LNG in North America Tommy Stone – Vice President, Operations & Engineering Trunkline LNG Company, LLC – Lake Charles, LA Tommy Stone – Vice President, Operations & Engineering Trunkline LNG Company, LLC – Lake Charles, LA

LNG Properties – A Means of Transportation Liquefied Natural Gas (LNG) Temperature –Minus 260 degrees Fahrenheit Volume reduction of 620 to Ships of Gas = 1 Ship of LNG Composition –Methane (85 – 98%) –Ethane (2 – 12%) –Propane (0 – 4%) –Butane (0 – 1%) –Others (0 – 1%) LNG is nontoxic Odorless, colorless Vapor is natural gas – lighter than air as it warms Stored near atmospheric pressure (± 2 psig)

Government and Academics Agree, LNG is the Solution FERC changes U.S. policy towards LNG terminals “The public interest is served through encouraging gas-on-gas competition by introducing new imported supplies of natural gas which will be accessible to all willing purchasers,” - FERC Order “in a short time the commission had made changes to federal policies dealing with LNG licensing and seen a response from businesses interested in investing in terminals, which will contribute to alleviation of shortages of natural gas in the U.S.,” - Pat Wood III, FERC Chairman Energy Market Research LNG…will set the price of gas in North America for the foreseeable future… - Michael Economides, University of Houston

Rockies Deep Gulf $ $5.85 Arctic Gas Supply tightening –Demand growth –Traditional basins in decline New supply must come from new areas –But will only come at a price that supports development LNG has the opportunity to gain market share LNG Nation Needs New Sources of Supply

LNG Value Chain, Exploration & Production $0.6 B$2.0 B $1.5 B 1 Bcf/d Scenario $6.1 B $.50 –.75$.60 – 1.60$1.25 – 1.50$1.25 – 2.00 Per Unit $/Mcf $3.60 – 5.85 Regasification Shipping* Liquefaction Exploration & Production TOTAL Reserves9 Tcf Scope$0.05B Initial drilling $0.05B Develop- ment $1.4B Trains required 2 Cost per train $1.0B Distance12,000 nm Rd. Trip Time 30 days Ships Required 12 Cost per ship $0.17B Port $0.14B Storage $0.16B Vaporization.20B Engineering & Other.10B *Shipping: West Africa to U.S. Gulf Coast. % of Total 9%33% 25%100%

Proven World Natural Gas Reserves Source:BP Statistical Review of World Energy, 2006 \\ ~ 4.1% of World Reserves

LNG Value Chain, Liquefaction $0.6 B$2.0 B $1.5 B 1 Bcf/d Scenario $6.1 B $.50 –.75$.60 – 1.60$1.25 – 1.50$1.25 – 2.00 Per Unit $/Mcf $3.60 – 5.85 Regasification Shipping* Liquefaction Exploration & Production TOTAL Reserves9 Tcf Scope$0.05B Initial drilling $0.05B Develop- ment $1.4B Trains required 2 Cost per train $1.0B Distance12,000 nm Rd. Trip Time 30 days Ships Required 12 Cost per ship $0.17B Port $0.14B Storage $0.16B Vaporization.20B Engineering & Other.10B *Shipping: West Africa to U.S. Gulf Coast. % of Total 9%33% 25%100%

Indonesia Algeria Malaysia Qatar Trinidad Nigeria Australia Oman Brunei Abu Dhabi USA Libya Egypt Iran Bolivia Yemen Russia Venezuela Angola Norway Peru Eq. Guinea Brazil Source:G.I.I.G.N.L, Liquefaction Capacity is Large and Will Continue to Grow

Res./Liq. (yrs) Growth Potential in Atlantic Basin Supply Atlantic BasinMiddle EastPacific Basin Tcf Reserves Bcf/d Liquefaction Tcf Reserves Liquefaction , Atlantic Basin 2901, Source:BP Statistical Review, 2006 & G.I.I.G.N.L

Abundant LNG Supply Nigeria Angola Venezuela Trinidad Algeria Libya Norway Middle East Egypt Equatorial Guinea Middle East

LNG Value Chain, Shipping $0.6 B$2.0 B $1.5 B 1 Bcf/d Scenario $6.1 B $.50 –.75$.60 – 1.60$1.25 – 1.50$1.25 – 2.00 Per Unit $/Mcf $3.60 – 5.85 Regasification Shipping* Liquefaction Exploration & Production TOTAL Reserves9 Tcf Scope$0.05B Initial drilling $0.05B Develop- ment $1.4B Trains required 2 Cost per train $1.0B Distance12,000 nm Rd. Trip Time 30 days Ships Required 12 Cost per ship $0.20B Port $0.14B Storage $0.16B Vaporization.20B Engineering & Other.10B *Shipping: West Africa to U.S. Gulf Coast. % of Total 9%33% 25%100%

LNG FLEET HISTORY CAPACITY

LNG VESSEL COST

LNG Vessel Fleet 228 Vessels - World Fleet 136 Vessels On Book (New Builds) –Deliveries Through % Membrane Containment 15% Moss (Spherical) –Avg. 10/12 New Orders Each Year

LNG SHIP TYPES Membrane Tank Design MossMoss

LNG/C – Physical Size Length: 950 feet (3 football fields) Width: 150’ Draft: 37’ (Underwater) –2615 m 2 (28,000 sq/ft.) Air Draft: 195’ (Above Water) –6,600 m 2 (71,000 sq/ft) Displacement: 110,000 Metric Tons Two Tractor Tugs Required for Berthing

VESSEL TRANSIT TO TLNG 6-8 Hour Transit – Approx. 52 Miles One Way Traffic for Deep Draft Vessels 24 Hour Transits Lake Charles Pilots Corp of Engineers Project Project Depth = 40 feet Outer Bar = 800 ft. Width Inner bar = 400 ft. Width

LNG Value Chain, Regasification $0.6 B$2.0 B $1.5 B 1 Bcf/d Scenario $6.1 B $.50 –.75$.60 – 1.60$1.25 – 1.50$1.25 – 2.00 Per Unit $/Mcf $3.60 – 5.85 Regasification Shipping* Liquefaction Exploration & Production TOTAL Reserves9 Tcf Scope$0.05B Initial drilling $0.05B Develop- ment $1.4B Trains required 2 Cost per train $1.0B Distance12,000 nm Rd. Trip Time 30 days Ships Required 12 Cost per ship $0.17B Port $0.14B Storage $0.16B Vaporization.20B Engineering & Other.10B *Shipping: West Africa to U.S. Gulf Coast. % of Total 9%33% 25%100%

North America France Spain North America France Spain Italy North America becomes much more significant in the global LNG community Atlantic Basin Regasification Capacity Growing

LNG Imports Relative to U.S. Demand Quotes from EIA Energy Outlook 2006 “Imports are expected to play an important role in U.S. natural gas markets, accounting for 21 percent of total U.S. natural gas consumption in 2030” “LNG imports are projected to grow from 650 billion cubic feet in 2004 to 4.4 trillion cubic feet in 2030, with net LNG imports rising from 17 percent of net imports in 2004 to 78 percent in 2030” “The most rapid growth in LNG import capacity will occur over the next decade, with peak annual capacity increasing from 1.4 trillion cubic feet in 2004 to 4.9 trillion cubic feet in 2015” Source: EIA

Distrigas, Tractebel Everett, MA CurrentExpanded Sendout: (MMcf/d) 715n/a Storage: (Bcf) 3.4n/a Cove Point LNG, Dominion Cove Point, MD CurrentExpanded Sendout: (MMcf/d) 1,0001,800 Storage: (Bcf) Elba Island, El Paso Savanna, GA CurrentExpanded Sendout: (MMcf/d) 8231,800 Storage: (Bcf) Trunkline LNG, Panhandle Energy Lake Charles, LA Sustained Peak Sendout: (MMcf/d) 1,8002,100 Storage: (Bcf) Summary Total Existing U.S. Regasification CurrentExpanded Sendout: (MMcf/d) 4,3886,115 Storage: (Bcf) TLNG Currently Offers Greatest Flexibility of All Domestic Terminals

LNG in U.S. Gulf Coast Region U.S. Gulf region 45-55% of U.S. supply Sufficient pipeline infrastructure Blending and processing allow a broader range of gas quality Low cost storage Deepwater ports Supportive state & local govt’s Reduced NIMBY issues *Source: US Department of Energy

Texas/Louisiana LNG Projects Approved by FERC or MARAD/USCG Proposed to FERC Approved by FERC or MARAD/USCG Proposed to FERC Sabine Pass LNG In-service date: Sendout: 2.6 – 4.0 Bcf/d Developer: Cheniere Capacity Holder: Total & ChevronTexaco Sabine Pass LNG In-service date: Sendout: 2.6 – 4.0 Bcf/d Developer: Cheniere Capacity Holder: Total & ChevronTexaco *Freeport LNG Development is composed of a General Partnership which has management control, but zero economic interest (Michael Smith 50% and ConocoPhillips 50%) and Limited Partners which have zero management interest, but have economic interest (Michael Smith 60%, Cheniere 30% and Contango 10%). Creole Trail In-service date: 2011 Sendout: 3.0 Bcf/d Developer: Cheniere Capacity Holder: TBD Creole Trail In-service date: 2011 Sendout: 3.0 Bcf/d Developer: Cheniere Capacity Holder: TBD Energy Bridge In-service date: 3/2005 Sendout: 0.5 Bcf/d Developer: Excelerate Energy Energy Bridge In-service date: 3/2005 Sendout: 0.5 Bcf/d Developer: Excelerate Energy Freeport LNG In-service date: 2008 Sendout:1.5 Bcf/d (expand to 3.0 Bcf/d) Developer: Freeport LNG Dev.* Capacity Holder: Dow & ConocoPhillips & Mitsubishi Freeport LNG In-service date: 2008 Sendout:1.5 Bcf/d (expand to 3.0 Bcf/d) Developer: Freeport LNG Dev.* Capacity Holder: Dow & ConocoPhillips & Mitsubishi Golden Pass In-service date: 2009 Sendout: 2 Bcf/d Developer: ExxonMobil Golden Pass In-service date: 2009 Sendout: 2 Bcf/d Developer: ExxonMobil Cameron LNG In-service date: 2008 Sendout: 1.5 – 2.65 Bcf/d Developer: Sempra Capacity Holder: ENI & Merrill Lynch Cameron LNG In-service date: 2008 Sendout: 1.5 – 2.65 Bcf/d Developer: Sempra Capacity Holder: ENI & Merrill Lynch Trunkline LNG In-service date: 2006 (expansions) Sendout: 1.8 Bcf/d Developer: Southern Union Capacity Holder: BG LNG Trunkline LNG In-service date: 2006 (expansions) Sendout: 1.8 Bcf/d Developer: Southern Union Capacity Holder: BG LNG Corpus Christi Projects (3) In-service dates: Sendout: 4.7 Bcf/d (total) Developers: 4Gas, Occidental Corpus Christi Projects (3) In-service dates: Sendout: 4.7 Bcf/d (total) Developers: 4Gas, Occidental

Trunkline LNG Activity (2Q 2007) Everett 21% Lake Charles 40% Lake Charles 40% Elba Island 19% Elba Island 19% Cove Point 19% Cove Point 19% LNG Imports by Terminal Jan – June 2007 Total = Bcf *Source: US Department of Energy Shell 5% BG LNG 59% BG LNG 59% LNG Imports by Company Jan – June % of U.S. Gas Demand (2 Qtr) Suez LNG 21% Statoil 6% BP 7% Excelerate 2% Excelerate 1%

Trunkline LNG Expansion Facilities Phase I –Construction Completed April 2006 –Double sendout capacity to 1.2 Bcf/d Peaking of 1.3 Bcf/d –Increase storage capacity to 9.0 Bcf Phase II –Construction Complete July 2006 –Increase sendout capacity to 1.8 Bcf/d Peaking of 2.1 Bcf/d Trunkline Gas Company Loop –Construction Complete –22 miles (new construction) of 36” pipeline loop –Several (6+) new or expanded delivery points

Beeville Edna Cypress Kountze Longville Centerville Patterson Terrebonne Lake Charles LNG 2006MMcf/d TGC Receipts:2,494 TGC Mainline Capacity:1,500 Field Zone Supply Overage: MMcf/d TGC Receipts:2,494 TGC Mainline Capacity:1,500 Field Zone Supply Overage:994 1,500MMcf/d Mainline Capacity TLNG & TGC Field Zone Supply with LNG Expansions Sea Robin Trunkline LNG Supply (avg):525 MMcf/d (est):1,500 +MMcf/d Trunkline LNG Supply (avg):525 MMcf/d (est):1,500 +MMcf/d

LNG Value Chain – Total Project $0.6 B$2.0 B $1.5 B 1 Bcf/d Scenario $6.1 B $.50 –.75$.60 – 1.60$1.25 – 1.50$1.25 – 2.00 Per Unit $/Mcf $3.60 – 5.85 Regasification Shipping* Liquefaction Exploration & Production TOTAL Reserves9 Tcf Scope$0.05B Initial drilling $0.05B Develop- ment $1.4B Trains required 2 Cost per train $1.0B Distance12,000 nm Rd. Trip Time 30 days Ships Required 12 Cost per ship $0.17B Port $0.14B Storage $0.16B Vaporization.20B Engineering & Other.10B *Shipping: West Africa to U.S. Gulf Coast. % of Total 9%33% 25%100%

TRUNKLINE LNG – LAKE CHARLES, LOUISIANA

REGASIFICATION PROCESS GAS LIQUID LNGSTORAGETANKS PIPELINECOMPRESSOR VAPORIZERS DESUPERHEATER BOIL-OFFCOMPRESSOR PIPELINE RECONDENSER

Trunkline LNG - Infrastructure Enhancement Project (IEP)

Conclusion “One of the benefits of LNG is that new supplies could enter the market within the next few years, well ahead of other opportunities, and begin to offer relief to American consumers.” - Center for LNG

Questions & Answers