Anatomy of a Successful LNG Project

Transcription

1 Anatomy of a Successful LNG Project Henry Aldorf, Regional Vice-President Business Development Bonifacio Monsuy, Deputy Managing Director EG LNG Al Pace, P.E., Project Director Marathon Oil Corporation, Houston, Texas EG LNG, Equatorial Guinea Gastech March, 2008 Bangkok, Thailand Original Conceptual Photo of Train 1 1 of 19

2 ABSTRACT Grassroots LNG projects are always a challenge, particularly in areas of the world with limited infrastructure and experience in completing such projects. While most projects are completed, not all of them happen within expectations for safety, budget, schedule, plant performance or national content. All too often, we have to settle for Lessons Learned and vow to execute better next time. When an LNG project is truly successful, it is often helpful to look at the decisions and actions that worked well, and share them in the industry for use on future projects. EG LNG Train 1 project is one of the fastest LNG projects concept to first LNG, and was completed with an excellent safety record, under budget, ahead of schedule, exceeded its goals for national training and content and has been able to produce significantly more than its nameplate capacity. It included, as a highlight, the first major suspension bridge used for LNG loadout piping. INTRODUCTION Equatorial Guinea is located in western Africa between Cameroon and Gabon, and includes five islands, the largest of which is Bioko. Equatorial Guinea covers around 28,000 square kilometers, and varies in elevation from sea level to 3,008 meters at the top of Pico Basile. Equatorial Guinea gained its independence in 1968, after 190 years of Spanish rule. Some 550,000 people reside in Equatorial Guinea, and Spanish is its leading official language. 2 of 19

3 Twenty five kilometers to the northwest of Bioko Island rests the Alba field. In early 2002, Marathon Oil acquired an interest in the Alba field from CMS Energy and Globex Corporation, and subsequently initiated efforts to increase utilization of the available gas. Major Condensate and LPG production expansion projects were implemented, with the increased natural gas production being re-injected for future use. Several gas monetization scenarios were studied, which resulted in a subsequent decision to add a nameplate 3.7 mtpa single train LNG plant to the expansion which was already underway. Front end engineering and commercial work was completed for EG LNG Train 1 and a Financial Investment Decision was made in June, First LNG Cargo was 24 May, 2007 against a contract date of 16 October, 2007, five months ahead of schedule. Train 1 is located on Bioko Island, near the city of Malabo, in an area called Punta Europa. This paper reviews the key decisions, strategies and actions that resulted in the highly successful EG LNG Train 1 project. DEVELOPING A PROJECT After Marathon conceived the idea of an LNG project, it needed to make the basic commitments surrounding national government participation, feedstock, product offtake, and front end loading (engineering and cost studies). The primary commitments included the following: Government of Equatorial Guinea The government of Equatorial Guinea agreed to be a 25% equity owner in the new project company (EG LNG Holdings Ltd.). This was done through the government entity of GEPetrol, and later novated to SONAGAS G.E. S.A. (Sonagas), which was later organized to manage all of the Equatorial Guinea government interests in gas monetization. The government nominated its Ministry of Mines and Energy to interface with the development team in the early stages of the project, with Songas taking the lead thereafter. Feedstock At conception of the LNG project, Marathon and its partners, through Marathon Equatorial Guinea Production Limited (MEGPL), had already begun work to substantially expand their ability to extract LPG and condensate from the wet gas of Alba field. This expansion came in the form of Phases 2A and 2B, which brought on line the necessary dry gas feed for LNG Train 1. After these expansions were fully operational, the dry gas was re-injected into the Alba field until LNG Train 1 was ready to accept it. A Gas Supply Agreement was negotiated among the parties and executed in March, Product Offtake A decision was made by EG LNG Holdings to sell its LNG to BG Gas Marketing Ltd., a subsidiary of BG Group plc., under a long term agreement approximating the Alba field 3 of 19

4 life and based on the value of natural gas at Henry Hub, U.S. The LNG Sales and Purchase Agreement was based on Free On Board (FOB) sale at the LNG Jetty and a fixed Annual Contract Quantity (anticipated annual plant production). Expanded Partnership In June, 2005, the firms of Mitsui & Company Ltd. and Marubeni Gas Development Company Ltd. joined the EG LNG partnership within Equatorial Guinea LNG Holdings, with ownership percentages of 8.5% and 6.5% respectively. Project Development Timeline Project development went quickly towards a Financial Investment Decision. milestones are as follows: Key Marathon purchased an interest in Alba January, 2002 Commence Gas Monetization Studies January, 2002 Recommend LNG to Partners August, 2002 Awarded LNG FEED Contract* November, 2002 Completed FEED November, 2003 Commence Early Works at Site December, 2003 Shareholders Agreement March, 2004 Gas Supply Agreement March, 2004 Alba Gas Processing & Marketing Agreement March, 2004 Financial Investment Decision June, 2004 LNG Sales and Purchasing Agreement June, 2004 EPC Contract Notice to Proceed June, 2004 * Front End Engineering Design (FEED) What Worked Well By most project standards, the above milestones were completed in record time. Such speed in development can be attributed to the following fundamentals: -Highly experienced and motivated negotiating team -Equatorial Guinea government foresight and willingness to place a high priority on the project. The value of the E.G. government cooperation and support on the project cannot overstated. It was one of the key factors in the project success -Atmosphere of trust -Shareholders were aligned -President of Equatorial Guinea set a date by which the alignment must take place -No need to structure the project around financing institutions (self financed) -No need to locate the gas supply. Ample supply immediately available from Alba field -Synergy of partners between gas supply and LNG production (same operator Marathon Oil) -Highly experienced and knowledgeable legal counsel (Baker Botts) 4 of 19

5 -Lessons learned from ongoing operations in Equatorial Guinea (existing gas plant and methanol plants) -Decision to sell all of the LNG to one entity (BG Gas Marketing Ltd.) ENTREPRENEURIAL COMPANY BUILDING With the structure of the project in place, it became time to create a company, which was eventually named EG LNG. With creation of a company, came the following needs: Staffing EG LNG staffed the fledgling company with experienced personnel, who were able to begin work immediately. Early in the staffing process, Equatorial Guinean nationals were included in many positions, and in all departments. Over time, national deputy director positions were added to plan for the future. Departments included: -Office of the Managing Director -Health, Environmental and Safety -LNG Project Management Team -Operations -Maintenance -Engineering -Financial -Human Resources -Commercial -Legal -Government Relations -Community Relations -Logistics -IT (shared service with other Punta Europa business entities) Infrastructure EG LNG began as a paper concept. It is an Equatorial Guinea based company, therefore it was necessary and natural that its headquarters be in Equatorial Guinea. The first step was to build the necessary buildings and infrastructure. They were built near the new LNG plant site, in an area called Punta Europa, which comprises the LNG plant, Gas Plant and Methanol Plant, as well as the company offices and expatriate housing. The new construction was managed by the EG LNG Project Management Team, and resulted in a new office complex and a new housing project for the company staff to work and reside in Equatorial Guinea. Work Processes and Procedures Key to the formation of a fledgling company is the development of work processes and procedures for management of the new company business. These processes and procedures were sourced from several areas: 5 of 19

6 -Proven procedures from Marathon -Development by EG LNG staff -Support from outside consultants -Assistance from the Equatorial Guinea MMIE Why it Was Successful There were a number of reasons why EG LNG was successfully formed in time to merge into smooth operations. These included, but were not limited to: -EG LNG staffed its organization with very senior personnel capable of working in an entrepreneurial environment, several of whom have large project and international business experience. -EG LNG developed a detailed annual Business Plan to organize and focus its company formation activities. Each department within the company was required to plan its work for the coming year. Individual directors performance was formally measured against plan on a regular basis. -EG LNG benefited from extensive Equatorial Guinean government cooperation and assistance in matters of meeting national content requirements, hiring, logistics and compliance with laws and regulations. -Extensive support was provided by the shareholders in the form of advice, information and resources. -The local Punta Europa entities (MEGPL and AMPCO) went out of their way to provide logistical support, housing, advice and benefits of their experience in Equatorial Guinea. -A decision was made early on that EG LNG would immediately begin extensive staffing efforts with nationals. Not only did this speed the nationalization process of EG LNG, it also provided substantial benefits in local knowledge for company operations. This included placement of nationals in management positions to begin the training process, even as the company was being formed. -EG LNG set aside a budget from the beginning, for community relations. This paid dividends in ensuring that nationals living in the area, were aware of EG LNG and demonstrated that EG LNG employees care about the people living in the area. -Substantial national content was set forth as one of the major goals for EG LNG. A Contracts Committee was utilized to ensure that all avenues of local procurement were explored. EG LNG personnel were assigned with national content improvement responsibility, and such focus resulted in remarkable amounts of local purchasing, considering the specialty nature of a new LNG plant. -Cost control was a significant issue in the formation of EG LNG. In order to ensure that the original Development Budget was met, EG LNG s budget (until LNG production) was managed like a project budget. That is, a fixed budget, controlled with rigorous cost reports and reviews. In fact, during the Development Budget phase, the monies were actually tracked and reported by the EG LNG Train 1 Project Management Team. 6 of 19

7 -Development of an entrepreneurial company is sometimes measured over a multi-year period. EG LNG worked to a company schedule (much like a project) and Directors were measured monthly against schedule progress. EG LNG s formation was put to the test, as the project began to accelerate ahead of schedule. In particular, the plant groups (Operations, Maintenance, and Engineering) were required to work very quickly, as the plant was ready for their control immediately after the successful LNG Train 1 Performance Test at the end of June, The EG LNG staff resides on Bioko Island. Given that all are within a few mile area, a espirit de corps was easy to develop. EG LNG management facilitated this team spirit with a number team building activities on a regular basis. PROJECT EXECUTION Highlights The project was executed with an OSHA Record Incidence Rate (ORIR) of 0.66, based on over 17 million hours of craft labor. Over eight million hours were worked without a Loss Time Incident. Both Bechtel and the owner Project Management Team were recognized for the project safety record in Marathon s recent Living Our Values Ceremony. The team of ConocoPhillips (LNG technology) and Bechtel (General Contractor) was selected to perform the Front End Loading activities. The liquefaction technology selected was the ConocoPhillips Optimized Cascade SM Process. The Acid Gas Removal Unit (AGRU) was based on BASF technology, utilizing amdea solvent to remove carbon dioxide (CO 2 ) and hydrogen sulfide (H 2 S). In the field, the EG LNG Train 1 project began as a greenfield, heavily vegetated site. Substantial amounts of earthwork were required for cut and fill and to change the natural drainage. Such massive changes were backed with robust environmental assessments and a world class Environmental Management Plan. 7 of 19

8 Early Site Work for Train 1 During the FEED phase, the project scope was defined in detail, with the exception of the LNG Loadout Piperack (eventually became the Bridge), LNG Jetty, Special Purpose Construction Jetty and Aggregate sourcing. After the FEED phase, a negotiated Lump Sum Turn Key (LSTK) contract was executed. Execution of the project proceeded in earnest, with the following schedule milestones: Begin Engineering for Long Lead Items Mobilize for Early Works at Site First 50% Model Review First ISBL Concrete Placed at Site Start Structural Steel Erection Engineering 90% Complete Delivered Last Refrigeration Compressor Delivered Cold Boxes First LNG Produced in Cold Box December December August September January September December February May 8 of

9 Setting Up for Success There were a number of key decisions made and strategies used, which set the project up for a high probability of success. These included, but were not limited to: -Proven EPC contractor (Bechtel) with multi project experience in the technology and in large international projects -Proven technology (ConocoPhillips, BASF) -Proven third party engineers (e.g. Buckland & Taylor - Bridge) -Proven vendors (e.g. Nuovo Pignone Refrigeration Compressors/Generators, Chart Cold Boxes, Pax Bridge Steel Fabrication) -Proven subcontractors (e.g. Besix LNG Jetty, KWH Bridge Erection, Pihl Construction Jetty). Of particular note was CB&I, whose quality project management and workmanship resulted in the two LNG tanks being completed four months early. -Availability of lessons learned from previous similar projects (this project was the 8 th of its type) -Use of Bechtel specifications and standards. This resulted in a lower capital cost and a shorter engineering schedule. However, EG LNG had to be willing to accept Bechtel standards and specifications, or be ready to approve a significant number of change orders to modify Bechtel s normal design. -Preparation of a high quality FEED basis for the Lump Sum Turn Key pricing. The owner Project Management Team (PMT) was highly involved from the conceptual design through the start-up and commissioning of the plant to ensure the project met owner expectations. Owner involvement focused on FEED package quality and clarity from the beginning to minimize any change orders later. -Lump Sum Turn Key terms were negotiated for the contract. This greatly reduced owner risk of project overrun. The pricing was set during early 2004, before the dramatic industry price increases. It should be noted that allowances (Provisional Sums) were included for the LNG Loadout Bridge, LNG loadout piping, LNG Jetty, Special Purpose Construction Jetty or the Aggregate as these scope items were not completely defined in the Lump Sum Turn Key pricing. -Contract incentives were included to reward high performance: -Safety Payable direct to craft labor. Un-earned amounts to be donated to a local charity -Schedule For early LNG production -National Content For exceeding the national content goal -Plant Production For production exceeding the performance guarantee. This encouraged Bechtel to avoid bottlenecks in the plant design which would limit plant production. It obviously worked, as the plant performance test significantly exceeded design -Early ordering and early risk engineering were started before FID -Self supporting for all utilities. This significantly reduced construction and future operations risks 9 of 19

10 -Focused on the design and risks of integration with the other Punta Europa facilities. The owner s Project Management Team was highly involved with the various aspects integration and interfaces, from conceptual design to startup and commissioning. This was made somewhat more challenging as the upstream facilities were in various stages of design and construction in parallel but out of phase with the LNG plant. Various opportunities for integration were managed, including the feed gas source, electrical utility sharing, and modification within the upstream gas plant. This has resulted in minimal upsets of the upstream facilities during start-up and commissioning of the LNG plant and a multi-facility integrated process design. -Technical plans were made for the future (Frame 5C vs. 5D), put into the FEED basis and into the Lump Sum Turn Key pricing. These larger turbine drivers were selected to put extra refrigeration horsepower into place Execution Model Successful Strategies and Decisions The execution model was configured to promote execution success. Some of many successful strategies and decisions were as follows: Health, Environment, Safety (HES) HES was managed intensely throughout the project. Following are highlights of the Train 1 HES management model employed by the Project Management Team: -HES starts at the top. Train 1 had the good fortune of a Managing Director who took HES very seriously. The senior managers of the Train 1 Project Management Team were emphatic about HES throughout the life of the project, as were the shareholder representatives. Such HES leadership made it easy for the project personnel to focus on safety. -As with many companies, Marathon and EG LNG worked very hard to create a safety first culture throughout the project and the company. This started with a Safety Moment at the Kickoff Meeting and concluded with a safety considerations prior to demobilization to proactively avoid incidents, even as the contractors demobilized. -The HES project policies and procedures were debated and agreed between Bechtel and owner before mobilization. In the field, it became a matter of conformance to agreed requirements, rather than a debate of applicable safety procedures surrounding each field safety issue. -The Train 1 Project Management Team had the good fortune of a world class HES Manager (Ron Brown) and Site Manager (Ken Lambert) whose attention to detail created a very strong site safety culture. Examples of such detail included modifications to the construction camp to reduce the possibility of injury in the kitchen. In another case, one endangered species plant was identified during site clearing, an Eribroma Oblonga tree, which, unfortunately, had to be removed. The owner Project Management Team took seeds and contracted with a local nursery to grow multiple replacement saplings. There are now over a dozen of these trees on the road to the plant. -The entire Train 1 Project Management Team was regularly trained in safety. This increased the number of people in the field, with boots on the ground, watching for unsafe behavior. 10 of 19

11 -The Train 1 Project Management Team worked to maximize its visibility on site, to extent of wearing a standard Project Management Team White Shirt and attending nearly all safety meetings, from craft area morning toolbox meetings to weekly/monthly foreman and overall group meetings -As mentioned above, the contract provided for incentives paid directly to craft labor for safe behavior, as well as the normal safety awards. -Near Misses were analyzed, in detail, to learn from each one. -Before site preparation, an Environmental Impact Assessment, and several other reviews (e.g. Fauna and Flora) were completed. These led to an Environmental Management Plan, which was followed. High Performance Team -Owner and Contractor teams were highly experienced in LNG, international project execution and Africa specific knowledge (right kind of experience) -Owner s Project Management Team had blend of contractor and owner backgrounds. This greatly impacted the speed of decision making and ensured that focus was put on appropriate priorities -Use of contract personnel on the Project Management Team worked very well Project Management Fundamentals Still Work -The owner s Project Management Team resided either in the Bechtel task force area (home office) or in the field at the job site. Communications were convenient, frequent, rapid and clear. -The FEED basis set the Lump Sum Turn Key price. Accordingly, changes to the FEED were minimized during project execution -A project specific construction jetty was built (near the site) to facilitate offloading of heavy equipment. This decision was actually a change from the Lump Sum Turn Key project basis (basis was to extend an existing jetty). Investment of additional monies for a new jetty, greatly reduced the risk of delays in unloading equipment/materials and transporting to the site -A proactive culture was promoted from the beginning. Of particular note, was our Site Manager (Ken Lambert), who constantly looked six to 12 months ahead of the work. Engineering Execution -From initiation of the Implementation Phase, a team environment was created, with one set of aligned goals between the owner and contractors. The owner s Project Management Team did not question Bechtel s need if a quick response was requested. We had a minimum of adversarial activity with this one-team culture. -In general, there were minimum changes to the FEED package. The primary exceptions surrounded the LNG Loadout Bridge, LNG Jetty, and Special Purpose Construction Jetty. The simple fact of minimizing change from the FEED basis, permitted us to maintain steady compliance to the engineering schedule. Minimizing change also greatly helped to control costs. -The Owner s Project Management Team and Bechtel worked closely together at the outset to review the LNG Loadout design and eventually faced a decision to design a conventional piperack on unstable soil, or to build a first of a kind pipe bridge. A joint 11 of 19

12 team developed a study to make the decision as to conventional rack or bridge. The bridge design was selected, and was the subject of an intense engineering and constructability effort to ensure that the design would meet the technical requirements. Subject Matter Experts Ensured the Best in Technology and Workmanship -The owner s Project Management Team used a series of outside consultants to ensure that design basis was correct. We hired outside firms to perform work such as Met Ocean studies, Wave/Weather study, biological consultant, geotechnical, reliability study, landslide technology, tanker maneuverability, vessel mooring, and safety risk analyses. -ConocoPhillips provided LNG plant expertise in a number of areas. Procurement Execution -As mentioned earlier, long lead equipment was early ordered prior to Financial Investment Decision (FID), in order to meet the aggressive project schedule. -Sourcing of equipment and materials was international based, to take advantage of the best possible pricing. One particular success story was Bechtel s pipe fabrication partnership in Turkey, a company called Cimtas. The pipe fit up very well in the field, which is a compliment not only to Cimtas, but also to Bechtel Engineering. -Of particular note, was the Nuovo Pignone rotating equipment order, which was comprised of refrigeration compressors and gas turbine drivers, as well as the Gas Turbine Generators and the Air Cooled Exchangers. Given the importance of this order, both Bechtel and the owner s Project Management Team devoted significant resources to the inspection, engineering review and progress monitoring of the work. As a result, these equipment items were successfully fabricated on schedule, with very few (minor) problems. -It should also be noted that the owner s Project Management Team spent considerable money and time in inspecting vendor workmanship at the shops, far more than normal. This investment paid great dividends in the field, in terms of less rework and little schedule problems attributed to vendors. -Shipping logistics were very challenging, as Equatorial Guinea is not on a heavily traveled shipping route. Bechtel s Procurement department performed very well, in that there was very little delay due to logistics. -Given the uncertainties surrounding the aforementioned bridge, preparation of a lump sum Bechtel change order was problematic. Our Business Manager (Nasser Fahmy) conceived a commercial concept which was a mix of reimbursable and lump sum strategies which saved the project a substantial amount of money in change order contingency. The concept was applied very successfully. -Aggregate was another big challenge. Local area issues dictated that the owner s Project Management Team locate and source the aggregate for the project. This was done successfully by locating appropriate land, leasing it and working with Bechtel and a local company to crush the rock into the various aggregate requirements. Construction Execution -Field construction management diligently participated in the engineering phase to ensure that the plant was fully constructable and to align on execution strategies. 12 of 19

13 -The owner s Project Management Team and the Bechtel jointly developed a very effective early works program to ready the site for mobilization of construction personnel. This included a team effort on housing, cooperation with other Punta Europa based business entities and early arrangement of an aggregate supply by the owner s Project Management Team. -Construction rarely suffered from a lack of materials or equipment. This can be traced back to a home office culture of construction driven schedule focus. Bechtel and the owner s Project Management Team mutually agreed to strongly focus on getting the purchasing done promptly to support the needs for vendor data in completion of engineering. -The Bechtel s selection of heavy equipment and rigging planning was very successful, and was based on past lessons learned on other LNG projects. -The first of a kind (in LNG) bridge erection was thought to be a major risk. Key decisions which mitigated this risk and facilitated construction execution were the selection of the Bechtel/owner engineering team, fabrication and construction team involvement, and the use of an Owner s field based Bridge Project Manager (Andy McGee). A paper was presented on this Bridge to Gastech 2006 in Abu Dhabi. -Eastern expatriates were a success story. These personnel were brought in by Bechtel, predominately from the Philippines, with others from India and other countries. Their workmanship was excellent. Work was performed based on a six ten hour day work week. -Bechtel provided a nice construction camp for their construction expatriates, including a swimming pool, tennis courts, internet café, religious areas, mini mart, phone booths, bar, exercise room, football pitch, and cricket pitch. In the interest of being part of the team, the owner s Project Management Team resided with Bechtel in the construction camp. Craft training for nationals A budget and goal was set to train 500 nationals in construction craft skills. The Owner s Project Management Team built the training facilities and shop, while Bechtel provided the instructors. The program covered safety, scaffolding, welding, insulation and carpentry. Some 535 nationals graduated from the school, and most of them were hired on the Train 1 project, with others finding jobs at other area employers. This particular program was one of the most successful parts of the project, in that investments were made for the future of Equatorial Guinea, and a labor pool is in place for construction of future LNG trains. 13 of 19

14 Craft Training Center Students Hiring of Nationals for the Train 1 Project On the Train 1 project, Bechtel worked very hard to hire nationals, in addition to those that were graduates from the craft training school. The project peaked at 40% nationals in the field. National Purchasing A substantial amount of effort was put into national purchasing. Initial efforts began with Bechtel s preparation of a local Yellow Pages ; based on experience of nearby MEGPL, AMPCO and advice from national personnel. Bechtel also conducted national supplier forums to welcome experienced and potential national suppliers to the project. These extensive efforts helped Bechtel significantly exceed its goal for national content. Help From Our Friends The government of Equatorial Guinea, including, but not limited to, the Ministry of Mines, Industry and Energy, GEPetrol and Sonagas were of great assistance in resolving various project execution challenges surrounding shipping, customs, visas, laws, regulations and the like. 14 of 19

15 EG LNG also gives its thanks to MEGPL and AMPCO for providing local knowledge, early housing, early logistics, early procurement, early concrete, vehicle maintenance, advice on government relations, construction power, fire service, IT (shared service among the entities), and assistance on many occasions throughout the project. The cooperation with these business entities was instrumental in our success. Community Relations Bechtel and the Owner s Project Management Team collaborated to build a Soccer Pitch at Ela Nguema for use by neighborhood children. The pitch proved to be very popular, and is still in use. EG LNG also built a network of water wells, implemented an HIV/AIDS Awareness Campaign, carried out a Student Health Project, and initiated a Maternal-Neonatal Health Program. Football Tournament on a New Football Field Constructed by Bechtel and EG LNG Project Controls Given the size of the project and the open ended cost risks of the pipe bridge, LNG Jetty, Special Purpose Construction Jetty and Aggregate, the owner s Project Management 15 of 19

16 Team instituted a very strong cost forecasting model. This model was updated whenever a potential cost adder (or savings) was anticipated and was required to be defendable. That is, every cost code was forecasted every month, and the calculations were required to be shown in the monthly owner s Project Management Team generated Cost Report. This strong forecasting model paid great dividends in that, on several occasions, major overruns were forecasted well in advance of the event, which provided Project and Executive Management an opportunity to change history before it happened. In fact, such strong cost forecasting did result in the cancellation of numerous planned expenditures throughout the project EG LNG s Development Budget was managed like a project, as well, in that there were no annual budget increases and rigid project style controls were imposed. Given the early cost pressures at the beginning of the project, we assumed budget pressure from the very first day. From the inception of the project, we implemented near draconian measures, with the feeling that we could always spend more money later, if the cost pressures were resolved. The robust forecasting and strong cost controls were directly responsible for the substantial owner budget underrun. Special credit to EG LNG s James Holt and Subhasish Rath, for their hard work in this area. The contract terms were Lump Sum Turn Key for all but LNG Loadout Pipe Bridge, LNG Jetty, Currency Exchange Costs, Special Purpose Construction Jetty, Aggregate and Owner Costs. This model, combined with above described heavy cost forecasting and cost control, and LNG project market timing, resulted in EG LNG being one of the lowest cost LNG producers. The project schedule was managed tightly, with Bechtel providing regular progress updates. The contract schedule incentive was particularly helpful in ensuring that Bechtel completed the work ahead of schedule. This, combined with an Owner Project Management Team culture of meeting schedule dates, resulted in a completion five months ahead of the original plan, which was thought to be aggressive at the time of the Financial Investment Decision. ROLE OF LUCK Weather played an important role in the project success. The site preparation work endured heavy rain, so much so that we nearly demobilized to wait for the next dry season. Strong focus was put on getting out of the ground, along with addition of mud mats and work area paving to mitigate against rain. Perhaps our preparations helped swing our luck..subsequent rainy seasons were more kind to the project. The project also endured two hurricanes on the U.S. Gulf Coast during fabrication, causing some rework, repairs and shop relocations. We also admit to being fortunate not to have any major shipping losses or any serious force majeure events to impact our schedule. 16 of 19

17 CLOSING COMMENTS The EG LNG Train 1 Project is a benchmark example of what is possible when large numbers of talented and motivated people work together towards common goals of safety, quality, cost, national content and schedule. Aerial Picture of EG LNG Train 1 17 of 19

18 Henry Aldorf is a Regional Vice President of Marathon and is responsible for business development in Europe, Africa, the Middle East and Asia. Following Marathon s focus on integrated gas from 2002, Henry has been responsible for the development of the greenfield LNG project in Equatorial Guinea, Central Africa, and was its first Managing Director. Before joining Marathon in 2001, Henry worked for Unocal in a variety of positions of increasing responsibility, in both the chemical and business development organizations of that company. His international experience includes Europe, the United States, Canada, the Russian Federation, Brazil, Asia Pacific, Japan, Korea and China. Henry graduated from the University of Leiden in the Netherlands, with a Bachelor of Science degree in Chemistry and Biochemistry. He also gained a Master of Science degree in Chemical Engineering from the Technical University of Delft in the Netherlands, and holds a Master of Business Administration from the INSEAD graduate business school, Fontainebleau, France. Bonifacio MONSUY NSUE is the Deputy Managing Director Planning, IT, Document Management, Community Relations and Government Affairs for EG LNG. He is a member of the EG LNG Executive Committee and Operations Committee. Before joining the company in March 2007, Bonifacio worked for the National Oil Company of Equatorial Guinea (GEPetrol) as Director of the London Office since GEPetrol was created in He has also worked for the Ministry of Mines Industry and Energy as Chief of Department of Planning and Statistics; was a Member of the National Committee of Audits and Negotiations of the Production Shearing Contract (PSC); an Expert in the Association of African Producers of Oil & Gas country (APPA); and an Advisor to the Ministry of Health and Environment responsible for Projects Evaluation and Control. Mr. MONSUY NSUE graduated with a Master of Science of Economics and Sociology from the State University of Donetsk (Ukraine). He graduated from the Institute of Petroleum in London and Paris as Petroleum Economist, and received a certificate of Marketing of Crude Oil by Glencore Spain, in Madrid and London; a Certificate of Audits in the Oil and Gas Industry by West Africa Navigator Resources Management in Houston and Dallas, Texas; and a certificate of Moving from an Operational Manager to a Strategic Thinker by American Management Association in New York. Mr. MONSUY NSUE speaks French, English and Russian, with Spanish being his home language. 18 of 19

19 Al Pace was the Project Director for EG LNG s Project Management Team, starting prior to the Financial Investment Decision and Notice to Proceed, and continuing through the engineering, procurement, construction, commissioning and the successful plant performance test. Al also had a very strong role in the formation of EG LNG, including the leadership of the EG LNG business planning effort and day-to-day activities such as membership on the EG LNG Executive Committee. Al is currently Director of Major Projects for Marathon s Ohio Refining Division Before joining Marathon Oil, Al had a successful career in the process plant contracting community, having worked for KBR and Foster Wheeler. Past project management assignments included a major LNG expansion and renovation project, a large number of petroleum refinery projects, several gas plant projects, a chemical plant and a major international crude pipeline. His extensive international project management experience includes Equatorial Guinea, Cameroon, Algeria, Venezuela, Argentina, USA, Canada and Japan. Al has also spent six years in business development for KBR covering, at various times, all geographical areas of the world. Al graduated from Kansas State University with a degree in Mechanical Engineering. He is a licensed Professional Engineer and a member of the Project Management Institute. His previous publications include Unknown Solutions for Offshore West Africa West Africa Offshore Conference, December, of 19