LNG in North America

Tommy Stone – Vice President, Operations & Engineering

Trunkline LNG Company, LLC – Lake Charles, LA

Tommy Stone – Vice President, Operations & Engineering

Trunkline LNG Company, LLC – Lake Charles, LA

0105-0052

LNG Properties – A Means of TransportationLiquefied 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)

0105-0053

Government and Academics Agree, LNG is the Solution

• FERC changes U.S. policy towards LNG terminals

“The public interest is served through encouraging gas-on-gas competition by introducing new imported supplies of natural gas which will be accessible to all willing purchasers,” - FERC Order 12-18-02

“in a short time the commission had made changes to federal policies dealing with LNG licensing and seen a response from businesses interested in investing in terminals, which will contribute to alleviation of shortages of natural gas in the U.S.,” - Pat Wood III, FERC Chairman 09-10-03

• Energy Market ResearchLNG…will set the price of gas in North America for the foreseeable future… - Michael Economides, University of Houston

0105-0054

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 share

LNG

LNG

Nation Needs New Sources of Supply

0105-0055

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

Regasification

Shipping*Liquefaction

Exploration &

Production

TOTAL

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%

0105-0056

Proven World Natural Gas Reserves

Source: BP Statistical Review of World Energy, 2006

\\

~ 4.1% of World Reserves

0105-0057

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

Regasification

Shipping*Liquefaction

Exploration &

Production

TOTAL

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%

0105-0058

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

0105-0059

Res./Liq. (yrs)

Growth Potential inAtlantic Basin Supply

500

1000

1500

2000

2500

Atlantic Basin Middle East Pacific Basin

Tcf

Reserv

es

0

2

4

6

8

10

Bcf/d

Liq

uefa

ctio

n

Tcf Reserves

Liquefaction

1015

9.6

2,546

5.6

527

11.5

AtlanticBasin

290 1,246 126

Source: BP Statistical Review, 2006 & G.I.I.G.N.L.

3000 12

0105-00510

Abundant LNG Supply

Nigeria

Angola

Venezuela

Trinidad

Algeria Libya

Norway

Middle East

Egypt

EquatorialGuinea

Middle East

0105-00511

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

Regasification

Shipping*Liquefaction

Exploration &

Production

TOTAL

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%

0105-00512

LNG FLEET HISTORY CAPACITY

LNG Vessel Historical Capacity

115,000

120,000

125,000

130,000

135,000

140,000

145,000

150,000

1970s 1980s 1990s 2000s Present(2006)

Construction Era

Ves

sel S

ize

(Cu

bic

Met

ers)

Avg.Capacity (Cu/M)

0105-00513

LNG VESSEL COST

Avg. Vessel Cost ($MM)

$0

$50

$100

$150

$200

$250

$300

1970s 1980s 1990s 2000s Present(2006)

Avg. Cost ($MM)

0105-00514

LNG Vessel Fleet LNG Vessel Fleet

• 228 Vessels - World Fleet • 136 Vessels On Book (New Builds)

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

– Avg. 10/12 New Orders Each Year

0105-00515

LNG SHIP TYPES

Membrane Tank Membrane Tank DesignDesignMembrane Tank Membrane Tank DesignDesign

MossMossMossMoss

0105-00516

LNG/C – Physical SizeLNG/C – Physical 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

0105-00517

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

0105-00518

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

Regasification

Shipping*Liquefaction

Exploration &

Production

TOTAL

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%

0105-00519

North Americ

a

France

Spain North Americ

a

France

Spain

Italy

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

Atlantic Basin Regasification Capacity Growing

0105-00520

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 2015E

Percent of U.S. Demand

Source: EIASource: EIASource: EIASource: EIA

0105-00521

Distrigas, TractebelEverett, MA

CurrentExpandedSendout: (MMcf/d) 715 n/aStorage: (Bcf) 3.4 n/a

Cove Point LNG, DominionCove Point, MD

Current ExpandedSendout: (MMcf/d) 1,000 1,800Storage: (Bcf) 7.8 14.5

Elba Island, El PasoSavanna, GA

Current ExpandedSendout: (MMcf/d) 823 1,800Storage: (Bcf) 7.45 15.85

Trunkline LNG, Panhandle EnergyLake Charles, LA

Sustained PeakSendout: (MMcf/d) 1,800 2,100Storage: (Bcf) 9.0 9.0

SummaryTotal Existing U.S. Regasification

Current ExpandedSendout: (MMcf/d) 4,388 6,115Storage: (Bcf) 27.65 42.75

TLNG Currently Offers Greatest Flexibility of All Domestic Terminals

0105-0052222 0105-005

0105-00523

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 Energy 0105-005

0105-00524

Texas/Louisiana LNG Projects

Approved by FERC or

MARAD/USCG

Proposed to FERC

Approved by FERC or

MARAD/USCG

Proposed to FERC

Sabine Pass LNGIn-service date: 2008-9Sendout: 2.6 – 4.0 Bcf/dDeveloper: CheniereCapacity Holder: Total & ChevronTexaco

Sabine Pass LNGIn-service date: 2008-9Sendout: 2.6 – 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 Contango 10%).

Creole TrailIn-service date: 2011Sendout: 3.0 Bcf/dDeveloper: CheniereCapacity Holder: TBD

Creole TrailIn-service date: 2011Sendout: 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: 2008Sendout:1.5 Bcf/d (expand to 3.0 Bcf/d)Developer: Freeport LNG Dev.*Capacity Holder: Dow & ConocoPhillips & Mitsubishi

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

Golden PassIn-service date: 2009Sendout: 2 Bcf/dDeveloper: ExxonMobil

Golden PassIn-service date: 2009Sendout: 2 Bcf/dDeveloper: ExxonMobil

Cameron LNGIn-service date: 2008Sendout: 1.5 – 2.65 Bcf/dDeveloper: SempraCapacity Holder: ENI & Merrill Lynch

Cameron LNGIn-service date: 2008Sendout: 1.5 – 2.65 Bcf/dDeveloper: SempraCapacity Holder: ENI & Merrill Lynch

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: 2009-10Sendout: 4.7 Bcf/d (total)Developers: 4Gas, Occidental

Corpus Christi Projects (3)

In-service dates: 2009-10Sendout: 4.7 Bcf/d (total)Developers: 4Gas, Occidental

24

0105-005

0105-00525

Trunkline LNG Activity (2Q 2007)

Everett21%

Lake Charles40%

Lake Charles40% Elba Island

19%Elba Island

19%

Cove Point19%

Cove Point19%

LNG Imports by TerminalJan – June 2007

Total = 464.0 Bcf

*Source: US Department of Energy

Shell5%

BG LNG59%

BG LNG59%

LNG Imports by CompanyJan – June 2007

3.9% of U.S. Gas Demand (2 Qtr)

Suez LNG21%

Statoil6%

BP7%

Excelerate2%

Excelerate1%

0105-00526

Trunkline LNGExpansion Facilities

• Phase I– Construction Completed April

2006– Double sendout capacity to 1.2

Bcf/d• Peaking of 1.3 Bcf/d

– Increase storage capacity to 9.0 Bcf

• Phase II– Construction Complete July 2006– Increase sendout capacity to 1.8

Bcf/d• Peaking of 2.1 Bcf/d

• Trunkline Gas Company Loop– Construction Complete– 22 miles (new construction) of

36” pipeline loop

– Several (6+) new or expanded delivery points

0105-00527

Beeville

Edna

Cypress

Kountze Longville

Centerville

Patterson

Terrebonne

Lake Charles

LNG

2006 MMcf/dTGC Receipts: 2,494 TGC Mainline Capacity: 1,500Field Zone Supply Overage: 994

2006 MMcf/dTGC Receipts: 2,494 TGC Mainline Capacity: 1,500Field Zone Supply Overage: 994

1,500MMcf/d Mainline Capacity

1,500MMcf/d Mainline Capacity

TLNG & TGC Field Zone Supply with LNG Expansions

SeaRobin

Trunkline LNG Supply

• 2003 - 2006 (avg): 525 MMcf/d

• 2007+ (est): 1,500 +MMcf/d

Trunkline LNG Supply

• 2003 - 2006 (avg): 525 MMcf/d

• 2007+ (est): 1,500 +MMcf/d

0105-00528

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

Regasification

Shipping*Liquefaction

Exploration &

Production

TOTAL

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%

0105-00529

TRUNKLINE LNG – LAKE CHARLES, LOUISIANA

0105-00530

REGASIFICATION PROCESS

GASLIQUID

LNGLNGSTORAGESTORAGETANKSTANKS

PIPELINEPIPELINECOMPRESSORCOMPRESSOR

VAPORIZERSVAPORIZERS

DES

UPE

RH

EATE

R

DES

UPE

RH

EATE

R

BOIL-OFFBOIL-OFFCOMPRESSORCOMPRESSOR

PIPELINEPIPELINEREC

ON

DEN

SER

REC

ON

DEN

SER

0105-00531

Trunkline LNG - Infrastructure Enhancement Project (IEP)

0105-00532

Conclusion

“One of the benefits of LNG is that new supplies could enter

the market within the next few years, well ahead of other

opportunities, and begin to offer relief to American

consumers.”- Center for LNG

Questions & Answers