Joseph G. Munisteri, P.E. Transmar Consult, Inc.

Houston, Texas

1

RICE FORUMMONTHLY MEETING

MAY 20, 2005

A critical Analysis – Gauging The Available Technical Resources In The Global LNG Industry

Do We Have The Capabilities To Build LNG’s Future?

Is Perceived LNG Growth Realistic?

Joseph G. Munisteri, P.E. Transmar Consult, Inc.

Houston, Texas

2

STUDY METHODOLOGY

A Five Step Process

1. Identify Key Individuals

2. Contact Individuals – 165

3. Interviews – 112 Globally Using Common Questions for All

4. Collect and Analyze Data

5. Write up Study Findings And Issue Study With Follow-up Presentations

Joseph G. Munisteri, P.E. Transmar Consult, Inc.

Houston, Texas

3

TIME TABLE

Concerns – Operators and Contractors

Kickoff Meeting – Many United States Interviews

European Interviews

Asian Interviews

Data Collection

Data Evaluations

Writing Study Findings

Study Editing & Issuance

August 2004

September 2004

October 2004

November 2004

December 2004

January 2005

February 2005

March 2005

Joseph G. Munisteri, P.E. Transmar Consult, Inc.

Houston, Texas

4

STUDY OBJECTIVES

• Will a Shortage of Experienced Technical Personnel Impact the Global Growth of LNG?

• Who Are in Short Supply?• How Will the Global LNG Industry

Change in the Future?• What Are the Economics of LNG?• What Is the Status of LNG

Technology?• What Operators Are Considered

Best?• Who Are the Principal Contractors?• Will GTL Impact the LNG Industry?

Joseph G. Munisteri, P.E. Transmar Consult, Inc.

Houston, Texas

5

The Future of LNG

ISSUES

Tower of Babel

Likely LNG Demand

Key Players In LNG Arena

The Headhunting Wars

Where Are The Problems?

Important Means To Increasing Proven Reserves

Joseph G. Munisteri, P.E. Transmar Consult, Inc.

Houston, Texas

6

US NATURAL GAS PRICES1985 - 2003

0

1

2

3

4

5

6

7

8

9

10

85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04

$/million BTU (wellhead to 1989 then Henry Hub)

Joseph G. Munisteri, P.E. Transmar Consult, Inc.

Houston, Texas

7

U.S. DOE ENERGY FORECAST(Millions boe/d)

2000 2010 2020

Oil 76 88 106

Natural Gas 45 58 73

Nuclear, (coal, etc.) 68 84 101

Total ___ ___ ____189 230 280

Joseph G. Munisteri, P.E. Transmar Consult, Inc.

Houston, Texas

8

COMPARING IEA AND OWEN OIL

SUPPLY FORECASTS

74.7

95.9

114.2

73.7

87.999

50

70

90

110

130

150

170

1995 1992 2010 2020 2030

YEAR

MIL

LIO

N B

AR

REL

S PE

R D

AY

WEOOWEN

Legend: Owen-Opec Model

Joseph G. Munisteri, P.E. Transmar Consult, Inc.

Houston, Texas

9

SHELL FORECASTS

LNG DEMAND

270 mtpa

Potential Unrisked Supply

Venezuela

other

Trinidad

Sakhalin

Qatar

Oman

Nigeria MalaysiaIndonesia

Equatorial Guinea

Egypt

Brunei

Bolivia

Australia

Angola

Algeria

MEDIUM TERM 201225 - 35 Projects

340 mtpa

Joseph G. Munisteri, P.E. Transmar Consult, Inc.

Houston, Texas

10

OPERATOR OUTLOOK FOR NEW LIQUEFACTION

TRAINS IN THE MEDIUM TERM (2010 – 2012)

• NUMBER OF NEW LNG TRAINS: FORECASTS RANGED FROM 5 TO 25 TRAINS.

• THE MEAN AVERAGE FORECAST: 14.2 TRAINS

• THE MEDIAN FORECAST: 14

• 33% OF THE OPERATOR PERSONNEL INTERVIEWED WOULD NOT OR COULD NOT PROVIDE A FORECAST.

Joseph G. Munisteri, P.E. Transmar Consult, Inc.

Houston, Texas

11

OPERATOR OUTLOOK FOR NEW RE-GASIFICATION PLANTS IN

THE MEDIUM TERM(2010 – 2012)

• NUMBER OF NEW LNG RE-GASIFICATION TERMINALS: FORECASTS RANGED FROM 5 TO 50

• THE MEAN AVERAGE FORECAST OF RE-GASIFICATION TERMINALS: 14.1

• THE MEDIAN FORECAST: 10

• 38% OF THE OPERATORS COULD NOT OR WOULD NOT PROVIDE A FORECAST

Joseph G. Munisteri, P.E. Transmar Consult, Inc.

Houston, Texas

12

OPERATOR OUTLOOK FOR NEW LNG SHIP TRANSPORTS IN THE

MEDIUM TERM (2010 – 2012)

• NUMBER OF NEW LNG TRANSPORT VESSELS: FORECASTS RANGED FROM 40-100

• THE MEAN AVERAGE FORECAST OF LNG TRANSPORT VESSELS: 70

• THE MEDIAN FORECAST FOR LNG TRANSPORT VESSELS: 70

Joseph G. Munisteri, P.E. Transmar Consult, Inc.

Houston, Texas

13

Nine Potential New Exporting Countries

• Angola• Bolivia• Egypt• Equatorial Guinea• Iran• Norway• Peru• Russia• Venezuela

Joseph G. Munisteri, P.E. Transmar Consult, Inc.

Houston, Texas

14

POTENTIAL LIQUEFACTION PROJECT ACTIVITY

(Millions metric tons)

YEARLYPROJECT NO. TRAINS CAPACITY

Tangguh 2 7.0Darwin 1 3.6Greater Sunrise 1 5.3Gorgon 2 10.0Brunei #6 1 4.0Sakhalin II 2 9.6Qatar II 2 15.6Ras Laffin 2 15.0Oman 1 3.3South Pars-11 2 8.0South Pars-12 2 8.0Pars LNG 2 10.0Persian LNG 2 10.0Yemen 2 6.0Arzew 1 4.0Idku-2 1 3.6Idku-3 1 3.6Damietta-2 1 5.0Bioka Island 1 3.4Nigeria LNG-6 1 4.1West Niger Delta 1 5.0Brass River 1 10.0Nigeria floater 1 5.0Trinidad &Tabago-5&6 2 7.0

Joseph G. Munisteri, P.E. Transmar Consult, Inc.

Houston, Texas

15

TRANSMAR ESTIMATE OFTHE MEDIUM TERM OUTLOOK FOR LNG VESSELS (Millions cubic meters)

2000 2004 2010

Number of 114 175 280Vessels

Capacity 13.9 21.3 34.1

Joseph G. Munisteri, P.E. Transmar Consult, Inc.

Houston, Texas

16

TRANSMAR GLOBAL FORECAST FOR NEW RE-GASIFICATION TERMINALS:

MEDIUM TERM (2010 – 2012)(Millions metric tons)

NO.REGION TERMINALS CAPACITY

Europe 16 50.8

Asia 11 27.5

North & SouthAmerica 12 71.4

____ _____Total 39 149.7

Joseph G. Munisteri, P.E. Transmar Consult, Inc.

Houston, Texas

17

0%

20%

40%

60%

80%

100%

Australia1985

MalaysiaDua 1990

Nigeria1993

Oman1985

Sakhalin2001

2005

plant (design year)

?

Shell Greenfield LNG Supply PlantsContinuing Cost Reduction

Specific capital cost on location

EPC cost, normalized

Joseph G. Munisteri, P.E. Transmar Consult, Inc.

Houston, Texas

18

2003PROJECTS IN PROGRESS

(Millions metric tons)

PROJECT SIZE OF PROJECT

Nigeria Trains #4-#5 11.2

N.W. Shelf 4.2

Malaysia Tiga 7.6

Ras Laffan Train #3 4.7

Damietta, Egypt 5.0

Idku, Egypt 3.6

Snohvit, Norway 4.0_____

Total 40M/T/Y

Joseph G. Munisteri, P.E. Transmar Consult, Inc.

Houston, Texas

19

Ras Gas Train# 3 4.7 M/T/YR.

Malaysian Tiga Train# 1 3.4 M/T/YR.

N.W. Shelf Train #4 4.2 M/T/YR.

Sega Egypt Train # 1 5.0 M/T/YR.

TOTAL = 17. 3 M/T/YR.

2004

COMMISSIONED LNG TRAINS

Joseph G. Munisteri, P.E. Transmar Consult, Inc.

Houston, Texas

20

BEST OPERATORS

• SHELL

• EXXON

• BP

• CHEVRON

Joseph G. Munisteri, P.E. Transmar Consult, Inc.

Houston, Texas

21

BEST CONTRACTORS

• LIQUEFACTION– JGC– CHIYODA– KBR– BECHTEL

• STORAGE– CB&I– IHI

• RE-GASIFICATION– BECHTEL– KBR– TECHNIP– AKER KVAERNER– JGC

Joseph G. Munisteri, P.E. Transmar Consult, Inc.

Houston, Texas

22

AVAILABLE “A” TEAMS FROM LNG PROCESS CONTRACTORS

COMPANY AVAILABLE TEAMS

BECHTEL 1

CHIYODA 1

JGC 1

KBR 2

LINDE* 1

TOTAL 6

* Linde is undertaking its first LNG project Snohvit. It must prove that its “A” team is truly world class. Because of delays and budget problems some doubts exist.

Joseph G. Munisteri, P.E. Transmar Consult, Inc.

Houston, Texas

23

MAJOR ISSUES IMPACTING LNG GROWTH

• Declining Gas Production• Experienced Technical Personnel

Shortages – Liquefaction, Re-gasification

• Major Equipment Manufacturing Limitations– Compressors– Turbine Drivers– Alloy Steels – Valves, etc.

• Regulations and Permitting – Terminals• Growing NOC Demands• Substitution – Coal, Nuclear• LNG – Baseload vs. Peak Shaving

Growth• Financial Restraints

Joseph G. Munisteri, P.E. Transmar Consult, Inc.

Houston, Texas

24

SUMMATIONTRANSMAR’S ESTIMATES

Medium Term 2010 – 2012

Global Liquefaction Capacity Growth By 110 MMTY

Global LNG Demand Growth By 85 MMTY

New LNG Vessels – 105

New LNG Re-gasification Terminals – 39

New LNG Re-gasification Capacity – 150 MMT/YR.