The Outlook for LNG in the US Market · The Outlook for LNG in the US Market ... Tangguh Sunrise...
30
The Outlook for LNG in the US Market 6 th Annual Energy Trading & Marketing Conference March 11, 2008
Transcript of The Outlook for LNG in the US Market · The Outlook for LNG in the US Market ... Tangguh Sunrise...
The Outlook for LNG in the US Market
6th Annual Energy Trading & Marketing ConferenceMarch 11, 2008
2
The Outlook for LNG in the US Gas Market
� Why do we need LNG imports?� Where will it come from?� Who are we competing against?� Where will it go?� What is unique about trading around LNG imports?� Shameless promotion…
3
North American Production is Not Sustainable
Lower 48 & Canada Productive Capacity
40
45
50
55
60
65
70
75
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
$ 4.00 $ 6.00 $ 8.00 $ 10.00
0
Gas price $/MMBtu
Rising costs and shift to unconventional reservoirs sets a floor for natural gas prices
3
4
5
6
7
8
9
2
1
4.965.40
5.95 6.026.31
7.24 7.24 7.39 7.507.86
Pin
edal
e A
ntic
line
Bar
nett
Gas
Sha
le
Fay
ette
ville
sha
le
Bar
nett
shal
e K
WK
App
alac
hia
Sha
le
Woo
dfor
d S
hale
Bos
sier
Cot
ton
Val
ley
San
ds
Bar
nett
Sha
leE
xten
sion
Uin
ta B
asin
Pic
eanc
eB
asin
$7.00/MMBtu
Note: Prices for a 10% rate of return
Source: Productivity Graph - CERA/IHS; NYMEX Gas Pri ces Chart - Kuuskraa et al, OGJ, Oct. 2007
4
Consensus on Canadian Production Decline
Outlooks on Canadian Gas Production
89
101112131415161718
2005
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
Bcf
/d
NEB "Energy Future" High Tech NEB "Energy Future" ReferenceZiff CERI 2006TCPL Lippman NEB 2007-09 ST Outlook
5
Supply Gap in North America How Big and How Will it Be Filled?
N. America Supply-Demand
0
10
20
30
40
50
60
70
80
90
100
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
Pro
duct
ion
& D
eman
d
0
5
10
15
20
25
30
35
40
45
50
Sup
ply
Gap
Demand Supply Gap (EIA)Supply Gap (CERA/IHS) Production (EIA)Production (CERA/IHS @ $8.00)
6
New Liquefaction Competes for Market Share
Source: CERA, Cheniere Research
Shtokman
Kenai
Deltana
Peru LNG
Snohvit
Yemen LNG
SakhalinArzew
Gassi Touil
AngolaLNG
Marsa el Brega
Damietta
Skikda
Idku
Persian LNG
Abu Dhabi LNG
Oman LNG
QG 4QG 3QG 2QG 1
Raz Gas 1-5Raz Gas 6-7
NIOC LNGPars LNG
Gorgon
Pluto
AustraliaNWS 1-5
Arun
Pilbara
Bontang
Darwin LNG
Browse Basin
Bintulu
Brunei
Sulawesi
Tangguh
SunriseEquatorial
Guinea
Brass LNG
MariscalSucre
ALNG
NLNG 6NLNG
7-8
Existing Liquefaction
Under Construction
Proposed Liquefaction
NLNG1-5
Iran LNG
OK LNG
5
15
25
35
45
2005 2006 2007 2008 2009 2010
36
23 24 2630
35
Liquefaction CapacityBcf/d
PNG
7
Contractual Trends Away from Utilities . . .
0
10
20
30
40
50
Bcf/d
2005 2006 2007 2008 2009 2010 2011 2012
Non-UtilityNon-Utility
UncommittedUncommitted
UtilityUtility
Contracted Supplies - Utility vs. Non-Utility
~44% of 2010 LNG supply will seek premium markets
Source: Cheniere Research
8
…Results in Increasingly Flexible LNG Supply
LNG Imports by Region
-
4
8
12
16
20
24
28
32
36
40
44
48
2000
Q1
2000
Q3
2001
Q1
2001
Q3
2002
Q1
2002
Q3
2003
Q1
2003
Q3
2004
Q1
2004
Q3
2005
Q1
2005
Q3
2006
Q1
2006
Q3
2007
Q1
2007
Q3
2008
Q1
2008
Q3
2009
Q1
2009
Q3
2010
Q1
2010
Q3
2011
Q1
2011
Q3
2012
Q1
2012
Q3
2013
Q1
2013
Q3
In B
cfd
Europe APNorth America Available LNG
Asia Pac + ME Gulf
Atlantic + ME Gulf
Supply Source
Atlantic + ME Gulf
Source: Cheniere Research
9
Worldwide Liquefaction Utilization
Source: Poten, Cheniere Research
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%
120%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2007 2004 2005 2006
10
First in the Demand Stack: Asia-Pacific
Asia Pacific Historical - Forecast LNG Imports
02468
10121416182022242628
2000
20
01
2002
20
03
2004
20
05
2006
20
07
2008
20
09
2010
20
11
2012
20
13
2014
20
15
2016
20
17
2018
20
19
2020
B
cf/d
Philippines Japan South Korea ChinaIndia Chile Indonesia (Java) TaiwanSingapore Pakistan Thailand New Zealand
Source: WoodMackenzie
11
Second: Europe – A Pipeline-Supplied Market
New Pipeline
Existing Pipeline
Expansion
Source: BP Statistical Review; GIIGNL; Cheniere Res earch
20070.3Turkey-Greece Intercon. 20110.8Italy-Greece Interconnect. 20122.9NabuccoIran/Caspian
20060.3Maghreb-Europe (Exp.)20090.8 – 1.0Galsi20090.6Transmed (Expansion)20090.8MedgazAlgeria
20080.6TAG Expansion20070.4TAG Loop II20122.6 - 5.3Nord Stream (NEGP)Russia
20061.5BBLNetherlands
20071.9LangeledNorway
DateBcf/dPipelineSupplier
Incremental Pipeline Supplies in Europe
Consumption2006: 50 Bcf/d
Production2006: 26 Bcf/d
Piped Gas Import Trades2006: 27 Bcf/d
Total Incremental Capacity13.5 – 16.7 Bcf/d
Large and Growing Piped Gas Supply
12
…with LNG Terminals Becoming a Negotiating Tool
Bcf/d
1.28
7.4
10.25
Mediterranean
2007 2012
1.31.48
6.61
NW Europe
2007 2012
4.47
0.92
5.36
UK & Ireland
2007 2012
2007 LNG Imports5.4 Bcf/d
LNG Terminals
Existing 9.8Firm 7.1Proposed 22.2
39.1 Bcf/d
13
Europe – Total LNG Imports
Source: Poten, Cheniere Research
0
2
4
6
8
10
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Bcf/d
2007 2008 2006 Total 2005 Total
14
Spain Hydro Generation Impact on LNG Imports
15
European Production Decline Outlook
EUROPE - Natural gas production (Bcm/y)
0
50
100
150
200
250
300
350
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
Othersforecast
Others
NWforecast
Norway
NLforecast
NL
UKforecast
UK
What proportion of Europe’s production declines wil l be replaced by pipeline supply from FSU and Algeria?
Source: Cheniere Research
16
Some European Import Forecasts are Impressive
Europe - Historical vs. Forecast LNG Imports
0
2
4
6
8
10
12
14
16
18
20
22
2000
20
01
2002
20
03
2004
20
05
2006
20
07
2008
20
09
2010
20
11
2012
20
13
2014
20
15
2016
20
17
2018
20
19
2020
B
cf/d
Iberia France NW Europe Other Med
Source: WoodMackenzie
17
2010 Annual Balance - Bcf/d
Global Liquefaction Capacity 36
Estimated LNG Delivery @ 90% 32
Asian Consumption <~16>
European Consumption <~ 6>
Remaining for North America ~10
Source: Cheniere Research
18
Constraint is not Regas Capacity but Consumption
Source: GIIGNL; Waterborne LNG; Cheniere Research
� Regasification is built for peak utilization because of seasonal variations
Bcf/d
1
3
10
LNG Imports
5418~ 104863472
3320~ 650115685
4739~ 164034143628
%Utilized
RegasCapacity
LNG Imports
%Utilized
RegasCapacity
LNG Imports
%Utilized
Regas Capacity
Asia
Europe
NorthAmerica
2010E2007E2000
19
Demand Seasonality Impacts Flows
Source: IEA
2006 Demand
0
5
10
15
20
25
30
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Belgium Spain France UK US GC
Bcf/d
20
North American Demand and Seasonality
Historical: EIA (2005), BP Statistical Review (2006); Forecast: IEA WEO (2004),Cheniere Research
Bcf/d Demand by Country and Region (2005)
Bcf/d Demand by Country and Region (2005)
0.7
1919
Canada9
Canada9
1313 1414
Mexico5
Mexico5
0.7
0.81.0
1.0
1.5
11.7
66
99
Altamira 70 0Shell, Total
Costa Azul 1,000Shell, Sempra
Canaport 1,000Irving, Repsol
Total 16,800
Golden Pass 2,000EOM, ConocoPhillips, QP
Cameron 1,500Sempra, ENI
Sabine Pass 4,000Total, Chevron, Cheniere
Freeport 1,500ConocoPhillips, Dow
Lake Charles - BG 1,800
Elba Island 800BG, Marathon, Shell
Cove Point 1,800BP, Statoil, Shell
Everett - Suez 700
BaseloadSendout (MMcf/d)
TerminalCapacity Holder
Altamira 70 0Shell, Total
Costa Azul 1,000Shell, Sempra
Canaport 1,000Irving, Repsol
Total 16,800
Golden Pass 2,000EOM, ConocoPhillips, QP
Cameron 1,500Sempra, ENI
Sabine Pass 4,000Total, Chevron, Cheniere
Freeport 1,500ConocoPhillips, Dow
Lake Charles - BG 1,800
Elba Island 800BG, Marathon, Shell
Cove Point 1,800BP, Statoil, Shell
Everett - Suez 700
BaseloadSendout (MMcf/d)
TerminalCapacity Holder
LNG Import Capacity Bcf/d
Existing Facilities 5.0Expansion of existing 0.8
New Terminals 11.0NA Total by 2010 16.8
LNG Import Capacity Bcf/d
Existing Facilities 5.0Expansion of existing 0.8
New Terminals 11.0NA Total by 2010 16.8
21
Demand by Region, Market and Season LNG Receiving Terminal Utilization Depends on Seaso nality, Pipelines & Logistics
Southeast6.0 Bcf/d
0
3
6
9
12
15
18
Summer Winter
5.65.66.76.7
Bcf
/d
Northeast9.0 Bcf/d
0
3
6
9
12
15
18
Summer Winter
6.96.9
10.610.6
Bcf
/d
Gulf Coast19 Bcf/d
0
3
6
9
12
15
18
Summer Winter
18.418.4
Bcf
/d
19.219.2
Industrial
Electric
Residential
Total U.S. consumption of 61 Bcf/d in 2005with 76% consumed in these markets
Total U.S. consumption of 61 Bcf/d in 2005with 76% consumed in these markets
Source: EIA 2005 Data
Midwest14 Bcf/d
0
3
6
9
12
15
18
Summer Winter
9.09.0
18.218.2
Bcf
/d
20
Gulf Coast regas terminals ideally located for full year utilization
22
Trading Considerations
� Maritime issues in transportation– Scheduling, diversions, force majeure
� LNG terminals as a gas asset– Storage, sendout, pipeline interconnections
� Regulatory considerations– Hackberry rule, EPAct 2005, anti-manipulation legislation
� Role of conventional assets– Underground storage, pipeline transport, power generation
� Valuing destination options� Services for the supply community
– “Put” rights, ratability services, bundled risk management
Cheniere’s Assets and Projects
24
Cheniere Energy Partners, L.P. (AMEX: CQP)Sabine Pass LNG, L.P. Cheniere Energy, Inc. 90.6%
1.0 Bcf/d1.0 Bcf/d2.0 Bcf/d
Capacity
~ $126~ $130~ $256
Total, S.A.Chevron Cheniere Marketing
2010 Full-Year Revenue ($MM)
Sold – Terminal Use Agreement (TUA)
Sabine Pass LNG Terminal Construction – January 2008� Land– 853 acres in Cameron Parish, LA
� Accessibility – Deep Water Ship Channel– Sabine River Channel dredged to 40 feet
� Proximity – 3.7 nautical miles from coast– 22.8 nautical miles from outer buoy
� Berthing/Unloading– 2 docks – LNGCs up to 265,000 cm– 4 dedicated tugs
� Storage– Phase I: 3 x 160,000 cm (10.1 Bcfe) – Phase II: 2 x 160,000 cm (6.7 Bcfe)
� Vaporization– Phase I: 2.6 Bcf/d– Phase II: 1.4 Bcf/d
� Potential Pipeline Access (Interstate) – Access to NE, MW, SE, & Mid-Atlantic markets– ~14 Bcf/d within 150 miles
� Regional Market - Strong Gas Demand – Port Arthur, Beaumont, Orange, Lake Charles
� Project Status – Phase I: operational Q2 2008– Phase II: operational Q2 2009
25
Fourth gas turbine generator
8 SCV trains to increase plant capacity from 2.6 to 4.0 Bcf/d
Two 160,000 m3 LNG tanks
One 160,000 m3 LNG tank
15 additional AAV trains
Sabine Pass LNGNo Shading = Phase 1
Yellow = Phase 2
Blue = Other FERC-Permitted Assets
Ambient Air Vaporizer (AAV) Pilot
26
Sabine PL
Targa
Transco
Gulf South
Trunkline
Jefferson IslandStorage
Sabine Pass LNG Terminal Phase I – 2Q 2008Phase II – 2Q 2009
Sabine Pass LNG Terminal Phase I – 2Q 2008Phase II – 2Q 2009
Creole Trail LNGTerminal
Creole Trail LNGTerminal
Henry Hub
Varibus
NGPL
Transco
Bridgeline
Tennessee
Florida Gas
Creole Trail Pipeline
Liberty Storage
Starks Storage
Hackberry Storage
Texas Eastern
Gulf Coast Markets
Northeast Markets
Southeast Markets
Midwest / Great Lakes Markets
Connects with Henry Hub
Gulf of MexicoGulf of Mexico
4Q 2007
ANR Texas Gas
Transco
Florida Gas
Columbia Gulf
Cypress
Egan Storage
Pine Prairie Energy Center
Tennessee
2Q 2008M.P. 58
Creole Trail – MP 58*
Creole Trail – Phase II
6
Potential Pipeline Interconnects:
Dq
SESH -Lucedale
SONAT
Gulf South
FGT 11
TennesseeDequincyTGC, TETCO, Transco 45,
Sempra, Liberty Storage
Cheniere Sabine
Pass LNG
Johnson BayouNGPL, Bridgeline,
SWLateral
TETCO
FGT
Tennessee
Scale - Approximate
0 40 60 miles20
FGT 9
LIG
Cheniere Southern Trail Pipeline
Gulfstream
EuniceANR, TxGas, Egan Storage, Pine Prairie Storage
Transco 65
Southern Trail -ProposedCreole Trail – Under Construction
Creole Trail – FERC Authorized
Je
Fl
FGT 12
28
Corpus Christi LNG Facility Highlights
Corpus Christi TerminalArtist’s Rendition
Corpus ChristiCorpus Christi
AustinHouston New Orleans
� Land– 212 acres in San Patricio County, TX – ~ 400 acres of permanent easement
� Accessibility - Deepwater Ship Channel– La Quinta Channel dredged to 45 feet
� Proximity– 14.3 nautical miles from coast – 16 nautical miles from outer buoy
� Berthing/Unloading– 2 docks – LNGCs up to 265,000 cm– 3 dedicated tugs
� Storage – 3 x 160,000cm (10.1 Bcfe)
� Vaporization – 2.6 Bcf/d
� Potential Pipeline Access – Interstate access to NE, MW, SE & Mexico
markets– ~5 Bcf/d within 25 Miles
� Regional Market - Strong Gas Demand– Texas industrials & power generators
� Project Status– Site Preparation and engineering complete
29
Creole Trail LNG, L.P.Facility Highlights
� Land – 1463 Acres in Cameron Parish, LA
� Accessibility - Deepwater Ship Channel– Calcasieu Channel dredged to 40+ feet
� Proximity – 3.2 nautical miles from Coast – 30.9 nautical miles from outer buoy
� Berthing/Unloading– 2 docks – LNGCs up to 265,000 cm– 3 dedicated tugs
� Storage – 4 x 160,000 cm tanks (13.5 Bcfe)
� Vaporization Capacity – 3.3 Bcf/d
� Potential Pipeline Access– Interstate access to NE, MW, SE, & Mid-Atlantic
markets; ~14 Bcf/d w/in 120 Miles� Regional Market - Strong Gas Demand
– Louisiana industrials & power generators � Project Status
– FERC permitted
Creole Trail TerminalArtist’s Rendition
Creole TrailCreole Trail
AustinHouston
New Orleans
30
This presentation contains certain statements that are, or may be deemed to be, “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements, other than statements of historical facts, included herein are “forward-looking statements.” Included among “forward-looking statements” are, among other things:
� statements that we expect to commence or complete construction of each or any of our proposed liquefied natural gas, or LNG, receiving terminals by certain dates, or at all;
� statements that we expect to receive authorization from the Federal Energy Regulatory Commission, or FERC, to construct and operate proposed LNG receiving terminals by a certain date, or at all;
� statements regarding future levels of domestic natural gas production and consumption, or the future level of LNG imports into North America, or regarding projected future capacity of liquefaction or regasification, liquifaction utilization or total monthly LNG trade facilities worldwide, regardless of the source of such information
� statements regarding any financing transactions or arrangements, whether on the part of Cheniere or at the project level;� statements relating to the construction of our proposed LNG receiving terminals, including statements concerning estimated costs, and the
engagement of any EPC contractor; � statements regarding any Terminal Use Agreement, or TUA, or other commercial arrangements presently contracted, optioned, marketed or
potential arrangements to be performed substantially in the future, including any cash distributions and revenues anticipated to be received; statements regarding the commercial terms and potential revenues from activities described in this presentation;
� statements regarding the commercial terms or potential revenue from any arrangements which may arise from the marketing of uncommitted capacity from any of the terminals, including the Creole Trail and Corpus Christi terminals which do not currently have contractual commitments;
� statements regarding the commercial terms or potential revenue from any arrangement relating to the proposed contracting for excess or expansion capacity for the Sabine Pass LNG Terminal or the Indexed Purchase Agreement (“IPA”) or LNG spot purchase examples described in this presentation;
� statements that our proposed LNG receiving terminals, when completed, will have certain characteristics, including amounts of regasification and storage capacities, a number of storage tanks and docks and pipeline interconnections;
� statements regarding Cheniere and Cheniere Marketing forecasts, and any potential revenues and capital expenditures which may be derived from any of Cheniere business groups;
� statements regarding Cheniere Pipeline Company, and the capital expenditures and potential revenues related to this business group; statements regarding our proposed LNG receiving terminals’ access to existing pipelines, and their ability to obtain transportation capacity on existing pipelines; statements regarding the Cheniere Southern Trail Pipeline, and its potential business opportunities
� statements regarding possible expansions of the currently projected size of any of our proposed LNG receiving terminals;� statements regarding the payment by Cheniere Energy Partners, L.P. of cash distributions;� statements regarding our business strategy, our business plan or any other plans, forecasts, examples, models, or objectives; any or all
of which are subject to change; � statements regarding estimated corporate overhead expenses; and� any other statements that relate to non-historical information.
These forward-looking statements are often identified by the use of terms and phrases such as “achieve,” “anticipate,” “believe,” “estimate,” “example,” “expect,” “forecast,”“opportunities,” “plan,” “potential,” “project,” “propose,” “subject to,” and similar terms and phrases. Although we believe that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this presentation. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in “Risk Factors” in the Cheniere Energy, Inc. Annual Report on Form 10-K for the year ended December 31, 2006, which are incorporated by reference into this presentation. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these ”Risk Factors”. These forward-looking statements are made as of the date of this presentation, and we undertake no obligation to publicly update or revise any forward-looking statements.
Safe Harbor Act
