The opportunity for mid-scale LNG

Roland Fisher, CEO, Gasfin Development SA

19th April 2012

Right-sized LNG
solutions

Gasfin introduction

Gasfin: Right-sized LNG solutions

Gasfin and its subsidiaries have a unique track

record in the design and delivery of mid-scale
LNG plant
Designed and delivered the first midscale mixed use LNG carrier - Coral
Methane, 7,500m3 (2009)
Designed and delivered the first midscale LNG liquefaction plant - Xinjiang,
400,000ktpa (2004)
Market leading provider of gas plant to
120+ cryogenic gas carriers
Designed and delivered 50+ LNG &
petrochemical terminals

This document is being furnished on a confidential basis and the information contained herein may not be reproduced or provided to others without the prior written consent of Gasfin

Developing LNG projects requires technical

expertise, equity capital and project management
Gasfin controls the resources to design, finance, deliver and operate mid-scale LNG infrastructure:
.LNG at every step, in every size, on land or sea, across the globe.

Caledonia Investments

Gasfin

CIMC

UK equity investor

Dedicated multi-disciplinary project

development team

World leading infrastructure

equipment manufacturer

49% TGE Marine

50% shareholding TGE Marine

Majority shareholding in TGE Gas

40% shareholding in TGE Gas

TGE Marine

TGE Gas

Market leader in cryogenic

gas handling systems for
ships and offshore units

Leading contractor for bulk

storage of cryogenic gases

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Small/Mid scale LNG requires combining

disciplines from LNG and Pet-chem markets

Required experience

Rationale

Gasfin / TGE

Designed & delivered :

LNG receiving (Regas) terminals

Core activity for LNG importation

Designed & delivered:

Mid-scale LNG production

Could offer supply alternative for LNG

outside the oil major cartel

Designed & delivered:

Type C LNG cargo tanks

Only tank design able to withstand

pressure build up from LNG storage

Designed & delivered:

Floating cryogenic storage

Floating plants ideal for fast build,

quick approval, and scarce land

Designed & delivered:

Shallow draft gas carriers

Design critical for delivering LNG to

shore in shallow waters

Turnkey, fixed price service, with

full EPC bonding

Ensures risk for equipment

performance remains with TGE/Gasfin

Integrated project developer and

gas engineer

Improves design flexibility and

accelerates project timeline

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Mid-Scale today

Mid-scale LNG works and is nothing new...

Liquefaction

Shipping

Receiving and Consumption

Small scale liquefaction

common eg >100 peakshave plants in US

Distribution sites designed

to receive cargoes from
5m3 up

Multiple mid-size
liquefaction plants in China

Commonest tanks for

small terminals are TypeC
for 500m3

Most small scale deliveries

made by truck Boston
trucks 100s ktpa LNG

Floating receiving
infrastructure is only area
not proven at the small/
mid-scale

First mid-scale in 2004 TGEs 430ktpa plant, near

Urumuchi, NW China,
Choice of technologies for
liquefaction Chart, Linde,
Air Products, Black &
Veatch, all proven in
operation

Small ships not new...1st

LNG shipment on a
5,000m vessel, old ships
of ~35,000m serve in Med
Several 20,000m LNGCs
in international service
eg. Malaysia to Japan
Japan & Norway pioneers
of small ships eg. vessels
of 1,000m3 to 7,5000 m3
Vessels fit world scale
terminals but use safe,
simple cylindrical tanks
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Switching to gas for power generation can be

economical.... but case by case analysis required
Analysis of Total generation costs:
~400MW running baseload
LNG vs .5% HFO
(LNG priced @ 14% Brent bbl/mmbtu)

US$/MWh Electricity

Value of CO2 credits depends on

jurisdiction. Some EU clients use
$50/tonne, UNCDM nearer $15/tonne
When sourced in small quantities LNG can
be expensive, however so too is LFO
LNG

Infrastructure cost sensitive to distance to

source, volumes, location

HFO

Savings attributable to lower maintenance

are material, and may be overlooked

Gas

Cost of conversion of D/F ready engines is

material, but adds only 25% to costs of major
overhaul

Lo-Su HFO

Base Case Oil Price

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Optimising configuration can be critical

Key Issues

Considerations

Supply

Route
Storage Location

Distance to market affects scale, energy consumption

Availability of jetty space fixed costs and frequency limit may affect size choice

Compatibility - Mooring configuration and loading rates

Point to point or multiple customers simple contract vs aggregation advantage

Onshore is most stable, but not always cheapest or possible

Jetty moored FSRU cheaper than offshore but permitting/regulation tougher

Type C Cylindrical tanks dominate the smaller LNG market allows longer
storage times (i.e. pressures), no license, and de-skills yard/site work

Membrane tanks limited by license costs, sloshing and yard limitations

Using sea-water as heating agent may spur environmental objections

Air vaporisors increase visual impact and wind exposure

Shell & tube (glycol loop) optimum but requires storage to be near plant

Submerged combustion is last resort but energy intensive

Tank system

Regas technology

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EDF project:
1 x 25,000m3 LNG carrier, 2 x 25,000m3 FSRUs
25,000m3 FSRU for Martinique/Guadeloupe
Operational details

Length: 114m; Width: : 32m

Depth:

Containment: 2 x IMO type C cylindrical tanks

Max. send out capacity: 50t/h

Spread moored, 12 anchors

18m;

Proven, reliable components, high

redundancy with minimal maintenance

Side-by-side LNG carrier unloading using

conventional hard arms

Regasification using air vaporizers

25+ year docking interval

Tank design increases operational flexibility

Environmental details

Technical specifications: FSRU

Draft: : 7m

Air vaporizers have no impact on sea

Leak proof tank rules out gas venting

Clean ship per classification rules

Electricity generated with gas fuelled gen sets

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FSRU breakdown into known components

Designed by specialists - reviewed by 3rd parties

HULL AND MACHINERY

PROCESS PLANT

RISER

SPREAD MOORING

Design led by:

TGE Marine Gas Engineering

Design led by:

TGE Marine Gas Engineering

Design led by:

Technip

Design led by:

Design reviewed by:

Bernhard Schulte
Shipmanagement

Design reviewed by:

Bernhard Schulte
Shipmanagement, TGE Gas
Engineering

Design reviewed by:

Risertec

Design reviewed by:

Tecnitas

Proven design existing

for:
FSPOs and FSRUs

Proven design for:

Several FPSOs /
MODUs

Design similarity to:

Ship hulls and machinery
equipment

Design similarity to:

LNGC and receiving terminal

Promoor Limited

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Commercial model for right-sized services

Commercial approach is as specialised as the technical one

Market depends on customised, right-size infrastructure to optimise storage and logistics costs

Purpose built equipment needs long term contracts to offset limitations on alternative use

Configuration of custom ships and FSRU means integrating of multiple steps and parties

Sequential risk and interdependency is a BIG issue, especially given weak credits

Mix of small markets and weak counterparties has been very detrimental to growth

Typical Contract terms

Contract length

~20+ years post ~30month construction

Payment type

Fixed availability based payment with indexation protection

Performance hurdles

Take or pay agains pre-agreed availability criteria

Other key considerations

Permitting risk largely borne by customer

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What next for Mid-scale?

When will mid-scale LNG really happen?

LNGC Size 25.000 m3

EDF pioneering LNG for Martinique and Guadeloupe

Project development agreement signed with Gasfin

3,000 page permitting dossiers submitted Q4/2011

FID anticipated in 2012, first gas 2015.

Volume ~400,000tpa,

1x

FSRU Size 25.000 m3

2x

BIG hurdles remain for next repeat project!

Supply: Appetite of World-scale LNG producers

Volumes too small to move the needle

Perceived as adding risk to global operations

Unfamiliar with infrastructure or counterparties

Ask unreasonable prices or terms for new buyer, expect US players to take up market

Jetty space limited need dedicated mid-scale jetty (eg Singapore)

Demand: Realism on LNG pricing and value chain

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Economics add up, but market price cost plus

... need policy and private sector to join the dots

Cost base for Mid-Scale LNG Value Chain

(US$/mmbtu Volumes .3-.6mtpa)

1.

Feed Gas Costs

$3.50*

(e.g. 115% x H.Hub @$3.00)

2.

Liquefaction Cost

$3.50*

(est. for .500,000ktpa plant)

3.

Shipping

$1.00-$3.00

(depends on size/distance)

4.

Storage and Regas

$1.50-$3.50

(depends on size/distance)

Total Cost Delivered Gas

$9.50-13.50

(alternatively = HH + $6-10)

* Note costs for Steps 1 & 2 v.similar for either mid-scale or world scale volumes

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IF LNG cost HH+$4.00 FOB Trinidad ... Gas is

economic for all these markets
Potential New Smaller Carib Customers:
Ranked by attractiveness of LNG
Island

Alt Fuel

LNG Vol (tpa)

Puerto Rico

LFO

500,000 x2

Jamaica (N)

LFO

250,000

St Lucia

LFO

100,000

HFO+

400,000

Bermuda

LFO

100,000

Cayman

LFO

100,000

Bahamas

Mix

500,000

St Barts/St Martin

LFO

30,000 x2

Jamaica (S) (ex.Alu)

HFO

600,000+

Dom Rep

HFO

300 900,000

Barbados

HFO

150,000

Aruba/Curacao
(excl. refineries)

HFO

100,000 x2

Grenada et al...

Mix

50,000

Mart/Guad

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Gasfins next step for Caribbean?

Mid-scale LNG production plant dedicated to

Caribbean LNG sales?

Above: Example of mid-scale LNG production plant developed by Gasfin affiliate, TGE in Urumuchi, China (2004)
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Why Mid-scale LNG production might work for

Trinidad?

Captures long term premium market for T&T gas in Caribbean, before lost to US exports
Demonstrates genuine T&T commitment to fuel the region
Stimulates jobs and new investment
Provides unique opportunity for direct local participation in LNG chain
Will spur incremental exploration, will not crowd out other projects
Allows gradual regional gas adoption LNG production added as demand grows
Positions Trinidad as global pioneer in mid-scale LNG export
Financeable by private sector, with proven technology, 2.5 year build time
Has support of suppliers, investors, customers awaits sanction for 70mmscf/d gas

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Contacts:
UK :

+44 20 3432 8510

Germany :
Luxembourg:

+49 228 60448 821

+35 2 2644 731

Fax:
Email:

+44 20 3369 9695

[email protected]

Web:

www.gasfin.net