LNG BUNKERING. Advancements & Challenges. HHP Summit Jay Gottlieb Houston, TX USA. President Sept 2012 Argent Marine Companies

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1 LNG BUNKERING Advancements & Challenges HHP Summit 2012 Jay Gottlieb Houston, TX USA President Sept 2012

2 Presentation Topics Maersk-Argent Background LNG as Marine Transport Fuel LNG Bunkering Options Issues/Challenges/New Technology Safety Worldwide Developments Maersk-Argent Next Steps

3 Partnership Maersk Line, Limited Ship design and engineering expert 28 years of experience in: o Tanker operations o Vessel management o Maritime technical services Global intermodal capability Established U.S. flag network Brings a unique solution to the LNG value chain State-of-the-art marine/land-based technology for the safe and economical distribution of LNG Argent Marine Specialist in LNG marine vessels and related engineering services Advisor to domestic and international LNG marine operations Service provider to major oil & gas companies U.S. flag Jones Act qualified company

4 JV Business Model Three Focus Areas 1. LNG Bulk distribution up to 30,000 m3 2. Containerized LNG for intermodal Distribution 3. LNG Bunker fueling

5 LNG as Fuel An important role as a heavy transportation fuel. On road Off road Marine Rail Distribution and Economics are crucial factors Evolving at High Rate

6 Marine Fuel Vessel Propulsion Vessel Auxiliary Power S/ECA Compliance

7 Emission Control Areas (IMO ECA s) are Driving LNG as a Marine Fuel Environment drivers / Emissions control on Marine Markets Ship Operators Mandatory stricter environmental regulations Maritime Emission Control Areas (ECA) Fuel with less than 1.0% Sulphur beginning 1 Aug 2012 Fuel with less than 0.1% Sulphur beginning 1 Jan 2015 US coasts out to 200 nautical miles LNG as compared to Heavy Fuel Oil (HFO): Reduces nitrous oxide (NOx) by 85-90% Reduces sulphur dioxide (SO2) by nearly 100% Reduces particulate matter (PM) by nearly 100% Economic driver: Price (esp in US)

8 Marine Fuel Existing Ship Types New Concept Designs Ferries DNV Concept Vessel: Trialty An LNG-fueled VLCC Container Feeder Vessels DNV Concept Vessel: Quantum 6,200 TEU container ship

9 Vessel Bunkering Options Pier side via truck Fueling option of choice for early adopters Limited for large bunker volumes Dedicated bunker berth (limited application) Vessel must shift to bunker berth Not most desirable option due to vessel delay Piped LNG to vessel s usual berth (restrictive) Requires shore based tanks Bunker vessel alongside ship at berth Mirrors current oil bunkering process Bunker vessel either self propelled or tug/barge

10 Bunkering From Truck LNG Trailer ~ 40 m 3 (US GVW limit) Can Service Viking Energy ~ 209 m 3 US OSV ~ 300 m 3 Laker ~ 300 m 3 Not Practical For Coastal Ro/Ro ~ 2000 m 3 Trans Atlantic Container ~ 6000 m 3

11 Alongside Ship at Berth A commercial approach for sea-going vessels Least disruptive to vessel operations Lowest commercial cost model Required to maximize LNG fuel adoption

12 Bunker Vessel Concepts

13 Maersk-Argent Bunkering Designs 1,500 10,000 m 3 Tank layout view Topside view of four hold spaces, plus tug Dedicated vessel for in port operations 1,500 5,000 m 3 (scalable) Tug/Barge or Integral Vessel Maersk-Argent Vessel Design in development since 2008 Approval in Concept Class Society HAZID Study conducted in March 2012

14 LNG Fuel Intermodal Distribution System Containerized LNG (Patent pending) Terminal to User Vessel Fuel, Auxiliary Power Replaces Bulk Transfers/Handling No Transport and Storage Tanks ISO/US DOT Certified Ideal for Ferries/Small Vessels, Inland Fueling Simplifies Distribution Start-Up Lower Delivered Cost Compelling System Economics

15 Maersk-Argent Intermodal Vessel (Patent Pending) Tanks within one hold space LNG Container Vessel Bird s eye view of the six hold spaces

16 Intermodal LNG System ISO Tanktainers: efficient storage, loading and transport Trucking Rail Typical Container handling operations

17 Intermodal System Vessel Fuel Propulsion/Bunkering Marine Services GmbH Approval In Concept - Bureau Veritas

18 Illustrative Bunker Distribution by Container Ferry/Short-Sea/Inland

19 LNG-fueled power barges Cleaner, in-port auxiliary power Options: Electrical service at berth Vapor gas for onboard dual fuel genset Augment port power Sources: World Maritime News; Eckelmann

20 Bunkering Issues LNG Sourcing Peak Shaving Plants not a long term viable source Regulated Interruptible supply only Small liquefaction, large storage, big send out Will play a relatively small role in LNG fuel sourcing Import / Export Terminals Dedicated LNG fuel liquefaction plants Inland locations Maritime locations Small scale to mid scale plant designs

21 Bunkering Issues LNG Quality/Quantity Composition/Methane Number Gas sampling?? Volume measurement/flow Meters Transfer Options/Connections/Equipment Hard Arms/Hoses ANSI Flange/Emergency Disconnect Bunkering Time Flow Rate/Delivery Pressure/BOC Vapor Return

22 LNG Bunkering Safety Flammable-makes good fuel! Prime Directive Never let natural gas and air in the same place at the same time Proper inerting is critical Cryogenic Personnel safety cryogenic burns Brittle fracture of vessel structure Drip trays Hull water curtains Training LNG properties root understanding of fuel Procedures

23 Standards and Best Practices Applying/Observing/Complying IGC Code (Bunker Vessel is Gas Ship) IGF Code (Interim and pending) SIGTTO/OCIMF Standards Standards for Equipment/Operating Procedures Local Regulations LNG Specialized Training

24 Europe is Leading The Way Major ports are driving adoption Rotterdam Antwerp Hamburg Baltics Every major shipping company Every major vessel segment Ferries Short Sea Inland Ocean Organizational Efforts DMA ADN SIGTTO IMO Green Deal Classification DNV Lloyds Bureau Veritas ABS

25 One Example National LNG Platform 50 Inland Vessels, 50 Ocean Vessels by 2015 Wadden/North Sea/Rotterdam/Basel/Rhine Legislation/Legal/Incentives/Social/Environment Public/Private Initiative Dutch Economic Affairs and Environment Port of Rotterdam DeltaLinqs Marine Industry Targets 2 3 million LNG tons NOx, SOx, Noise Bio-LNG

26 North America Distant Second Activity Staten Island Ferry Washington State Ferry BC Ferries Harvey Gulf TOTE Ocean Going Pilots in Works - Both Coasts USCG Engaged Many Ports Wait and See

27 North America Unique Opportunity Establish US as LNG Bunker Center First Mover Potential Domestic Gas Companies Not Focused on Global LNG Distribution Services Options Port Facilities Vessel Bunkering Operations

28 Maersk-Argent LNG Accepted Fuel by 2020 Progression Ferry/Short-Sea/Inland Ocean TA/Pacific Cruise Vessels 10,000 Vessels (MEC)? Bunker Distribution Key 1,000 more likely Bunker Services in 2013

29 Maersk-Argent Bunker Services in 2013 Selected US ports Supply Sources Vessel Fueling Power Barge Service

30 Thank You Jay Gottlieb Bob Bowers Maersk Line Limited