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17th INTERNATIONAL CONFERENCE & EXHIBITION ON LIQUEFIED NATURAL GAS (LNG 17)

Fre reeport LNG Liq iquefaction Pro roje ject

By: Justin Capouch, CB&I April 16, 2013 17 17th

th INT

INTERNATIONAL CO CONFERENCE & EXH XHIBITION ON ON LI LIQUEFIED NA NATURAL GAS GAS (LN (LNG 17 17)

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Introduction

• Freeport LNG Regasification Terminal
• Brazoria County, Texas, USA
• 2.0 Bcf/day send-out capacity
• Proposed liquefaction terminal
• Will be 2nd LNG export terminal in

“lower 48” states

• Export capabilities up to 1.9 Bcf/day
• Approximately 1% of U.S. trade

deficit

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History

• Freeport LNG Regasification Terminal development initiated in the early 2000’s
• US gas supplies were dwindling
• Large quantities of LNG imports expected by the late 2000’s
• Freeport engaged a joint venture of Technip, Zachry, and Saipem
• Construction began in 2005 and was completed in 2008
• Commissioning cargo was received and the performance test was performed
• Since then, Freeport’s customers have only used the facility for storage and

re-export

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Market Conditions

Natural Gas Production by Source (trillion cubic feet)

• Surplus of U.S. natural gas reserves

because of Shale accessibility

• The US now has more than 100 years of

natural gas supply.

• Lower gas prices long term make exporting

natural gas economically attractive.

• Significant difference between lower US

gas prices and higher international crude

• il-linked gas prices expected to remain

long into the future.

• LNG buyers interested in diversifying

supply and linking price to Henry Hub.

• Freeport LNG proximity to:
• Eagle Ford, Barnett, Haynesville-Bossier

deposits

• Houston ship channel and Katy trading

Hubs

U.S. Natural Gas Pipeline Network, 2009

Source: EIA, Office of Oil & Gas, Natural Gas Division, Gas Transportation Information System

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Health Safety & Environment

• Freeport LNG is committed to HSE as a Core Value
• Zero injuries since start up of the facility in 2008
• Ongoing training to identify and mitigate hazards
• CB&I and Zachry are also committed to HSE as a Core Value
• People and the Environment are our most valuable asset!

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Environmental Challenges

Concern Mitigation Erosion from ship traffic Recycle usable vegetation and replant along waterway to decrease erosion Destruction of plants in construction path Increased construction traffic Work only during limited time frames to minimize impact. Bussing employees to the island Waterway contamination from equipment spills Diligent equipment maintenance and spill prevention procedures Plant Noise Detailed Sound studies to reduce impact of louder equipment

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Existing Terminal

• Two full containment 160,000 m3 (1

million barrels) LNG storage tanks

• Seven vaporizer trains capable of

delivering 2.0+ Bcf/d of gas to intrastate pipeline connections

• Unique ambient air heating system to

substitute fired heaters during warm weather periods

• State-of-the-art marine dock facility to

accommodate largest LNG tankers built

• Nine miles of 42-inch pipeline to

transport gas to pipeline connections at Stratton Ridge

• Underground gas storage cavern at

Stratton Ridge (4.5 Bcf of working gas)

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Expansion to Liquefaction

• Freeport LNG is well suited to develop a

liquefaction project.

• A financially strong company with

proven, experienced operating and management organizations.

• Utilization of FLNG’s existing

infrastructure represents an advantage of lower capital and

• perating costs compared to a grass

roots facility.

• The FLNG terminal will be able to

react to domestic and global gas market fluctuations to import/vaporize or liquefy/export.

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Facilities for Expansion

• Gas Pretreatment
• Liquefaction
• Additional LNG Storage
• 2nd LNG Loading berth
• Additional Boil Off Gas Handling

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Pre-Treatment Facility

Metering Inlet Reception and Mercury Removal Compression Acid Gas Removal Dehydration Compression Feed Gas from Pipeline Treated Gas to Liquefaction NGL Product to Pipeline NGL Removal

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Liquefaction

MAIN CRYOGENIC HEAT EXCHANGER

TREATED GAS

APCI C3MR Liquefaction Process 1.9 Bcf/d of natural gas. Three propane pre-cooled mixed refrigerant trains 4.4 mtpa per Train 13.2 mtpa in aggregate

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Terminal Transition

• Liquefaction technology: AP-C3MR (Air Products – Propane and

Pre-cooled Mixed Refrigerant)

• Air Cooled, Electric Motor Drive Refrigerant Compressors
• Vessel Traffic: 200 Ships per year
• About 700MW of power

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Challenges – Land Acquisition

• Leased 170 acres adjacent to the current plot
• Purchase of land adjacent to the existing pipeline for

the pre-treatment facility

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Challenges – Engineering Design

• Soil Conditions on Liquefaction Site
• Dredge Material Placement Area
• Extensive geotechnical studies performed
• All foundations will require piles
• Potential Storms
• All facilities designed to withstand a

category 5 hurricane event

• All facilities grade levels set above

potential storm surge

• Electrical System Design
• Working with Center Point

for robust supply

• 75 MW motors
• Variable speed drives

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Regulatory Status

Regulatory Agency Review Basis Submission Federal Energy Regulatory Commission (FERC)

Environmental impact – required for construction

 Department of Energy (DOE)

Trade to non-FTA countries

 U.S. Department of Transportation (DOT)

Safety, location, traffic

 Other Federal, State and Local agencies

Varies



Source: FERC, Office of Energy Projects 2/21/2013

North American LNG Import/Export Terminals Proposed/Potential

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Community Involvement

• Freeport LNG developed a good relationship with the local community

during the construction of the existing terminal

• Freeport LNG has held

several open house meetings to inform the public of its future plans and regularly keeps in touch with the local community elected officials

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Project Status

• Liquefaction tolling agreements for Train 1

volumes with Osaka Gas and Chubu Electric executed in July 2012

• Liquefaction tolling agreements for Train 2

volumes with BP executed in February 2013

• Negotiating with potential customers for

Train 3 volumes

• Completing FEED
• EPC Execution Plans near completion
• Arranging financing for the first two Trains
• Responding to data requests from FERC

1st 2nd 3rd 4th 1st 2nd 3rd 4th 1st 2nd 3rd 4th 1st 2nd 3rd 4th 1st 2nd 3rd 4th 1st 2nd 3rd 4th Feed Agreement Formal FERC Application FEED Completion DOE Export Ruling EPC Proposal FERC Approval EPC Notice to Proceed Commence Construction Train 1 Operation 2012 2013 2014 2015 2016 2017

Freeport LNG Liquefaction Project Schedule

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Future Liquefaction Facility