TETCO Gas Quality Meeting Crown Landing LNG Project January 23, - PowerPoint PPT Presentation

TETCO Gas Quality Meeting Crown Landing LNG Project – January 23, 2007

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Outline • BP and our LNG Business • Crown Landing Project • LNG importation and Interchangeability − What are the Core Issues? − Difference between LNG and Pipeline gas − Potential Sources of Supply − Interchangeability Data, Studies and Experience − Gas Quality Specifications − Managing Interchangeability and Future Trends • Summary 3

What we Do BUSINESS SEGMENTS RESOURCES CUSTOMER FACING Gas, Renewables, Supply & Refining & Marketing Exploration & Production Trading (incl. Aromatics & Acetyls) 4

BP in LNG 5

BP in North America Gas • BP has built an extraordinary presence in the North American gas value chain • Top tier natural gas producer and reserves holder • Number 1 marketer of natural gas • BP NA Gas & Power has over 800 people in 25 offices managing over 25 bcf/d of gas sales • Serving over 1200 end-user customers groups; links to 1000+ additional customers Top North America Gas Marketers Rank Company S&P Rating 4Q05 1 BP AA+ 26.3 2 ConocoPhillips A- 11.8 3 Coral (RD Shell) AA 11.0 4 Sempra BBB+ 9.6 5 Chevron AA 6.2 6 Constellation BBB+ 5.6 7 Nexen BBB- 5.1 8 Louis Dreyfus E.S. Not Rated 4.4 9 Cinergy BBB+ 4.2 10 Tenaska Not Rated 4.1 6 Source: Gas Daily, S&P ratings as of March 20, 2006

Crown Landing Project Scope • Located in Logan Township, New Jersey • 75 miles up the Delaware River • Industrial area, low population density • 174 acres site, only 40 acres actually utilized • 1.2 bcf/d send-out; 1.4 bcf/d peak • Single pier sized for up to 200k m3 ships • Three 150,000m3 storage tanks • Nitrogen blending • Access to three major interstate pipelines • 36 month construction period; Start-up 2012 7

Crown Landing Project Status • FERC approval obtained in June 2006 • BP on track with Local and State permits • Expected Project timeline: − Final permits 2008 − Construction begins 1Q 2009 − Expected start-up 1Q 2012 8

Pipeline Interconnects • Three pipeline interconnects • Transco and Columbia on site • TETCO requires a 12 mile interconnect 9

LNG Importation – Core Issues • Gases from multiple sources have different compositions and properties • New gas to an existing market may not be interchangeable with current supplies • Gas quality and interchangeability standards are required to meet the needs of customers and suppliers alike 10

LNG and Pipeline Gas • LNG is still natural gas, but in liquid form for ease of transportation • Due to the liquefaction process, its quality has some unique differences from typical pipeline gas: − It’s drier − Little C4+ − Low N2 − Virtually no contaminants (practically no CO2, H2S, sulfur and other solids typically found in natural gas) 11

LNG Supply • Over 71% of U.S. LNG imports currently come from Trinidad 12

Data and Studies • Examples of Key Studies Available: AGA, USBM and other European studies on interchangeability − AD Little study for Everett & Elba Island − − Recent GTI study Recent TIAX study for Cove Point − Other LDC studies (Brooklyn, PSEG, etc.) − − Current Socal & CEC studies for California UK studies by Advantica − Gasunie studies − Current DOE testing − • Available Data: − GRI gas quality statistics for USA (1992) NGC+ − NAESB started the gas quality posting for pipeline (since last Qtr 2005) − Post Katrina operational data − 13

Industry Experience – Some Examples • LNGs with Wobbe number of about 1400, representing a 4% change from historical, were successfully accommodated in Everett terminal with air blending. 1 • Bilbao LNG import terminal and power plant in Spain has been able to accommodate gases of varying gas qualities within a HHV of 800 – 1200 and a modified Wobbe Index of +/- 5%. 2 • Recent Power Turbine Performance in California during heat content surge resulting from shutdown of some processing plants in Canada. 3 • Rich gases were landed and transported via the Trunkline system with so reported problems during and after hurricanes Rita and Katrina. 4 References: 1. Environ presentation: 2006 Algonquin gas quality workshop. 2. BP internal data. 3. 2005 Aspen Environmental Group report to CEC. 4. Trunkline Gas Company website. 14

North East Gas Quality Specifications NGC+ Current NE Market Historical Heating Value ≤ 1110 ≤ 1065 (BTU/SCF) +/- 4% around historical --- Wobbe (BTU/SCF) averages with cap of 1400 ≤ 4% ≤ 2% N2 and Inerts C4+ ≤ 1.5% --- • Current heat content in service areas varies from 1018 to 1065 with averages of 1035 BTU/SCF or Wobbe from 1340 – 1369 with averages of 1355 BTU/SCF) • NGC guidelines are performance based, industry consensus and included in the FERC policy statement of 2006 15

LNG Supplies with NGC+ Specifications Measure NGC+ NE Historical Experience HHV Max 1110 ≤ 1065 Historical ± 4% with max. 1400 Wobbe Max 1.5% Butane plus (C 4 +) CO 2 + N 2 Max 4% Max 2 % Max HHV and Wobbe limits HHV ≤ 1156 HHV ≤ 1087 for LNGs before blended Wobbe ≤ with N2 1472 Potential LNG Supply Sources Existing supplies: Existing supplies: Trinidad, Meeting Spec Egypt Trinidad, Egypt, Arzew, Nigeria, Rasgas, Skikda, Qatar, Oman, Adgas, Malaysia, Bontang Future supplies: Tangguh, Baltic, Egypt, Qatar, Nigeria Brass, Angola Future supplies: Tangguh, Baltic, Egypt, Nigeria, Qatar, Snovit, Equitorial Guinea, Gorgon, Peru, Angola 16

Managing Interchangeability • Inject N2 at the Crown Landing Terminal • Blend richer LNG with leaner LNG in-tank at the Crown Landing Terminal • Blend vaporized LNG exiting Crown Landing Terminal with pipeline gas 17

Perspective on Future Trends • Days of matching ONE supplier with ONE customer are over • Tight supply constraint and increasing market demand will lead to some convergence of gas quality or interchangeability specifications globally • Convergence in the US toward NGC+ recommendations • Flexible gas specifications will result in wider availability of source of LNG and increase security of supply 18

Summary • Suppliers, Pipelines and Customers need to work together to address gas quality issues • Introducing overly tight composition limits in tariffs will unduly restrict new sources of supply and disadvantage the U.S. market • As per FERC policy statement, a clear demonstrable rationale to move to tighter limits would need to be evidenced NGC+ is the consensus way forward 19