Transport of Light Gases Blended with LNG

LNG Transport Industry Summary

LNG Production Worldwide

LNG supply by year: 2005 to 2013

Supply by country: 2013 YOY

Markets: 2013 YOY

Shipping LNG: Supply & Demand LNG Tankers – Plentiful, Many Sizes LNG Sources – Growing Number LNG Receiving – Slowly Growing Number Limited Excess Capacity Oversupply in 2008 has virtually disappeared Lower gas cost has seen increase in LNG transport by about 40% since 2008 US Gas Supply Increasing Promising Substantial LNG Exports within a decade

Growing Industry & Transport Capacity 226 ships built through 2006 163 ships built in 2007 through 2013 46 ships planned for delivery in 2014 or later

LNG Value Chain

Cost of Transporting LNG Transport of Natural Gas costs about $3.50/MSCF using LNG from source to destination (5000 km) Natural Gas sells for about $4 to $16/MSCF ($200 to $800/tonne) Natural Gas can be bought for $1 to $4/MSCF Profit highest transporting to Far East from Middle East

Established LNG Sea Links

Qatar Gas -Major LNG Source

LNG Transport Equipment

LNG Storage

LNG Terminals

LNG Terminals

The LNG Transport Cycle

Blended LNG Transport of Valuable Gases: Ethylene, Ethane, Propylene

Ethylene: Prime Raw Material for Chemicals Traditionally made from Ethane and Naphtha Cracking Ethane reserves are falling except in USA Ethane Uneconomical for Shipping as Gas Naphtha easily shipped to Manufacturers (has destination value) All Major Future Ethylene Production Growth in Africa, Middle East and Far East

Ethylene Production

Chemical Production needs Raw Materials

Potential New Ethylene Technology Synfuels GTE makes Ethylene from Low Cost Natural Gas Economically GTE Ethylene market needs: Local Chemical Industry Mode of Transport to Traditional Market

Destination Value of Gases Methane - $200 to $800/tonne Ethylene - $1100 to $1600/tonne Propylene – $1600 to $2000/tonne

Ethylene Transport Using LNG Few Changes to Existing LNG Facilities are Needed Chemicals made from Ethylene Cryogenic Separation of Ethylene from LNG

Handling Ethylene/LNG Blend LNG Gasification Facilities Gasify LNG and Deliver Natural gas to Pipelines Ethylene/LNG Gasification Facility will Separate Ethylene from Methane Deliver Natural Gas to Natural Gas Pipeline Deliver Ethylene to Ethylene Pipeline

Liquifaction Equipment Additions are Minimal Pipeline from Ethylene source to LNG Liquefaction Plant Cross exchanger for Ethylene/LNG Pumps to Move Blend to Storage Tank Optional Separate Storage Tank for Cryogenic Blend

Gasification Equipment Additions are Minimal Cryogenic Tower to Separate Ethylene from Natural Gas Cold Box Condenser Fin-Fan Air-heated Reboiler Ethylene Pipeline Extension at Destination

Example Case - Load Value Ship Size – 138,000 cu meters 58320 tonnes displacement* 100% Methane $ 35.0 Million 75 wt% Ethylene $ 63.4 Million 75 wt% Propylene $ 95.1 Million All examples above for equal displacement shipping from USA to Japan Cost to manufacture ethylene and propylene set at $350/tonne

Market Opportunity is Enormous LNG shipping capacity – 60 Million cubic meters ( 25.4 Million Tonnes) LNG annual transport – 562 Million cubic meters (237.7 Million Tonnes) Worldwide Ethylene Production – 143.4 million tons per year (252 Million cubic meters)

Process Description

Process Description

Opportunity A (Add Synergy to Close Ethylene and LNG plants) Bring ethylene by pipeline to site of existing LNG Liquefaction Plant Cool and liquefy the ethylene with existing LNG refrigeration Load the ethylene and LNG separately on a slightly modified LNG tanker Unload the ethylene at the ethylene receiving site Unload the LNG at the LNG receiving site

Opportunity B (Utilize far apart LNG and ethylene plants) Load some LNG onto LNG Tanker from LNG production site Move ship to distant ethylene production site and load refrigerated ethylene into separate LNG cooled storage Unload the ethylene at the ethylene receiving site Unload the LNG at the LNG receiving site

Opportunity C (Simplify Transport through Blending) Bring ethylene by pipeline to site of existing LNG Liquifaction Plant Cool and liquify the ethylene with existing LNG refrigeration Blend the ethylene with LNG and ship in existing LNG tanker Separate blend at receiving site

Potential GTE/LNG Sites Co-Locations of Ethylene production and LNG Loading (Blue) and Receiving (Green)