CNG Marine Transport:The Emergence of a Third Major Gas Transportation Industry

John DunlopEnerSea Transport LLC

Gastech 2005Bilbao, Spain15 March 2005

EnerSea Transport LLC

Gas Transport and Storage service provider Privately owned; based in Houston, TXExperienced team of industry leadersWorld class partners & business relationships

NIPPON STEEL

CNG – Proven Technology

1967-70– SIGALPHA, Columbia Gas

Since 1970’s– CNG Land Transport

Since 1980’s– Public & Commercial NGVs

CNG Vehicles - Worldwide

Columbia Gas

Emergence of Modern CNG

Advanced steel propertiesOffshore buoy systemsShip construction efficiencyClassification societies & maritime administrations“Promotion” of CNG by motivated regulators“Volume Optimized” CNG technology

CNG Transport System

Loading Terminal

CNG Carriers

Delivery Terminal

Gas Storage

New Generation CNG Carriers

Knutsen PNG

EnerSea VOTRANStm

Trans Canada GTM

WilliamsCoselles

VOTRANSTM “Volume Optimization” Proprietary CNG Breakthrough

Store gas at optimum temperature-pressure– Reduced compression– Reduced steel– Increased storage efficiency: 60-100% greater storage capacity

than high pressure CNG designs

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0 500 1000 1500 2000 2500 3000Pressure, psia

Mass = PVol ZRT

Z fa

ctor

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pres

sibi

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-20o F

Hi-pressure,Ambient StorageHi-pressure,Ambient Storage

Rich GasRich Gas

Lean GasLean Gas

Technology Acceptance & Marine Standards Developed

• Maritime Class Societies’ initiatives to support CNG transport implementation:– DNV: CNG carrier Rules issued– ABS: CNG carrier Guide issued

• Prototype Testing underway – To be completed in 2Q 2005

• International institute established devoted solely to CNG (Centre for Marine CNG)

• ”Class Approval in Principle” designations have been granted for CNG carriers

A World of CNG Opportunities

Reduce Reserves Threshold

<1 to 4+ Tcf ReservesReduce Reservoir AppraisalHighly ScalableCapture UpsideMitigate Risk

Enhanced Asset Management------

Improved Risk-weighted NPVs

LNG Targets

CNGTargets

World’s Gas Fields by Size ex N America

Source:HIS Energy Group

1.5-15 TCM

150-1500 BCM

30 to 150 BCM

15 to 30 BCM

7.5 to 15 BCM

3 to 7.5 BCM

0.3 to 3 BCM

All Others

Commercial ViabilityPr

ojec

t Rat

e (M

M s

cf/d

)

$1.00 - $2.50/mmbtu total transport tariff

Incl. CNG fleet and loading/offloading terminals

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Unique CNG Transport Applications

• Direct offshore gas field offtake• Deep and ultra-deep water fields• Associated gas• Uncertain reserves volumes• Dynamic & new gas markets• Limited LNG receiving terminal access

Direct Offshore Loading System

Low cost, proven systemsSubsea flowline & flexible riserApplicable in deep & ultradeep waterSingle or dual buoys (continuous production)

Courtesy Bluewater

Low Cost Delivery Terminal Access

Simple, proven and highly cost effectiveSafe & secure - offshore operationsEases application approvals

Where will CNG be used?Some EnerSea Efforts

Recent Feasibility Studies:– South America– Atlantic Canada– Unocal Philippines – S.E. Asia Associated Gas– New Zealand (OSL/Itochu)– U.S. Ultra-Deepwater

Feasibility Studies Underway:– Med Import Study– India Gas Imports (GAIL)– Marathon Oil

Specific Project Initiatives:– White Rose Pre-FEED (Husky)– PNG-New Zealand Pre-FEED

(OSL/Itochu)- India Gas Imports (GAIL)- Marathon Oil

Gas produced “Direct-to-Ship”

Field operations & production support onboard

Gas storage & transport system

Eliminates deepwater pipeline, other infrastructure

500-3000 meters water

Gas Production/Storage/Shuttle

Recently Announced EnerSea Project

New Zealand Gas Imports•Client: Oil Search & Itochu•Source: Papua New Guinea•Rate: up to 200+ MMscfd•Status:- Feasibility study completed- OSL developing offtake agmts.- Completing downstream

infrastructure studies

Atlantic Canada Project Development

White Rose Gas Offtake•Field Operator: Husky Energy•Rate: 150 - 300 MMscfd•Associated Gas•Status:- Screening studies completed- Pre-FEED underway

Summary

CNG transport is an important new gas solutionTechnology advancements have greatly improved CNG economicsWorldwide CNG applications are being pursuedCNG transport is ready for project deployment

CNG vs. LNGComparative Risk Assessment

LNG CNG

Liquefaction Compression & Refrigeration

Loading Loading

Port Departure Buoy Departure

Transit Transit

Port Arrival Buoy Arrival

Discharging Discharging

Regasification Decompression

Class Approval-in-Principle (Granted April 2003)VOTRANS is deemed to have an equivalent order of

magnitude of risk as LNG, with a slight risk management advantage since all risks are offshore

Recently Announced EnerSea Project

New Zealand Gas Imports•Client: Oil Search & Itochu•Source: Papua New Guinea•Rate: 50 - 200 MMscfd•Status:- Feasibility study completed- OSL developing offtake agmts.- Completing downstream

infrastructure studies