www.tri-zen.com

Tony Regan

Principal Consultant

SEAAOC 2012, Darwin

18June-20 September 2012

Prelude where next

Is FLNG poised to take off

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Introduction to TRI-ZEN

TRI-ZEN is a consulting business focused on energy and utilities

We cover upstream & downstream, technical, commercial & financial

We offer a wide range of services:

Consulting

Strategy

Business Development

Project Management

Organizational Development

Alliances

Due diligence for M&A, project finance and IPOs

Lead consultants located across Asia with a global extended network

Clients include the leading companies in energy and professional services based in Asia, Europe & North America

Tri-Zen, in association with engineering consultants , Energy & Power Ltd, provide comprehensive advice and services at every stage of an LNG/FLNG

development

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FLNG - Prelude

15 years of research

1.6 million man hours working on the engineering challenges

Front End Engineering & Design awarded Samsung-Technip in July

2009

Final Investment Decision May 2011

Built at Samsung Heavy Industriess Geoje shipyard in South Korea

Enters service 2016

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Shell has entered into a Master Service Agreement with Technip and Samsung for the

design, construction and installation of multiple floating liquefied natural gas facilities

over a period of up to fifteen years

Picture courtesy of Shell

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FLNG - Prelude

Designed to be on site for 25 years

To be located in the Browse Basin off Western Australia

Will tap into 3 Tcf gas reserves in Prelude & Concerto fields

5.3 mill tonnes of liquids producing:

3.6 mtpa of LNG

1.3 mtpa of condensate

0.4 mtpa of LPG

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Floating liquefaction

Started with 14 different options on offer

Hull: 7 vessel, 7 barge Storage from 0.5 mill tn to

5.8 mill tn

Flex LNG

1.7 MTPA LNG

SPB Tanks SS

Nitrogen Cycle

Cost indic. $700/TPA

Shell

LNG 3.5 MTPA

Membrane Tanks

DMR/ACD

Cost indic. $1700/TPA

Hoegh LNG

Flex LNG

Shell

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FLNG Pacific Rubiales (Exmar)

Liquefaction

70 MMSCFD

0.5 MTPA

LNG Storage 14,000 m3

Offload to tankers up to 140,000 m3

Storage & Regas

Tolling basis for 15 years

Planned start 2014

Pacific Rubiales Energy Corp.

Offshore Columbia (Caribbean)

LNG Supply to Caribbean Islands

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Picture courtesy of Exmar

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FLNG - Petronas

Sarawak

1.2 MTPA

FEED Completed Feb 2012

Technip/Daewoo

Turret Moored

Membrane Storage

Sanctioned March 2012

Start Up Planned Q4 2015

Sabah

1.5 MTPA

4 Bidders for FEED 2 to be awarded

Samsung, Daewoo and Hyundai +

MMHE?

Sanction planned late 2013 ??

Start up planned Q4 2016

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Picture courtesy of Technip

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Projects

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LEADER TOPSIDES LNG HULL STORAGE PROJECT

(CONSTRUCTOR) LIQUEFACTION MTPA CONTAINMENT m3 STATUS

Shell Technip Barge 220,000+ Prelude Sanctioned,

(Samsung) Shell DMR Membrane 90,000 LPG+ EPC in progress

126,000 Cond Sunrise next?

Partner Inpex for Abadi (2.5)

4 projects planned

Petronas Technip/Linde Barge FEED completed Feb 2012

(DSME) MR Membrane Sanctioned Mar 2012

Overtake Shell?

Flex LNGCostain/Kanfa

/WParsonsShip 170,000+ Interoil PNG FEED

(Samsung) Dual Nitrogen SPB (SS) 50,000 LPG/Cond Generic - Det Eng

Hegh LNG KBR Ship 190,000+ Petromin FEED

(DSME)Niche

(Methane/N2)Membrane 20,000 LPG+ Generic FEED

19,000 Cond Tamar, Israel pre-FEED

Black & Veatch 14,000

SMR Part of value chain

Linde Barge 180,000+ PTTEP Australia

MR SPB?? 25,000 LPG+ Cogee FEED

25,000 Cond

TBA Bonaparte

Studies Conceptual Design

Exmar 0.5 BargePacific Stratus Energy

Colombia

SBMLinde 2.5

GDF Suez/Santos Doris 2 Studies

3.5

1.2 ???

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Projects

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LEADER TOPSIDES MTPA HULL STORAGE STATUS

(CONSTRUCTOR) LIQUEFACTION m3

Excelerate EBLV Black & Veatch 3.0 Barge 250,000 Concept

(Exmar) SMR Membrane (incl. LPG) FEED in 2012?

Inpex JGC 4.5 Barge Feasibility

Mixed

RefrigerantNow with Shell

Aker/Statioil Aker 5.8 Barge FEED

Mixed

RefrigerantShelved

BW Offshore Mustang 1 Ship Concept

Nitrogen SPB/Moss

Hamworthy Hamworthy 0.5-2.2 Ship Field Specific Studies

Nitrogen Field Specific

TGE Marine TGE 0.4-1.5 Ship Concept

(CMIC China)Mixed

RefrigerantType C

ConocoPhillips ConocoPhillips 5 Barge 350,000 Concept

Optimised

CascadeReview in 2012

Sevan Marine Kanfa 1.5 Circular FPSO 200,000 Concept

Nitrogen Tank

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The drivers for FLNG

Higher gas/energy prices

Growth in gas demand

36% increase between 2010 & 2020 (BP)

66% increase in Asia

Concern about declining domestic gas production

(Europe & Asia)

Explosive growth of LNG demand and development

of new sectors transportation fuel, bunker

fuel

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2010 2011 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E

North America Cent Amer/Caribb South America

Europe Asia Middle East

LNG Demand Forecast

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Drivers for FLNG

Cost effective way of monetising stranded/remote gas reserves

Design flexibility re-deployable, can handle wide range of gases, can draw from multiple fields

Problems with conventional LNG projects long delays getting permits, delays, cost over runs, shortage of key resources

Can utilise proven liquefaction technology plenty of vendors

Potential for considerable cost savings:

No offshore production and compression stations

No subsea pipeline to shore

No onshore plant/berths/utilities

Modular construction in shipyards

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LNG Project Breakeven Costs

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Sakhalin 2 Pluto 1 Browse Wheatstone GLNG APLNG QCLNG DSLNG Gorgon Ichthys Prelude

US$/MMBtu

FOB price needed to achieve a 12% IRR

Source: Deutsche Bank Proposed projects

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Indicative FLNG CAPEX Lowest Cost Scenario (1.7 MTPA, Lean Gas no LPG/Condensate Production)

Building Block $ million

Hull & Accommodation 580

Turret 40

Gas Reception 70

Feed Gas Compression later

Gas Treatment 50

Gas Liquefaction 360

LPG Stabilisation option

Power Generation 80

Utility Systems 80

Offloading 10

Interconnecting Pipework 30

Total 1300 765 $/TPA

Contingency 30% 390

Owner's Costs 130

Total 1820 1071 $/TPA

Production 1.7 MTPA

CAPEX Depreciation (15 years) 71 $/T

CAPEX Depreciation (15 years) 1.4 $/MMBTU

Metric

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OPEX (Operating Cost) Estimate

1.7 MTPA LNG Production

Component $ million/year

Fuel Gas (15% Gas Feed) 17 $1.5/MMBTU

Manning (120 people) 15

Maintenance (4% CAPEX) 38

Tugs 10

Base Support, Helicopters 10

Miscellaneous 10

Total 100

Production 1.7 MTPA

Production Cost 59 $/ton

Production Cost 1.2 $/MMBTU

Note: Excludes any project financing costs

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Proposed Floating LNG projects

Liquefaction

Firm

Existing

Proposed

Flex/InterOil, 2 mtpa

PNG

AUSTRALIA

Greater Sunrise, 3.5 mtpa

Bonaparte, 2 mtpa

Shell/Prelude, 3.5 mtpa

Scarborough, 6 mtpa

Echuca Shoals, 1.5 mtpa

Abadi, 2.5 mtpa

INDONESIA

TIMOR LESTE

PTT Cash Maple, 2 mtpa

Evans Shoal, Hoegh/DSME, 3 mtpa

Petronas FLNG, 1 mtpa Petronas FLNG 3 mtpa

Others: Iraq; Shell, Mitsubishi 2 mtpa Israel; Nobel, Delek, DSME 3 mtpa Colombia; Exmar, Pacific Rubiales 0.5 mtpa USA, Excelerate 3 mtpa

Current focus is South East Asia & Australia but likely to go global over next few years Iraq, Israel, Colombia, USA

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How will FLNG fit in?

Still challenges but there is a place/need for FLNG and it could fit in:

By clearly demonstrating:

Substantial reduction in project development costs and time

Operating efficiency similar to onshore LNG

Lower CAPEX than conventional LNG

OPEX no higher than conventional LNG

Faster monetisation of reserves

Sponsors have kept it simple not the time to be testing new technology

By having experienced, financially strong sponsors preferably able to fund from balance sheet rather than project finance

By having a strong marketing team to convince skeptical buyers (but we have moved back into a sellers market)

Probably more than just deepwater offshore could be sound opportunities inshore or berthed

Could be a call for small scale barge mounted FLNG

..it wont be easy but the time is right!

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What will it cost?

Early capital cost estimates for US$600- 1200/tpa

Recent indicative costs US$1,500/tpa plus/minus 30%

Flex LNG indicating US$ ~700/tpa for 1.7 to 2.0 mill tonne liquefaction capacity

Estimate that the capital cost of Shells Prelude FLNG facility will be just over USD6bn or about USD1, 700 per tonne of capacity

Significant variations depending on gas composition (high/low C3, C4, condensate) and CO2, N2 content,

High liquids content considerably increases commercial attraction

CAPEX figures exclude field development costs

Cost figures indicative until full design completed for specific location/resource

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Insufficient LNG supply

LNG demand expected to double between 2010 and 2018/2019

Insufficient new liquefaction capacity coming on to meet demand about 75 million tonnes

But, 338 million tonnes of new liquefaction capacity is being offered by project sponsors who say they expect to take FID between 2012 and 2014.

Have recently seen a significant increase in the number of new projects being offered into the project pipeline including 166 million tonnes from the USA

From famine to feast unprecedented number of proposed projects

However, not all will go ahead

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2011 2012 2013E 2014E 2015E 2016E 2017E 2018 2019 2020

Existing 270 275 280 279 280 280 280 278 276 276

Under construction 0 0 5 18 40 62 75 75 75 75

Proposed 0 0 4 12 47 95 169 272 330 352

Speculative 0 0 1 3 4 5 21 84 122 130

Total 270 275 290 312 371 443 545 710 803 833

Existing planned and proposed liquefaction capacity

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A path forward

Unprecedented number of potential projects being offered into the project pipeline

Too many, much more difficult for customers to choose

Could see the emergence of business clusters/ areas of prime focus

Will make it more difficult for projects not in these focus areas to gain traction with customers (e.g. Russia, Nigeria)

Likely to see FLNG emerge as the 5th cluster. Although not geographic, another 40 million tonne cluster is emerging

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USA 40 mill tn 2016-2018

Canada 40 mill tn 2016-2020

East Africa 40 mill tn 2018-2022

Australia 60 mill tn 2014-2017

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Oil versus gas pricing

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Gas Henry Hub $/MMBtu Crude WTI $/MMBtu

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LNG as a transportation fuel

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Increasing environmental and economic drivers to use LNG as a transportation fuel

LNG cheaper then fuel oil and much cheaper than diesel

Growing interest in using LNG as a truck fuel in USA and China. Australia emerging

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LNG versus fuel oil & gasoil NW Europe

US$/MMBtu

1% fuel oil NW.Eu German Gasoil LNG UK

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180 cst Fuel Oil Gasoil LNG

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LNG as a transportation fuel

LNG service stations supported by small scale liquefaction plants

Floating storage an attractive option as LNG bunker storage in

ports without an LNG terminal

Bunkers may also be supported by small/medium scale liquefaction

plant

This could be FLNG in the port or against a berth.

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LNG Bunker barge

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We add value

Strategy

Asset optimisation

Sector studies

Market studies

Forecasting

Commercial and technical studies

Commercial representation

New market entry

Detailed business cases

Project finance and management

Mergers & Acquisitions

Organisational Development

Based in Singapore with

consultants in:

Bangkok

Beijing

Hong Kong

Jakarta

Kuala Lumpur

Melbourne

Perth

TRI-ZEN International Pte Ltd

30 Cecil Street, Prudential Tower 15-00, Singapore 049712

Tel: 65 6254 4791 tony.regan@tri-zen.com