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Click to edit Master title style Edit Master text styles Second level - Third level o Fourth level Fi8h level Alas aska a LNG Project t Update Leslie C. Fritz Krusen, VP LNG & AdministraLve Services September 13, 2018

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Fi8h level

Alas aska a LNG Project t Update

Leslie C. “Fritz” Krusen, VP LNG & AdministraLve Services September 13, 2018

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2

  • In

Intr troducLon

  • LNG Mar

Market t

  • Star

ars Aligned

  • Commercial

al & Finan ancing

  • Technical

al & Regulatory

  • Benefi

fits ts to Alas aska a

IntroducLon

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SLIDE 3

Alaska Gasline Development Corp.

  • Alas

aska a Gas asline Development t CorporaL aLon (AGDC):

Independent, public corporaLon owned by the State of Alaska. Empowered to expedite, finance, and build a gas project. AGDC is Alaska’s natural gas infrastructure development company.

  • Vision:

Vision:

Maximize the benefit of Alaska’s vast North Slope natural gas resources through the development of infrastructure necessary to move the gas into local and internaLonal markets.

  • Alas

aska a LNG & Alas aska a Stan and Alone Pipeline:

AGDC is advancing two pipeline projects that will provide gas to Alaskans, but only one pipeline project will be built. While Alaska LNG moves forward as AGDC’s priority project, AGDC will conLnue to advance the ASAP project to a Record of Decision.

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SLIDE 4

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AGDC Takes Lead of Alaska LNG

  • 2017 –

– Took the lead of Alaska LNG at the end of 2016. Introduced project to market for the first Lme in 2017.

  • 2018 –

– Advancing Alaska LNG through regulatory process. Working toward definiLve commercial agreements.

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SLIDE 5

LNG Market

  • In

Intr troducLon

  • LNG Mar

Market t

  • Star

ars Aligned

  • Commercial

al & Finan ancing

  • Technical

al & Regulatory

  • Benefi

fits ts to Alas aska a

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SLIDE 6

Hydrocarbon EvoluLon

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  • World is moving to clean

aner fuels:

Coal to oil to natural gas. Methane (natural gas) is the simplest, cleanest hydrocarbon. Global demand for natural gas is booming as countries seek to meet energy demands and environmental goals.

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SLIDE 7

Alaska’s Market Window

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Gap between global LNG demand and supply in 2025 ranges from 50-100 million tonnes per annum (MTPA), with long-term demand driven by China, India, and other emerging markets across the Asia-Pacific region. Asia represents 73% of the LNG market (and growing).

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SLIDE 8

CompeLLon and Tracking

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Austr tral alia a 5+ + MT MTPA Pap apua a New Guinea a ~8 ~8 - 15MT MTPA Alas aska a 20 MT MTPA LNG Can anad ada a KiLmat t 13 - 50+ + MT MTPA Gu Gulf f Coas ast t 50+ + MT MTPA

Mo Mozam ambique 40+ + MT MTPA

Qatar ar TBD TBD MT MTPA

Alas aska a must t compete in a a global al mar arket. t.

Vo Volumes noted by eac ach region ar are proposed, not t exisLng. Both th exisLng an and newly proposed projects ts ar are seeking to sell LNG to th the sam ame mar arkets ts as as Alas aska a LNG.

Yam amal al TBD TBD

Var arious

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SLIDE 9

Stars Aligned

  • In

Intr troducLon

  • LNG Mar

Market t

  • Star

ars Aligned

  • Commercial

al & Finan ancing

  • Technical

al & Regulatory

  • Benefi

fits ts to Alas aska a

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SLIDE 10

America’s Project, not just Alaska’s

Lar arge infras astr tructu ture. Lar arge constr trucLon. Resource development. t. Energy export. t.

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SLIDE 11

Alaska and China Establish Ties

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Consensus reached that LNG is an area of cooperaLve trade

China is the natural market for Alaska’s abundant North Slope gas.

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SLIDE 12

THE RIGHT COMPANIES TO ADVANCE THE PROJECT.

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Joint Development Agreement

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SLIDE 13

Financing & Commercial

  • In

Intr troducLon

  • LNG Mar

Market t

  • Star

ars Aligned

  • Finan

ancing & Commercial al

  • Technical

al & Regulatory

  • Benefi

fits ts to Alas aska a

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SLIDE 14

Alaska LNG Capital Structure

$27.9 Constr trucLon Cost t $ 6.2 Owner’s Costs ts $ 9. $ 9.3 Co 3 ConLn Lngen ency cy

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$43.4 PotenLal al Total al $Bi $Billions s

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SLIDE 15

Balancing Three Drivers

  • All infras

astr tructu ture an and resource development t projects ts have similar ariLes.

  • Three key drivers have to be bal

alan anced to mak ake th the project t economic.

Cus Custome

  • mers:

s: Product delivered at a market clearing price. Finan ancing: Adequate pricing for debt and equity markets. Re Resource Owner/SOA: Acceptable netback and PILT.

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SLIDE 16

2018 is a a year ar of pap aperwork:

  • Re

Regulatory is progressing; FERC schedule, ASAP.

  • Advan

ancing defi finiLve LNG sal ale ag agreements ts.

  • Goldman

an Sac achs an and Ban ank of China a engag aged as as lead ad project t cap apital al coordinators for debt t an and equity ty fi finan ancing.

Status of Documents

DEB DEBT T EQUIT ITY BUYER R

  • 15 LOIs

Is/MO MOUs concluded, mo movi ving t g to S SPA.

  • Str

trategic par arLcipaL aLon

  • pportu

tuniLes.

  • Se

Seeking ing por porLons of Lons of fi finan ancing connected to offftak ake.

  • Project

t str tructu ture to al allow segment t investm tment. t.

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SLIDE 17

Technical & Regulatory

  • In

Intr troducLon

  • LNG Mar

Market t

  • Star

ars Aligned

  • Finan

ancing & Commercial al

  • Technical

al & Regulatory

  • Benefi

fits ts to Alas aska a

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SLIDE 18

Alaska LNG Project Development

2018 Technical al/Regulatory Focus:

  • AcLvely De-Risking the Project through Regulatory Process.

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SLIDE 19

ALASKA LNG PERMIT RMITTIN ING TIME IMELIN INE

2014 – – 2016 Pr Producer cer Led ed Efffort t

$600 million of engineering, environmental, and science completed to advance permisng of Alaska LNG under Producer Led Effort.

2017 an and Beyond AGDC Led Efffort t

December 2016 AGDC takes the lead of Alaska LNG project April 2017 AGDC Files FERC ApplicaLon August 2017 FAST Act Acceptance August 2017 PresidenLal ExecuLve Order November 2017 Joint Development Agreement March 2018 FERC publishes EIS schedule March 2019 Dra8 Environmental Impact Statement December 2019 Final Environmental Impact Statement March 2020 FERC authorizaLon to construct

FERC Schedule Published

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SLIDE 20

ASAP Right-of-Way

  • U.S. Army Corps of Engineers Releases

Final Supplemental Environmental Impact Statement for Alaska Stand Alone Pipeline Project (ASAP).

  • The ASAP Project and Alaska LNG

Project both include buried pipelines, share a common mainline alignment for over 80 percent of the route, and provide gas to Alaskans.

  • The ASAP Final SEIS and forthcoming

Record of Decision, will result in three addiLonal federal authorizaLons that will provide tremendous benefit to both projects.

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SLIDE 21

Benefits to Alaska

  • In

Intr troducLon

  • LNG Mar

Market t

  • Star

ars Aligned

  • Finan

ancing & Commercial al

  • Technical

al & Regulatory

  • Benefi

fits ts to Alas aska a

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SLIDE 22

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Benefits to Alaskans: Economy

OperaL aLons Gas as Supply Ru Rural al CommuniLe CommuniLes s Mai Maintenan ance Equity ty Retu turn

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SLIDE 23

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Benefits to Alaskans: Gas for Fairbanks

  • Clean

aner ai air for Fai airban anks

  • Stab

able Prices

  • Energy for al

all of Alas aska: a: Offtakes to communiLes, uLliLes, and industries (mines, etc) along the Alaska Gasline. Designed to serve in-state needs before gas as is delivered to th the Liquefac acLon Fac acility ty.

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Benefits to Alaskans: Environment

Alas aska a LNG will bring clean an ai air an and blue skies to Alas aska a an and th the world.

Alas aska a LNG will offfset t 80 million to tonnes of CO2 per year ar going into to th the atm atmosphere.

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SLIDE 25

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Benefits to Alaskans: Jobs

Project t lab abor ag agreement t will ensure Alas askan ans will be fi first t in line to work on Alas aska a LNG.

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SLIDE 26

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  • Norwegian

an & Jap apan anese smal all-scal ale distr tribuLon program am is a a model for Alas aska a

  • Alas

aska a Afffordab able Energy Fund estab ablished by th the Legislatu ture (Senator Lyman an Ho Hofffman an in lead ad); to receive 20% of Alas aska a Royal alty ty Gas as funds remai aining a8 a8er Perman anent t Fund deposit t

  • Legislatu

ture to ap appropriate funds for more afffordab able energy opLons to communiLes not t ac accessible from th the pipeline/electr trical al grid; could be renewab able forms but t could al also be coas astal al LNG

Small-Scale LNG Regas-Storage Terminal 1,000m3 Norwegian LNG Shutle Carrier

Future Benefits to Alaskans: LNG to Coastal CiLes

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SLIDE 27

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Future Benefits to Alaskans: LNG Bunkering

  • Ships (cruise, car

argo, ferry) emit t far ar less par arLculates, sulfur, an and CO2 when fueled (“bunkered”) by LNG, instead ad of heavy residual al oil (ag agai ain, “bunker”) or diesel

Cruise ship exhaust prompts complaints to Alaska agency

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SLIDE 28
  • Progressing on al

all fronts ts.

  • Lar

arge project: t: lots ts of ag agreements ts an and process.

  • Lar

argest t LNG mar arket t is in our bac ack yar ard.

  • Alas

aska a is ab able to compete.

  • Tran

ansformaL aLonal al benefi fits ts to Alas aska a for generaL aLons:

Gas for Alaskans. Environment. Jobs. Economy. Revenue to the state.

Summary

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SLIDE 29

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