September 25, 2014

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WesPac Midstream LLC

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Newark Container Terminal Jaxport Container Terminal American Ref-Fuel Plant Kern River Pipeline Boron LNG Plant Sunrise Power Plant

• WesPac was founded in 1998 to develop, own, and operate energy infrastructure projects

• Historically, a developer of tank farms, pipelines, marine terminals , rail off-loading, and airport fuel facilities

• Broaden our focus over time to include LNG, NGL, and gas processing infrastructures

• WesPac’s majority owners are Oaktree Capital and Highstar Capital , a $86 billion diversified investment firm with deep expertise in energy investing and development, with significant ownership positions in Kinder Morgan, Ports America, Advanced Disposal Services, Wells Fargo and FirstBanCorp

• WesPac’s minority owners are WesPac’s management and Clean Marine Energy (CME) which offers financing and LNG conversion technologies to the shipping industry

Why WesPac?

Infrastructure based company• Build, own and operate

Development, construction and operating • North American presence

Financial strength• Major financial backing

Focused on emerging markets• Marine, power, mining, on road, utility

Alaska - portfolio approach• Upstream, midstream and downstream

Alliances with major international LNG players• Commodity, shipping, container, distribution

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Wespac’s LNG Development Projects

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Recent Developments for WesPac and TOTENew LNG Ships – Marlin Class

WesPac/AGL developing LNG project for TOTE in Jacksonville, FL

• 1st LNG bunker vessel

• 1st LNG container vessel

• 1st LNG supply dedicated to marine operations

WesPac working with TOTE to formulate LNG fueling options in Tacoma & Alaska

Orca Re-Engine

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WesPac’s Primary Objectives

• Build, own and operate a new scalable mid-sized LNG project in the Cook Inlet

• Establish LNG alternative for Fairbanks and Interior markets

• Create new gas markets in rural and coastal Alaska by displacing diesel

• Offer a competitive gas peaking alternative for “railbelt” communities

• Develop in state optionality (LNG by truck, pipe, rail, vessel and “wire”)

• Own and commercialize stranded Cook Inlet gas reserves

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WesPac’s Secondary Objectives

WesPac and affiliates within Highstar/Oaktree portfolio have interest to build, own, finance and operate …

• Regasification

• Floating/on shore storage

• Power plants

• Distribution systems

• Rail

• Ports & Expansions

• Pipelines

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Backup Supply & Connected Markets

8/4/13 https://maps.google.com

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Tilbury LNG SupplyAlaska (Backup supply)

Hawaii, Asia & Bunkering

Cook Inlet LNG SupplyAlaska (Phase 1)

Possible Export & Bunkering (Phase 2)

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WesPac’s Alaska Efforts

LNG supply for Alaska• Cook Inlet LNG

– Port MacKenzie development– EOI’s with producers

• Tilbury LNG– Bridge Supply

• Distributed options– Vessel, rail, trucks– Floating/onshore storage– ISO’s and bulk

Rural Alaska marketing• Door to door

– Ketchikan to Dutch Harbor

• Work with DNR, DOR, AEA, AIDEA• Legislative outreach• Assisted AEA in LNG study• Power conversion studies

Export• Major Asian markets identified

Local Utilities• LTGSP Group RFP• MEA - Eklutna

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WesPac’s Offer

Deliver reliable and affordable LNG to Alaska’s communities at a net savings relative to the cost of diesel

Supply + Jetty + Transport + Regas + Distribution + Conversion < Diesel Cost

WesPac offers turn key solutions – Wellhead to Burner tip

Upstream

• Produced & feed gas, production platforms and processing

Midstream

• Pipelines, liquefaction and storage

Downstream

• Receiving/regas, storage and distribution

• Power conversion and repowering

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Cook Inlet Production

Quantum turnaround in potential delivery of Cook Inlet gas …

• Hilcorp has significantly increased gas production

• Independents continue to find incremental gas

• Gas supplies are robust and growing

• New markets are necessary to monetize the gas

• WesPac received five (5) EOI’s for term gas supply

• Pursuing equity in Cook Inlet gas reserves

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Port MacKenzie – Project Location

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Port MacKenzie Attributes

Ideal location for LNG• Existing port

• Abundant Land

• Minimal impact

• Gas pipelines

• Power transmission

• Rail lines

• Truck access

• Marine access

• Peaking for utilities

• Growth opportunities

Ideal Location

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Port MacKenzie Update

Development approach• Speed to market• Minimize permitting timeline• Tie LNG production to reserves• Offer LNG by multiple transport methods

Site Development• Integrate the Port and WesPac’s

development plans• Address 3rd party concerns

Cook Inlet Gas Production• Five (5) EOI’s representing between

138,000 MMbtu/day and 340,000 MMbtu/day

Active due diligence• Dispersion, labor, marine, ice, geotech,

land and right of way, power, pipeline

Alaska Railroad• Strategically-aligned• Cooperative and mutually beneficial

Permitting plan• Developed preliminary plan• Proposed engagement with DNR

Economics• Developed “bare bones” rates for Phase 1• Competitive Pricing without state support• Developing preliminary rates for a Phase 2

mid-scale project

Alaska markets • Utility, marine, rail, industrial and truck

markets identified• Competitive transport rates• Peaking gas desired in Railbelt

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Overview of Project – Phase I

Phase 1 – Small scale project (serving in-state markets, COD early 2017)Preliminary Design Capacities

• 25,000 MMbtu/day (300,000 GPD) or .16 MTPY (113 mm gals per year)

• .25 BCF to 1 BCF storage (subject to regas)

– 120,000 MMbtu/day regas (utility function)

• 16” pipeline to ENSTAR

• Truck & ISO-Container loading racks

ISO containers

• Top pick or crane loading/unloading for rail, truck and marine operations

• Up to 200 - 300 ISO containers in circulation

Railcars, trucks and vessels

• Commercially available and/or dedicated

Rail to Fairbanks

• Direct via rail extension

• Intermodal by truck/vessel as necessary

Existing dock with minor modifications

• No cryogenic pipeline

• Non exclusive use of dock for LNG

• Multi purpose dock subject to USCG, state and local codes

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Overview of Project – Phase II

Phase 2 – Mid Scale (serving in-state + COD mid 2018)Preliminary Design Capacities

• 150,000 MMbtu/day or 1.1 MTPY

• 2.2 BCF storage

• 120,000 MMbtu/day regas (utility function)

• 16” pipeline to Enstar

• Truck loading racks

ISO containers

• Top pick or crane loading/unloading

• Up to 300 - 400 ISO containers in circulation

Smaller LNG carriers (65,000 m3 vessels)

• Dedicated LNG vessels for bulk export

Railcars, trucks and vessels

• Commercially available and/or dedicated

Rail to Fairbanks

• Direct via extension

• Intermodal by truck/vessel as necessary

Existing dock with major modifications

• Requires cryogenic pipeline for vessel loading at dock

• Requires exclusive & dedicated dock per USCG/FERC/State/local regulations

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Preferred Site

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Port MacKenzie – Planned Improvements

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Port MacKenzie Facility Renderings

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Preferred Site Intermodal + Regas

30,000 MMBtu/dayLNG Liquefaction

Facility

1 BCFLNG Storage Tank

195'x56'

ISO ContainerRail Loading

ISO ContainerShip Loading

Truck LoadingRack

120,000 MMBtu/dayRegasification Unit

Estimated Locationof Proposed Rail

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Preferred Site with Bulk Loading

Point MacKenzie - LNGWesPac Midstream

6 - 25,000 MMBtu/dayLNG Liquefaction

Facilities150,000 MMBtu/day Total

80,000 m3LNG Storage Tank

255'x56'

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Cook Inlet LNG – Phased Approach

Cook Inlet LNG maybe developed in Phases

• Phase 1 – up to 25,000 MMBtu/day for local markets

• Phase 2 – up to 150,000 MMBtu/day for both local and export markets

FERC License• Phase I does not require

FERC licensing if all in-state

• Phase 2 would require FERC licensing if exports and interstate are included

Export LNG vessel in the 65,000 m3 range

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Project & Site Assessment

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WesPac has performed a fatal flaw analysis to ascertain the strength and suitability of the project and the Port MacKenzie site. This analysis includes …

Fatal Flaw Analysis Result

Natural Gas supply

Pipeline & Electrical Transmission

Small power plant viability for self-generation

Health, Safety & Environmental Review (LNG dispersion analysis)

Suitability of barge & current dock

Geotechnical review for site suitability

Cook Inlet Ice Review for marine access

Labor availability assessment

Rail & Road access for LNG cargoes

Customer base for LNG

Vapor Dispersion Modeling

Tasks

• Braemar Engineering conducted high-level vapor dispersion modeling for primary site at Port MacKenzie

Results

• Site acceptable

• Mitigation req’s

• Site boundaries

• Potential impacts

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Demand & Storage Assessment

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Demand

• Fairbanks demand is exaggerated in the winter

• Storage in Fairbanks is key to managing costs and meeting demand

Storage

• A 2.2 BCF to 2.7 BCF of storage in Fairbanks could be used to balance seasonal loads and offer higher load factor

• Reallocating state funds to storage and market development could benefit overall project economics

Load Growth Uncertainty

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• Fairbanks load growth is difficult to predict– Timing, volume, cost

• Infrastructure build out is often ahead of demand

• Mitigating fixed cost is critical

• WesPac’s low fixed cost, access to diverse markets, load sharing and storage are key attributes

Price of LNG Delivered to Fairbanks

WesPac’s forecast delivered price of LNG to Fairbanks is competitive without subsidies or offsets

– $14.37 to $14.57 per MMbtu all in delivered price

– Low reservation fee $3.96 to $4.16 per MMbtu in 2017

27Prices escalate at 2% per year

Delivered Price Assumptions

WesPac’s Total Delivered Price = Gas price + Tolling fee

Total delivered price is between $14.37 and $14.57 per MMbtu :

Tolling fee is $7.23 to $7.43 per MMbtu , (250k GPD vs 300k GPD)

Assumes return on capital, fixed and variable O & M

» $177 to $194 million capex

» 250,000 to 300,000 GPD liquefaction

» 2.5 to 3.0 mm gal full containment storage

» ~11 mw on site power plant

» ~15 mile gas pipeline

» ISO containers

» Contingencies and development fees

» Fixed and variable fees including rail and fuel

Gas price is $7.14 per MMbtu at plant gate

» Gas price is a pass through

28 Prices escalate at 2% per year

Potential Commercial Obstacles

WesPac has found no inherent obstacles and is pursuing all requirements

• Port lease

• Existing uses at Port

• Dock and jetty access

• Master Plan at Port

• Creditworthy Off-takers

• Supply assurances

• Credit

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Next Steps

WesPac’s near term objectives (by October 31, 2014)Obtain site lease

• Negotiate with 3rd party lessees

Obtain commitments for off-take

• Fairbanks among others

Contract with Alaska Railroad

• Port MacKenzie and Fairbanks operations

Secure access to long term reserves

• Possible equity stake

Detailed permitting

• Remove potential fatal flaws from A - Z

Secure financial commitments and guarantees

• Work with State to ensure project success

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