small%andmid %scale(lng(summit june(2015
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Opportunities with Small-Scale LNG Infrastructure in North America
Small- and Mid-scale LNG SummitJune 2015
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Outline
4About ADI Analytics
4Opportunities with Small-Scale LNG Infrastructure in North America
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ADI Analytics is a consulting firm serving oil and gas, energy, and chemical companies with passion, expertise, and rigor
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Fortune 500 and mid-sized companies, start-ups, investors, and governments have hired us to shape decisions globally
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Outline
4About ADI Analytics
4Opportunities with Small-Scale LNG Infrastructure in North America
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Key messages
1 Growing supply of cheap shale gas has driven interest in gas monetization options with LNG being the most popular.
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Natural gas supply is projected to grow immensely in the coming years thanks mainly to unconventional shale plays
Source: EIA Annual Energy Outlook 2015
53
7279
8490
2010 2015p 2020p 2025p 2030p
Shale Gas Other
U.S. Lower 48 Shale Gas Basins U.S. Natural Gas Supply(billion cubic feet per year)
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Natural gas monetization spans several active, dynamic, rapidly evolving, and increasingly interlinked markets
Gas flaring
Small scale
Exportprojects
Regulatoryapprovals
Methanol
LNG GTLMTG
Oil and gas prices
Heavy-dutytrucking
Marine
Newplants
High horsepower
Natural Gas Monetization
Transpor-tation
PowerIndustrial
Chemicals
Regulations
New plants
Technologychanges
Coal displacement
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Economics of shale gas monetization depend on oil and gas prices;; a boe ratio of at least ~2.75 yields a 10% rate of return
Gas Monetization IRRs Vs. Oil/Gas Price Ratio on BOE Basis(U.S. Gulf Coast, 35% Taxes, No Debt)
0%
5%
10%
15%
20%
25%
30%
35%
0 1 2 3 4 5 6 7 8
GTL
LNG
MTG
Oil / Gas Price Ratio, boe basis
IRR
Ratio in 2015 = 4.0Oil = $60 / bbl
Gas = $2.60 / MM Btu
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LNG can also be used as a alternative to diesel fuel in several transportation and high-horsepower applications
Trucking
E&P(Rigs & Frac)
Rail
Marine
Industrial (Mining, off grid)
LNG Supply LNG Refueling
U.S. Diesel Use in Target Markets
Trucking, 72.0%
Industrial, 15.0%
Railroads, 6.0% Marine,
4.0%E&P, 3.0%
Source: EIA
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Key messages
1 Growing supply of cheap shale gas has driven interest in gas monetization options with LNG being the most popular.
2 Beyond LNG exports, small-scale LNG is another attractive natural gas monetization option with multiple end uses.
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There are several different types of LNG infrastructure each serving different markets and end users
Type Key Features Plants
Large-scale Export
4 Natural gas liquefaction terminal producing over 1 million tons per year4 Focused on shipping LNG to the large markets of Europe and Asia4 Most planned for the U.S. Gulf Coast and W. Canada often costing $1-$20 billion4 Cost per ton of $500-$800 with timeframes from 2-6 years
Over30
Import / Regasification Terminal
4 Coverts LNG imports into gas to supply power plants and other end-users4 Serve natural gas utilities in LNG importing countries4 Focused in Asia and Europe
8
Small-scale Export
4 Natural gas liquefaction terminals producing under 1 million ton per year4 Serve smaller regional markets in Central America and the Caribbean4 Located along the U.S. Gulf Coast4 Cost per ton of $700-$1,000 with timeframes less than 2 years
7
Merchant4 Natural gas liquefaction terminal to supply non-utility domestic users4 Supply LNG for marine, heavy-duty trucking, and high-horsepower markets4 Often located near shale plays4 Cost per ton of $700-$1,000 with timeframes less than 2 years
~10
Utility Peak Shaving
4 Facilities to liquefy and store gas for use in power plants during demand spikes4 Serve power plants in areas where electricity demand spikes are common…4…Focused in the Midwest and Northeast due to cold winters
~60
3
1
2
4
5
Source: FERC
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There are technological differences between small- and large-scale liquefaction facilities
Scale and Technology DriversPlant
Category Plant Type Size (MTPA) Technology Vendors
Micro Peak Shaving <0.1 § Nitrogen § Salof§ Cosmodyne
Mini Merchant (Dedicated) 0.1-0.5
§ Nitrogen§ Single mixed
refrigerant
§ GE § B&V§ Chart
Small Small Export 0.5-1.0 § Single mixed refrigerant § B&V (PRICO)
Large Large Export >1.0
§ Dual mixed refrigerant
§ Propaneprecooled mixed refrigerant
§ AirProducts§ ConocoPhillips§ Shell
Simple, low efficiency
Complex, high efficiency
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LNG capacity is focused in the Midwest and Northeast where utility peak shaving facilities are most prevalent
Source: PHMSA
• Utility Peakshaving• Merchant• Import Terminal• Planned Merchant
Quadren Cryogenics
Noble LNG
Puget Sound Energy
Waller MarineMagnolia LNG
HEYCO LNG
Floridian Natural Gas Storage
Eagle LNG
Gulf Oil
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Most of the current LNG capacity is already dedicated and unable to be used for anything else
PADD VWest Coast
PADD IVRockies
PADD IIIGulf Coast
PADD IIMidwest
PADD IEast Coast
PADD IA
PADD IB
PADD IC
PADD VWest Coast
U.S. LNG Supply (Million Gallons Per Year)
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Key messages
1 Growing supply of cheap shale gas has driven interest in gas monetization options with LNG being the most popular.
3 Small-scale LNG offers export opportunities to smaller, emerging regional markets.
2 Small-scale LNG offers unique advantages as a part of natural gas monetization though the production of LNG.
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Export could be focused on a countries in the Caribbean and Central America …
Mexico
Costa Rica
USA
Colombia
Cuba
Jamaica
Dominican Republic
Bahamas
Guatemala
Belize
Honduras
Nicaragua
Panama
Puerto RicoHaiti
El Salvador
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… Many of which are FTA countries …
§ FTA countries§ Non-FTA countries
Mexico
Costa Rica
USA
Colombia
Cuba
Jamaica
Dominican Republic
Bahamas
Guatemala
Belize
Honduras
Nicaragua
Panama
Puerto RicoHaiti
El Salvador
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… That have a need for natural gas imports to replace current heavy fuel oil and diesel-fired capacity
2008 2012 2020
2008 2012 2020
2008 2012 2020
Dominican Republic
2008 2012 2020
Cuba
2008 2012 2020
Puerto Rico
Mexico
Costa Rica
USA
Colombia
Cuba
Jamaica
Dominican Republic
Bahamas
Guatemala
Belize
Honduras
Nicaragua
Panama
Puerto RicoHaiti
El Salvador
Natural Gas Demand in Targeted Countries (mtpa)
Guatemala
Costa Rica
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Demand for natural gas in the Caribbean is projected to see robust growth over the next five years
2008 2012 2020 Base 2020 High
Central American Natural Gas Demand(mtpa)
Puerto Rico
Haiti
BarbadosNicaragua
BelizeCayman Islands
El SalvadorPanamaGuatemala
Costa Rica
Cuba
Dominican Republic
Honduras
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In response, several countries in this region are considering regasification terminals
Mexico
USA
• Under construction• Proposed regasification
§ FTA countries§ Non-FTA countries
Antillean Gas
AguirrePuerto Cortes
Cutuco
Colombia
Colon
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Collectively, a significant amount of regasification capacity is being proposed in Central America
Name Location Storage (cu/m) Stage Ownership
Andres LNG Dominican Republic 160,000 Operating AES
Penuelas LNG Puerto Rico 160,000 Operating Ecoelectrica
Antillean LNG Dominican Republic 127,000 Under Construction BWGas
Aguirre LNG Puerto Rico 150,000 Proposed Excelerate
El Salvador LNG (Cutuco) El Salvador 320,000 Proposed Cutuco Energy
Colon Panama - Proposed LNG Group Panama
Puerto Cortes Honduras - Proposed AES
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Planned regasification terminals are estimated to have enough capacity to handle LNG demand
2008 2012 2020 Base 2020 High
(High)
(Base)
Central American Natural Gas Demand and Regasification Capacity(Million Tons Per Annum)
Puerto Rico
Haiti
BarbadosNicaragua
BelizeCayman Islands
El SalvadorPanamaGuatemala
Costa Rica
Cuba
Dominican Republic
Honduras
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Key messages
1 Growing supply of cheap shale gas has driven interest in gas monetization options with LNG being the most popular.
3 Small-scale LNG offers export opportunities to smaller, emerging regional markets.
2 Small-scale LNG offers unique advantages as a part of natural gas monetization though the production of LNG.
4 Emerging small-scale LNG plants and new business models offer new opportunities and expanded end uses for LNG.
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If all of these plants move forward there will be a 40% increase in small-scale liquefaction capacity by 2018
Planned Capacity
2015 2016 2017 2018 Total 2015 2016 2017 2018 Total
Million Gallons Per Day Million Tons Per Year
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Dedicated liquefaction plants cost $600 to $1,000 per ton with economies of scale seen above 100,000 gpd capacity …
$-
$200
$400
$600
$800
$1,000
$1,200
0 100,000 200,000 300,000 400,000 500,000 600,000 700,000
Capital Cost ($/Ton)
Capacity (Gallons Per Day)
Unit Plant Capital Costs (Total Installed Cost)
Size with optimal capex and acceptable levels of market risk
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… Leading to very competitive delivery costs in comparison to current LNG pricing in the region
Mexico
Costa Rica
USA
Colombia
Cuba
Jamaica
Dominican Republic
Bahamas
Guatemala
Belize
Honduras
Nicaragua
Panama
Puerto RicoHaiti
El Salvador
$16.35 $12.23
$7.38 $5.02
2013 2014 2015 Cost of Supply
Central America
($USD per MMBTU)
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Carib Energy is currently supplying two Coca Cola bottling plants in Puerto Rico with LNG and has plans to supply more
Investors / Promoters4Carib Energy was acquired by Crowley Maritime, a diversified shipping company, in May 2013
4Crowley has shipping and trading infrastructure set up in many non-FTA Caribbean countries
Customers / Off-take4Intended to serve markets such as Latin America, the Caribbean and Puerto Rico that lack pipeline infrastructure or have demand too small for large LNG tankers
4Two Coca Cola plants in Puerto Rico already contracted
Other Information
4Floridian Natural Gas Storage Company building storage facility in Martin County, Florida
4Pivotal for gas supply from liquefaction plants / peak shavers north of port
Timeline
4Shipments to Coca Cola plants started in August 2014
4Planning to start shipments to a pharmaceutical in Puerto Rico 2H2015
Permits / Approvals
42012 Aug: FERC approval of storage facility
42013 Oct: Final DOE FTA approval for 0.03 Bcf/d to FTA countries
42014 Sep: Final DOE non-FTA approval for 0.04 Bcf/d
Suppliers / Vendors
4Shipped via truck w/ 10,000 gal 40ft containers to ports. Load containers onto ships for transportation
4Export from various Gulf ports depending on final destination of LNG
4U.S. territories don’t require permit
Project Location4Storage facility in Martin County, Florida
4No LNG is being manufactured
4LNG is stored then shipped
Capacity4Approved for export: 0.5 mtpa or ~0.07 Bcf/d
Cost
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Key messages
1 Growing supply of cheap shale gas has driven interest in gas monetization options with LNG being the most popular.
3 Small-scale LNG offers export opportunities to smaller, emerging regional markets.
2 Small-scale LNG offers unique advantages as a part of natural gas monetization though the production of LNG.
4 Emerging small-scale LNG plants and new business models offer new opportunities and expanded end uses for LNG.
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