuclear powerNew technologies, e.g. floating LNGNew markets, particularly in Asia

ThreatPrice competition with other fuelsUncertainty due to deregulationLNG being displaced, e.g. shale gasLack of EPC contractors, skilled workforceFiscal instability; various turmoilsOil and gas price volatilityProject: schedule and cost overrun danger

Strength of LNG: Low CAPEX and Technology RiskDifferent Methods of Monetising Stranded Gas

Cap

ital E

xpen

ditu

res

Commercially proven technologies

Yet-to-be commercially proven technologies

GTL

LongDistancePipelines

Source: Penn Well’s International Petroleum Encyclo pedia 2008

Technological risk

Cap

ital E

xpen

ditu

res

Source: SRI Consulting and Taylor-De Jongh

LNGCNG

FloatingLNG

FPSOGTL

Hydrates

IntroductionAustralian LNG: Key to Future Supply

World LNG Export Capacity350

300

250

200

Mtp

a

Rest of World

Australia

Source: Modified after

Santos, AOG 2011,

based on WoodMac

Australia: ~20 Mtpa ~40 Mtpa >40 MtpaNWS (5 trains) 1 Pluto 1 (4.3) (see next slide)Bayu-Undan (3.2) Ichthys (8.4)

Greater Gorgon (15) Prelude (3.6)

CSM (~22, first tranche)

Operational Under Implementation Pla nned

150

100

50

0

Mtp

a

?

1Actual 16.5 Mtpa in 2010Design capacity, 14.7 Mtpa

movingahead

spotsalesand

increasedefficiency

IntroductionLarger Australian LNG Projects

Operator Capacity Train Gas CondensateProject Mt No. 2P, Tcf 2P, MMbl

Pluto 1 WPL 4.3 1 4.8 62

Ichthys Inpex 8.4 2 12.8 527

Greater Gorgon Chevron 15 3 40+* lean gas

Prelude Shell 3.6 1 3 ?

Source: Company DataTotals 84.81 22 (av. ~4Mt/train)

Prelude Shell 3.6 1 3 ?

Pluto 2 WPL 4.3 1 ? ?

Wheatstone/Iago Chevron 8.9 2 8.6 145

Browse WPL 12 3 13.3 360

Sunrise WPL 4 1 5.1* 226

QCLNG BG 8.5 2 ?

GLNG Santos 7.8 2 ?

APLNG Conoco-Phillips 14 4 11,775 PJ

* high CO 21 plus small CSM and “blue sky”

IntroductionAustralia’s LNG Future

Total project “slate” = 525 Mtpa by 2020 (very high case?)

Mtp

a

Existing and under construction

Probable and possible

120

100

80

60

77 Mtpa

Source: Modified after Morgan Stanley, April

2009, after BG presentation

Aus

tral

iaQ

atar

Nig

eria

Alg

eria

Indo

nesi

aM

alay

sia

Egy

ptTr

inid

ad Iran

Rus

sia

Wes

tR

ussi

a E

ast

Ven

ezue

la

UA

E

Yem

en

Om

anP

eru

Liby

a

Bru

nei

Nor

way

Ala

ska

PN

GA

ngol

a

Eq.

Gui

nea

40

20

0

in 2 ½ years we are now at ~60 Mtpa, existing and u nder construction

IntroductionQatar: LNG

Export Leader

Qatar’s Sheik Hamad Bin Khalifa Al-Thaniand Queen Elizabeth II: inauguration of the

South Hook LNG terminal in Wales, May 2009.

Qatar reaches LNG milestone:“Qatar has achieved its 77 Mtpa target,with all 14 LNG trains now running at capacity.This confirms Qatar as the world’s main LNGsupplier with a market share of over 30% in 2011.”

Quote: WoodMac

IntroductionAustralia’s LNG Position

� Large, uncommitted gas resources

� Close to buoyant and growing Asian markets

� Politically stable country and proven reliability

� Too many LNG projects in “the race” (?)

ProjectSanctioning

� Technical, commercial and environmental challenges: • cost inflation uncertainty in project economi cs• limits of labour resources• delays in partner agreements re execution• delays on sales agreements• delays in environmental approvals• uncertainty in reserves estimates

What will be the actual growth?Can we become the world’s # 1, and if so, when?

Global LNG SceneHistory, Current and Beyond

Importanceof

Natural Gas

Natural GasGlobal Energy Shares – 1973 and 2008

Source: IEA, World Energy Statistics 2010

Natural GasResources and Reserves, Tcf

Russia

CanadaTurkmenistan

Norway

Kazakhstan

1567

28687

64

72

Source: Santos, AOG 2011,

based on BP Statistical Review 2010, Oil &

Gas Journal, *EIA

Iran

QatarUAE

USA

Canada

Australia

VenezuelaNigeria

Algeria

Saudi

Egypt

Iraq China

India

Kuwait Malaysia

Indonesia

1046

896227

280

185

159 112

113

77 63 39

87

84

109 250+

200

245

62 827

Proven gas reserves (Tcf)

Unconventional gas resources (Tcf)

Natural Gas – 1971 to 2009World Production by Region, bcm

Source: IEA, World Energy Statistics 2010

* Asia excludes China.

Natural Gas – 1973 and 2009World Production

Source: IEA, World Energy Statistics 2010

Natural GasWorld Production and Movement

**

2009 Figures:Net exports and net imports,include pipeline gas and LNG

* LNG exporter, importer

Source: IEA, World Energy Statistics 2010

**

*

**

**

*****

*

Natural Gas1963 – The Year before First LNG Trade

Reserves ConsumptionArea Tcf/bcm Tcf/bcm, 1963 R/P RatioUSA 276/7,800 15/430 18

Middle East 181/5,100 0.04/1 4500

USSR, Eastern Europe 98/2,800 3/90 33

Source: Modified after - The Petroleum Handbook,Shell International Petroleum Co Ltd 1966

Today: USA (conventional) reserves ~240TcfRussia & E Europe reserves ~2,000TcfMiddle East reserves ~2,600Tcf

USSR, Eastern Europe 98/2,800 3/90 33

Africa 81/2,300 0.01/<1 8000

Western Europe 52/1,500 0.55/16 95

South, Central America 46/1,300 0.31/9 150

Canada 37/1,000 0.75/21 49

Asia, Far East 20/600 0.11/3 180

LNG Trade, Demand and SupplyHistory and Forecasts

Global LNG SceneEvolution of LNG Trade Flows (1) – Mtpa

Source: Santos, AOG 2011,based on Wood Mackenzie

Global LNG SceneEvolution of LNG Trade Flows (2) – Mtpa

Source: Santos, AOG 2011,

based on Wood Mackenzie

“Global” LNG SceneEvolution of LNG Trade

Source: Santos, AOG 2011,

based on BP Statistical Review 1980-2010,

WoodMac 2000-2020

LNG DemandGlobal Base Case Projections

Source: Penn Well’s International Petroleum Encyclo pedia 2009

?

LNG SupplyGlobal Base Case Projections

Source: Penn Well’s International Petroleum Encyclo pedia 2009

LNG TradeGrowth Scenarios

WoodMac

USShaleGas

Source: Penn Well’s International Petroleum Encyclo pedia 2009

Chevron

More recentWoodMac

LNG TradeGlobal Projection – Base Case*

Source: Penn Well’s International Petroleum Encyclo pedia 2009

LNG DemandGlobal Forecast - Woodside

Demand Range

Probable

Possible

• 2009-10 market well supplied due toeconomic downturn, new LNG andunconventional gas

• Higher than expected economicrecovery in Asia in 2010

• From 2011 global market expected totighten leading up to the start up in

~450 mtpa

Operational or under Construction

~220 mtpa

Source: Woodside – based on Wood Mackenzie,

FACTS Global Energy, Poten and Partners

Historical LNG growth rate, 1980 to 2010, 7+% per a nnumLook forward to 2020, anticipated growth 5+% per an num

tighten leading up to the start up in~2015 of the next tranche of newsupply currently under construction

• Wildcard – Middle East demand couldrapidly absorb spot capacity

• 2015+ requires new LNG supply(a new Browse-sized project each yearfrom 2015)

• New projects face challenges toachieve FID

2015 2020 20252010

Asia-Pacific LNG

Asia-Pacific LNGDistinct Demand Groups

China

S Korea Japan

Taiwan

Growing Markets

Established Markets

100

100

0

50

100

0

50

100

0

50

100

5000 05 10 15 20 25

00 05 10 15 20 25 00 05 10 15 20 25

Growing at 1-3%

Growing at ~10%per annum

Source: Modified after Santos, AOG 2011

India

Philippines

MalaysiaIndonesia

Singapore

Thailand Vietnam

EmergingMarkets

Legend (volumes in mtpa):Woodmac estimates of LNG demand Woodmac Regas Peak Capacity estimatesAdditional LNG demand, Santos estimates

100

0

500

50

10

0

10

0

10

0

10

0

10

0

10

0

00 05 10 15 20 25 00 05 10 15 20 25

00 05 10 15 20 25

00 05 10 15 20 25

00 05 10 15 20 25

00 05 10 15 20 25

00 05 10 15 20 25

00 05 10 15 20 25

00 05 10 15 20 25

per annum

Variable Growth

Hong Kong?

Asia-Pacific LNGAsia: the Engine for Growth in Demand

• Key Asian buyers: China, India,Japan, S Korea, Taiwan

• Demand growth includes newbuyers, who are progressing LNGreceiving infrastructure

• Emerging Asian markets includesome unexpected buyers in

2010 2015

2020 2025

mtpa90

80

60

70

50

Source: Modified after Woodside – based on WoodMac

some unexpected buyers inMalaysia and Indonesia (historicalLNG exporters)

• Also a Middle East regional marketis emerging

• Traditional and emerging buyersrepresent the cornerstone of Asia-Pacific LNG demand - growth andre-contracting

2020 2025

10

0

20

30

50

40

Asia-Pacific LNGChina’s Existing Contracts

Contract Vol. Start-up Date 2006 2007 2010 2015

Exporter --------------------------------- Mtpa ---------------------------------

NWS 3.3 2006 0.7 2.4 3.7 3.7

Tangguh 2.6 2009 1.5 2.6

MLNG 3.0 2010 1.9 3.0

Source: Penn Well’s International Petroleum Encyclo pedia 2009

MLNG 3.0 2010 1.9 3.0

Total 8.8 0.7 2.4 6.2 9.3

FGE base-case LNG demand forecast 0.7 2.9 7.0 9.3

China uncommitted demand 0.5 0.8 4.0

Asia-Pacific LNGChina’s Import Terminal Profile

Project Location Capacity, mt Operator Start

Dapeng* Shenzhen 3.7 CNOOC 2006

Fujian* Quanzhou 2.6 CNOOC 2008

Shanghai** Shanghai 3.0 CNOOC 2009

Rudong** Rudong 3.5 CNPC 2011

Dalian** Dalian 3.0 CNPC 2011

Tangshan** Tangshan 3.0 CNPC 2012

Article: 5 June 2009

Tangshan** Tangshan 3.0 CNPC 2012

Zhuhai*** Zhuhai 3.0 CNOOC 2010

Zhuhai*** Zhuhai 2.0 SINOPEC 2012

Zhejiang*** Ningbo 3.0 CNOOC 2013

Shenzhen*** Shenzhen 2.0 CNOOC 2013

Shenzhen*** Shenzhen 2.0 CNPC 2012

Hainan*** Haikou 2.0 CNOOC 2012

Shandong*** Qingdao 3.0 SINOPEC 2012

Yuedong*** Shantou 2.0 CNOOC 2012

Yuexi*** Jieyang 2.0 CNOOC 2014*under operation, **under construction, ***approved or being planned

Asia-Pacific LNGChina’s LNG Demand at Different Prices

30

35

40

45

50LNG Existing and contracted (mtpa)Total LNG Demand @ 6 $/MMBtu DESTotal LNG Demand @ 10 $/MMBtu DESTotal LNG Demand @ 12 $/MMBtu DESTotal LNG Demand @ 15 $/MMBtu DES

Source: Modified after Fesharaki,FACTS Global Energy, Gastech March 2008

0

5

10

15

20

25

30

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

mtp

a

The “Wake” ofLNG Regasification Terminals

(from previous table)

Asia-Pacific LNGIndia’s LNG Contracts vs. Demand Outlook

Source: Penn Well’s International Petroleum Encyclo pedia 2009

25

30

35

40

45LNG Volumes: Existing and Contracted (mtpa)

Total LNG Demand @ 6 $/MMBtu DES

Total LNG Demand @ 10 $/MMBtu DES

Total LNG Demand @ 12 $/MMBtu DES

Total LNG Demand @ 15 $/MMBtu DES

Source: Fesharaki, FACTS Global Energy,Gastech March 2008

Asia-Pacific LNGIndia’s LNG Demand at Different Prices

0

5

10

15

20

25

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

mtpa

Source: “Fundamentals of the Global LNG Industry”,Petroleum Economist Ltd March 2001,in association with Shell Gas & Power

Asia-Pacific LNGJapanese Supply and Demand

1987 Forecast(NWS LNG Implementation)

1999 Forecast

Source: Woodside

LNG Pricing, Costsand

Other Commercial Aspects

LNG – CommercialInteractions Between East and West:

Important Implications for Trade, Prices, Contracts , etc.

Atlantic Basin

NBP Index JCC IndexHH Index

Asia Pacific BasinMiddle East

Source: Fesharaki, FACTS Global Energy,Gastech March 2008

LNG - CommercialNatural Gas Import Prices, USD/MBtu Natural Gas

Source: IEA, World Energy Statistics 2010

12

14

16

18

20

Gas/LNG prices have risen for five distinct reasons :1. Higher oil prices = higher natural gas prices2. Construction costs have risen significantly! 3. United States, from zero to possibly (?) number 2 importer4. Indonesia, substantial decline of exports (except Tangguh)5. Qatar holds most of the cards in the near term and they

know it!

$/MMBtuLNG - Commercial

Living in a High Priced World

0

2

4

6

8

10

Jan-0

0May

-00

Sep-0

0Ja

n-01

May-0

1Sep

-01

Jan-

02May

-02

Sep-0

2Ja

n-03

May-0

3Sep

-03

Jan-0

4May

-04

Sep-0

4Ja

n-05

May-0

5Sep

-05

Jan-

06May

-06

Sep-0

6Ja

n-07

May-0

7Sep

-07

Minimum-Maximum Price Range Average Northeast Asia Price NBP HH

know it!Higher prices will continue into the foreseeable fu ture.

Source: Modified after Fesharaki, FACTS Global Ener gy,Gastech March 2008

First HH Spike

LNG - CommercialHenry Hub (LA.) Natural Gas Prices: 1986 – 2001

Ref: Oil & Gas Journal – March 8, 2004

LNG CommercialLong-term Contracts

Source: Oil Search Ltd

Oil Price Relationship in LNG Contracts

20

40

60

80

100

120

% L

inka

ge w

ith O

il P

rices

LNG – CommercialHistory and Future Direction of Long-term Contracts

• Stronger price renegotiation clauses

• Shorter time periods

• Flexibility in delivery

• Willingness to consider alternative pricing formulas

0

Pre-1

985

Base

Con

tract

s Po

st-1

985

S-Cur

ve L

ow/H

igh

Prices

Gua

ngdo

ng

NWS/

KOG

AS M

edium

Ter

mRas

Gas

-Tai

wan

RasG

as-In

dia

KOG

AS 20

05 C

ontra

cts

New J

apan

ese

<$30

/bbl

New J

apan

ese

>$30

/bbl

Pluto

to J

apan

>$3

0/bb

l

NWS

Alloca

tion

Proce

ss

New R

asG

as to

KO

GAS%

Lin

kage

with

Oil

Pric

es

Source: Fesharaki, FACTS Global Energy,Gastech March 2008

LNG - CommercialEstimated Cost Reductions

Lower costs can improve netbacksor open additional markets

especially with higher gas prices

Source: Fundamentals of the Global LNG Industry,Petroleum Economist Ltd March 2001,in association with Shell Gas & Power

Note: does not include feedstock price;USD/million Btu – 4,000 km voyage

Unit Cost Against Train Size

Source: DOE

1 3 5 7642Train Size, Mtpa100

150

200

250

300Unit Cost, USD/tonne

2.53

1.54

1.00

1.75

0.50

0.49

0.40

0.35

1990 LNG Costs1980 LNG Costs

LiquefactionTransportation

RegasificationTotal

LiquefactionTransportation

RegasificationTotal

Source: McKinsey

30%declineIntodipelinecosts

DOMGAS 1,921 73 64

LNG Trains, 1and 2 2,916 73 66

Facilities Total Total Aus West Aus Expenditures AUD million % %

LNG – CommercialNWS Development Costs and Local Content

LNG Trains, 1and 2 2,916 73 66

LNG Train 3, GWA onshore 1,185 72 66

GWA Offshore 1,753 66 45

Source: Woodside

Totals 7,775 71 60

Australian LNG

Darwin

NTQLD

NWS

DarwinLNG

Bayu-Undan

Ichthys

Wheatstone

Pluto

Browse

Greater Gorgon

Sunrise

PNG LNG

Prelude

Scarborough

Australian LNGLocation of Projects

NWS LNGPluto LNG

GLNGQCLNGAPLNG

Sun LNGGladstone LNG

Southern Cross LNGGalilee Basin

Bowen Basin

Melbourne

WA

Perth

TAS

NSWSA

VICAdelaide

Brisbane

Sydney

0 500 1000

km

Wheatstone

Other LNG Possibilities:Abadi (Indonesia, INPEX)

PNG (Interoil)Poseidon (Conoco-Phillips)

Tassie Shoals (MEO)Caldita/Barossa (Santos)

More CSG

On StreamImplementationPlanned

Pluto LNG

“CSG Land”

Gladstone

QCLNG

Coal Basin Source: Arrow Energy, 2009

Galilee Basin

Surat Basin

Clarence-Moreton

BasinSydney Basin

Cooper Basin

Gunnedah Basin

“Australian” LNG: Project Scoreboard of 2009Typically 1 year DELAY

Project Concept Site EIS FEED Market FI D 1st Gas

Pluto 2 *** *** *** **

PNG LNG ** ** * * Q4/2009 2014

Ichthys ** ** * * H1/2010 2015

Gr. Gorgon * * ** * H2/2009 2015

Prelude NA NA NA NA NA NA NA

Source: Modified after Morgan Stanley, April 2009Number of stars indicates relative certainty or status of particular activity.

Prelude NA NA NA NA NA NA NA

Browse 2011 >2015

Wheatstone * * 2011 >2015

Sunrise

Scarborough

APLNG * 2011 >2015

QCLNG * * * 2009 2014

GLNG * * * * H1/2010 2014

Glad LNG * * * 2009 2013

Australian LNGPluto 2

Project Summary

• Ownership WPL (operator, 50%), Shell (50%)• LNG facility 1 x 4.3 Mtpa• Potential for expansion modular, up to 3 trains tota l • Gas resources no backing: exploration, purchase• Capex A$3.5 billion, est. Morgan Stanley• Schedule, activities exploration, 3 rd party gas discuss.

Source: Modified after Woodside

4.22.1

4.2

4.2

4.314.7*

*actual for NWS for 2010, 16.5 Mt

NWS and Pluto Design Capacities

• Schedule, activities exploration, 3 rd party gas discuss.• Approvals NA• First gas NA

NWSTrains 1, 2

NWS Train 3

NWSTrain 4

NWSTrain 5

PlutoTrain1

PNG LNG Project (1)

0 60km

Hides30% Kutubu

Area8.3%

Juha6%

Angore7%

Project Summary • Ownership ExxonMobil (50%) , Oil Search (34%),

Santos (17.7%), Nippon Oil (5.4%), MRDC (1.2%), Eda Oil (0.2%)

• LNG Facility 6.3 Mtpa (2 trains), further exp.• Resources 9 Tcf gas, 160 MMbl condensate• CAPEX USD 15 billion• Activities Construction

PNG LNG Project (2)*

• Activities Construction• First Gas 2014/15 * ExxonMobil and Oilsearch

Australian LNGIchthys*

Project Summary* • Ownership Inpex (76%), Total (24%)• LNG facility 2 x 4.2 Mtpa • Resources 12.8 Tscf gas, 527 MMbl cond.• Capex USD 18 billion• Activities completing FEED, FID in Dec 2011• First gas 2016 * Inpex

Australian LNG – Darwin LNG*Project Summary* • Ownership Conoco-Phillips (56.27%) , ENI (12.04%), • Santos (10.64%), Inpex (10.53%), Tokyo • Electric P (10.08%), Tokyo Gas (10.08%)• LNG facility 3.2 Mtpa • Resources 3.4 Tcf gas, 250-400 MMbl condensate• CAPEX NA• Activities On production (FPSO: C5+, C4, C3)• First Gas Feb 2004 * Conoco -Phillips

Darwin LNG Plant

• First Gas Feb 2004 * Conoco -Phillips

Darwin

PalmerstonBlaydinPoint

LNG Plant Site

East Arm Wharf

Channel IslandPower Station

Blaydin Point

Source: Map - Inpex

Project Summary* • Ownership

Chevron (47.333%) , Shell (25%), ExxonMobil(25%), Osaka G (1.25%), Tokyo G (1%), Chubu E (0.417)

Australian LNGGreater Gorgon*

Tokyo G (1%), Chubu E (0.417)• LNG Facility

15 Mtpa (3 trains)• Resources

> 40 Tcf gas, little cond., high CO 2• CAPEX

USD 43 billion• Activities

Under Construction• First Gas : 2014 * Chevron

Source: Map - Oil and Gas Australia,March 2009

Australian LNG – Prelude

Source: Oil & Gas Australia J, June 2011, from Shel l

Project Summary* • Ownership Shell (100%)• LNG facility 3.6 Mtpa (1 train) FLNG (first in world), • also 1.3 Mtpa condensate and 0.4 mtpa LPG • Resources ~3 Tcf gas• CAPEX NA• Activities FID in May 2011• First Gas 2016? * Shell

Source: Oil & Gas Australia J, June 2011, from Shel l

Prelude FLNG will be 488m long, weighing 600,000 to nnes,and will be able to withstand category 5 cyclones

Project Summary* • Ownership WPL* (50%), BP (1/6), Chevron (1/6)

BHP Billiton (1/12), Shell (1/12)• LNG Facility 3 x 4 Mtpa • Resources 13.3 Tscf gas, 360 MMbl condensate• CAPEX USD 19 billion Fiscal terms• Activities FEED in prep• First Gas 2017 (earliest)

Australian LNG - Browse

• First Gas 2017 (earliest) * operator

2009 2010 2011 2012

�HOA with KLC

�Start downstream studies

�Precinct select.., agreement

�Retention licence extended

�Environmental, tech surveys

�Dev concept selected

�BOD contracts awarded

�Broome office opened

�Prelim FDP submitted

�BOD completed

�Feed Contract. selected

�Start FEED

�Secure LNG agreement

�EIS & FDP approved

�Land access secured

�FEED completed

�Place LLI

�Secure LNG SPAs

�Ready for FID*

�Start construction

�2017 RFSU

*mid 2012* Woodside

Project Summary* • Ownership

Chevron (73.6%) , Apache (13%), Kuwait FPEC (7%), Shell (6.4%), Kyushu (coming in?)

• LNG Facility

Australian LNG - Wheatstone

• LNG Facility8.9 Mtpa (2 trains), plus DOMGAS

• Resources8.6 Tscf gas, 145 MMbl condensate

• CAPEXNA

• ActivitiesIn FEED, Signed MA: Kyushu(0.7 Mtpa – 20yrs)

• First Gas : 2017 (earliest) * Chevron

Source: Penn Well’s International Petroleum Encyclo pedia 2009;after WoodMac

Australian LNG – Greater Sunrise

Project Summary* • Ownership Shell (33%), ConocoPhillips (30%),

WPL (27%), Osaka Gas (10%)• LNG Facility 1 x 4 Mtpa (FLNG)• Resources 5.1 Tscf gas, 226 MMbl condensate• CAPEX USD 19 billion• Fiscal Terms 81.9%, Australia; 18.1% Timor-Leste• Activities BOD in prep, then FEED

Laminaria-Corallina

AustralianJurisdiction

Dili

0 50 100

kilometres

SunshineTroubadour

Joint PetroleumDevelopment Area

• Activities BOD in prep, then FEED• First Gas 2017 (earliest) * Woodside

IndonesianJurisdiction

Bayu-Undan

CSM

Australian LNGCoal Seam Gas LNG Proposals Revisited – mid 2009

RLMS COAL SEAM GAS – Baker and Slater, June 2009

Australian LNGAPLNG

Project Summary* • Ownership

Conoco-Phillips (42.5%) , Origin (42.5%), Sinopec (15%)

• LNG Facility• LNG Facility4.5 Mtpa (x2)

• Resources – Bowen and Surat11,775 PJ gas (2P)

• CAPEXUSD 14 billion (phase 1), USD 20 bn

• ActivitiesSigned MA with Sinopec (4.3 Mtpa - 20 yrs, Jul 2011)

• First Gas : 2015/6 * Origin

Australian LNGQCLNG

Project Summary* • Ownership

BG (~100%), Tokyo Gas (small)• LNG Facility

8.5 Mtpa (expand to 12 Mtpa)8.5 Mtpa (expand to 12 Mtpa)• Resources

Surat • CAPEX

USD 15 billion• Activities

Signed MA: Tokyo Electric(1.2 Mtpa – 20yrs, Mar 2011)

• First Gas : 2014/2015 * BG

Australian LNG –GLNG

Project Summary* • Ownership

Santos (30%) , Petronas (27.5%), Total (27.5%), Kogas (15%)

• LNG Facility3.9 Mtpa (x2)

• Resources :Bowen, Surat, GunnedahBowen, Surat, Gunnedah

• CAPEXUSD 16.1 billion

• ActivitiesMAs with Kogas (3.5 Mtpa), Total (1.5 Mtpa)

• First Gas : 2015/16 * Santos

(1) Net of interest on-sold to TRUenergy

Australian LNG –Gladstone LNG

Shell’sProposed

Bowen Basin

• ResourcesBowen, Surat, Gallilee, Clarence-Moreton, other minor basins

• First Gas : 2012/13

Project Summary* • Ownership

Arrow(50%) , Shell, PetroChina?, LNG International

• LNG Facility1.5 Mtpa (add later on Curtis Is?) * Arrow

Proposed Site

SunshineSojitzSite

Gladstone LNGPlant Location

CentralQueenslandGas Pipeline(Proposal)

Arrow’s CoalSeam Gasfields

Moranbah

Emerald

Blackwater

Gladstone

Australian LNG“Australia” LNG: Post Tax Real Project IRRs

ExxonMobilWoodsideWoodside

Source: Morgan Stanley Research, April 2009

WoodsideInpex

SantosConoco

LNG Plants

LNG – TechnicalLNG Plants

1964 - 2000NWS LNG (Burrup)10th Baseload Plant

Single Train Size

Mill

ion

tonn

es

Source: Modified after “Fundamentals of the Global LNG Industry”,Petroleum Economist Ltd March 2001,in association with Shell Gas & Power

First Commercial Plant

“Becoming of Age”

Established technology

Mill

ion

tonn

es

Year

LNG PlantBlock Flow Diagram

LNGDehydration,

MercuryRemoval

Acid GasRemoval

GasWells

Liquefaction

Acid GasTreatment

Reception

Condensate LPG

Natural Gas

FractionationCondensateStabilisation

Storage and

Loading

Removal

Utilities

LNG PlantNWS Development - Onshore Plant Complex Layout

Mermaid SoundWithnell Bay

CondensateStorage Tanks

Third Flash Tank

Flash StabilisationEquipment

LNG

Jetty

Generators

Stabilisation UnitsTrains 4 & 5

LNG Train 3

Phase I & II

Phase III

LNGStorage Tanks

The 10 th Baseload LNGplant in the world:Concrete: 132,000 cu.mSteel: 70,000 tonnesPiping: 11,300 tonnes, 270 kmCabling: 5,500 km underground,

1,680 km power,578 km instrument above ground

Process: 3 x 2.4 million tonnes/ annumSulfinol unit – removes CO 2Dehydration unit – removes waterLiquefaction unit – produces LNG

Source: Woodside

LNG PlantNWS Development - Onshore Plant Construction

Source: Woodside

LNG PlantNWS Development – LNG Storage and Plant

Source: Woodside

LNG PlantNWS Development – LNG Export Terminal and Tanker

Source: Woodside

LNG TransportComparison of Crude Oil and LNG Carriers

Typical FPSO LNG CarrierNWS Type

US$13.8/106 Btu US$10/106 Btu

VALUECOMPARISON

1.4 : 1

US$60 million 4.35 x 1012 Btu 2.12 x 1012 Btu US$21.2 million

Household30 x 106 Btu/yr

(24 kw/d)

71,000householdsannually*

ENERGYCOMPARISON

2.1 : 1US$80/stb ~5.8 x 106 Btu/bl ~2.7 x 106 Btu/bl US$10.0/Mscf125,000 m3, 0.0044 Bcf (liquid)(786,000 bl or 57,500 tonnes)

~750,000 bl 2.6 Bscfshrunkto 1/600 th

Australiaconsumesabout twoof theseeach day

600,000-650,000 bl

BHP Billiton Shell

Jabiru Venture, First Australian FPSO

~750,000 bl

x2 trainsrefrigerant forliquefaction

LNG PlantNWS Development – LNG Export Terminal & Tanker

Major Components per Train:- cryogenic heat exchanger- x4 refrigerant compressors- x4, 26 MW gas turbines- air-cooled heat exchanger

6.2 Mpa(900 psia)sea watertemp.

Patm- 161 oC

Source: Woodside

LNG Design Capacity:� 6.4 million tonnes (3 trains) � plateau gas composition (no LPG)� 324 days on line (main compressor)

LNG Process Facilities:� sulfinol unit

LNG PlantNWS Development

� sulfinol unit• removes CO 2 and H2S

� dehydration unit• removes H 2O < 1 mg/m 3

� mercury removal unit• Hg removal

� liquefaction unit• APCI propane pre-cooled,mixed refrigerant process

• propane cycle down to -35 oC• mixed refrigerant to -138 oC• methane flash: -161 oC, patm Source: Woodside

LNG PlantNWS Development – Contracted* LNG Quality

Specification ExpectationMaximum Minimum Maximum Minimum

Gross Heating Value Btu/scf

1170 1070 1160 1120

MethaneMol%

84.0

Butanes and HeavierMol%

2.0

Source: Woodside

Mol%

Pentanes and Heaviermol%

0.10

Nitrogenmol%

1.0

Hydrogen Sulphidemg/m 3

5 1

Total Sulphurmg/m 3

30 5

Solids or other Impurities none * initial contract

LNG PlantNWS LNG: Increasing Utilisation Capacity

Source: Woodside

LNG PlantRefrigeration Process

Source: Fundamentals of the Global LNG Industry,Petroleum Economist Ltd March 2001,in association with Shell Gas & Power

LNG PlantTypical Natural Gas – Refrigerant Cooling Curves

Pure Natural Gas

Heat

RefrigerantCooling Curve

MixedRefrigerant

MixedRefrigerant

PureRefrigerant

Natural GasCooling Curve

LNG PlantHeat Removal Requirements

Joules-Thompson

RefrigerationLiquidTurboexpander

Refrigeration

Heat rejectionTemperature = 105 oF

LiquidMethaneFlash

Temperature, oF-256 oF-161 oC

Sensible Heat

- 300 - 200 - 100 1000

LNG PlantSimplified (Cascade) Process Flow Diagram*

Source: Fundamentals of the Global LNG Industry,Petroleum Economist Ltd March 2001,in association with Shell Gas & Power

* Atlantic LNG Plant

LNG PlantOptimised Cascade Process*

Source: Fundamentals of the Global LNG Industry,Petroleum Economist Ltd March 2001,in association with Shell Gas & Power

* Phillips

LNG PlantTechnology Selection (1)

Technology Selection Item

Advantages Disadvantages

Mixed Refrigerant Process

simpler compression, variable composition for process matching

more complex operation

Pure Component potential greater more equipment, Pure Component Cascade Process

potential greater availability (parallel compressors)

more equipment, complicated compression system

Air Cooling vs. Water Cooling

lower CAPEX less efficient, higher OPEX

Fluid Medium Heating vs. Steam

elimination of steam gen. and H2O treatment

Higher reboiler costs

Larger Train Capacity lower CAPEX/Mt LNG Equipment/ process may require further development

LNG PlantTechnology Selection (2)

TechnologySelection Item

Advantages Disadvantages

Spiral-wound Exchangers

flexible operation proprietary, more expensive

PFHE competitive vendors, less ∆p, less ∆T

careful design for two-phase flow in multiple less ∆p, less ∆T phase flow in multiple exchangers

Axial Compressors high efficiency high flow rates only

Large Gas Turbines proven, efficient and cost effective

less reliable, strict maintenance, more complicated control, fixed speed

Large Motor Drives Efficient, flexible and more available

untried in LNG at speeds needed, large power plant

Some Parting Shots

LNG Project Management:• generally poor execution of projects

• typically schedule overrun by at least one year

• with an accompanying cost overrun of 10-20percent

companies are not building in enough contingencies• companies are not building in enough contingencies

(in form of allowances, i.e. weather, industrial di sputes etc.)

• when novel technology is used, more contingencies a re required

Conversion Factors

Back-up

Global LNG Movements

Source: Penn Well’s International Petroleum Encyclo pedia 2009

=183.1 Mt

1 Mt = 1.236 Bcm

Global LNG SceneFirst* LNG Development and Export

Source: Oil & Gas Journal, 1965

* Algeria – U.K. Methane ProjectStart-up in 1964

35 trillion Btu9.7 million bbl

Global LNG SceneMajor (Annual) Gas Trade Movements – bcm*

Source: Penn Well’s International Petroleum Encyclo pedia 2009(approx. 2007 actuals)

Note:Total LNG movement = 208.7 Bcm (169 Mt)

* 1 bcm = 0.81 Mt

LNG DemandShare of Global Market Demand

Total Asia Pacific72%

Total America (excl W. Coast)

5%

LNG Demand 2000 (101 mt)

Total Asia Pacific

Total America (excl W. Coast)

11%

LNG Demand 2007 (172 mt)

Asia-Pacific72%

Europe

America*5%

Asia -Pacific

America*11%

LNG Demand 2000(101 mt)

LNG Demand 2007(172 mt)

Total Europe23%

Total Asia Pacific65%

Total Europe24%

Total Asia Pacific54%

Total Europe30%

Total America (excl W. Coast)

16%

LNG Demand 2015 (340 mt)

Source: Fesharaki, FACTS Global Energy,Gastech March 2008

Europe23%

* Excluding West Coast

Asia -Pacific65%

Europe24%

Asia-Pacific54%

Europe30%

America*16%

Total too optimistic?

LNG Demand 2015(340 mt)

Oil-linked Pricing Dominant in Core Markets

Oil-linked(JCC, Brent)

Multiple formulae

Emerging Asia83 mtpa

Emerging Asia56 mtpaEmerging Asia

20 mtpaTraditionalAsia*

109 mtpa

* Japan, S Korea, Taiwan

TraditionalAsia*

122 mtpa

TraditionalAsia*

133 mtpa

Source: Woodside – based on Wood Mackenzie and publicly

available data

2010 2016 2020

Hub-linked LNG has limited role in global LNG

formulaeand indices

(fuel oil, gas oilBrent, hybrid)

Gas markettraded indices

UK (NBP)13 mtpa

US/Canada (HH)11 mtpa

Americas (HH)10 mtpa

UK7 mtpa

US/Canada11 mtpa

Americas14 mtpa

UK24 mtpa

Americas17 mtpa

US/Canada7 mtpa

Europe49 mtpa

Europe57 mtpa

Europe78 mtpa