LNG Exports A Story of American Innovation and Opportunity Tyler Energy Summit Jason French March 31, 2014
Forward Looking Statements This presentation contains certain statements that are, or may be deemed to be, forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included herein are forward looking statements. Included among forward looking statements are, among other things: statements regarding the ability of Cheniere Energy Partners, L.P. to pay distributions to its unitholders; statements regarding our expected receipt of cash distributions from Cheniere Energy Partners, L.P., Sabine Pass LNG, L.P., Sabine Pass Liquefaction, LLC or Cheniere Creole Trail Pipeline, L.P.; statements that we expect to commence or complete construction of our proposed liquefied natural gas ( LNG ) terminal or our proposed pipelines, liquefaction facilities or other projects, or any expansions thereof, by certain dates or at all; statements regarding future levels of domestic and international natural gas production, supply or consumption or future levels of LNG imports into or exports from North America and other countries worldwide, regardless of the source of such information, or the transportation or demand for and prices related to natural gas, LNG or other hydrocarbon products; statements regarding any financing transactions or arrangements, or ability to enter into such transactions; statements relating to the construction of our natural gas liquefaction trains ( Trains ), or modifications to the Creole Trail Pipeline, including statements concerning the engagement of any engineering, procurement and construction ("EPC") contractor or other contractorandtheanticipatedtermsandprovisionsofanyagreement with any EPC or other contractor, and anticipated costs related thereto; statements regarding any agreement to be entered into or performed substantially in the future, including any revenues anticipated to be received and the anticipated timing thereof,and statements regarding the amounts of total LNG regasification, liquefaction or storage capacities that are,or may become, subject to contracts; statements regarding counterparties to our commercial contracts, construction contracts and other contracts; statements regarding our planned construction of additional Trains, including the financing of such Trains; statements that our Trains, when completed, will have certain characteristics, including amounts of liquefaction capacities; statements regarding any business strategy, our strengths, our business and operation plans or any other plans, forecasts, projections or objectives, including anticipated revenues and capital expenditures and EBITDA, any or all of which are subject to change; statementsregarding projections of revenues, expenses,earnings or losses, working capital or other financial items; statementsregarding legislative, governmental, regulatory, administrative or other public body actions, requirements, permits, investigations, proceedings or decisions; statements regarding our anticipated LNG and natural gas marketing activities; and anyother statementsthatrelate tonon historical or future information. 2 These forward looking statements are often identified by the use of terms and phrases such as achieve, anticipate, believe, contemplate, develop, estimate, example, expect, forecast, opportunities, plan, potential, project, propose, subject to, strategy, and similar terms and phrases, or by use of future tense. Although we believe that the expectations reflected in these forward looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward looking statements, which speak only as of the date of this presentation. Our actual results could differ materially from those anticipated in these forward looking statements as a result of a variety of factors, including those discussed in Risk Factors in the Cheniere Energy, Inc. and Cheniere Energy Partners, L.P. Annual Reports on Form 10 K filed with the SEC on February 22, 2013, each as amended by Amendment No. 1 on Form 10 K/A filed with the SEC on March 1, 2013, and the Cheniere Energy Partners, L.P. Current Report on Form 8 K filed with the SEC on May 29, 2013, which are incorporated by reference into this presentation. All forward looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these Risk Factors. These forward looking statements are made as of the date of this presentation, andother than asrequired under the securities laws, we undertake no obligation to publicly update or revise any forward looking statements.
What Is Liquefied Natural Gas (LNG)? LNG is natural gas that has been super-cooled to -260 F and changed from gas to liquid Liquefaction reduces volume by 600-to-1 Stored cold in insulated containers at near atmospheric pressure Safe to store and transport LNG is colorless, odorless, non-corrosive, and non-toxic Becomes lighter than air when vaporized 3
Global Natural Gas Reserves TCF 3,500 3,000 2,500 U.S. Natural Gas Resource Base 2,915 TCF of total recoverable reserves 1,219 TCF recoverable shales 400 TCF of shales economical below $6/MMBtu 1,692 Tcf Unconventional 2,000 1,011 Tcf Conventional 1,500 1,000 318 Tcf Proved Reserves 500 0 US Russia Iran Qatar Turkmenistan Saudi Arabia UAE Venezuela Nigeria Algeria Iraq Indonesia Australia China Malaysia Egypt Norway Kazakhstan Kuwait Unconventional gas is abundant globally, but only the U.S. has the technical capability to develop at present Source: 2011 BP Statistical Review (Global Reserves); Advanced Resources International US Natural Gas Resources & Productive Capacity, August 2010 (US Resource Base) ; MIT, The Future of Natural Gas, 2009 (shales economic below $6)
Extensive Shale Resource Base Shale Gas Plays Lower 48 States Montana Thrust Belt Cody Bakken Gammon Williston Mancos Greater Green River Hermosa Lewis Hilliard Baxter Mancos Piceance Paradox San Juan Pierre Raton PaloDuro Excello Mulky Woodford Anadarko Granite Wash Forest City Cherokee Platform Fayetteville Arkoma Michigan Illinois Black Warrior Antrim New Albany Chattanooga Conasauga Appalachian Marcellus/Utica Barnett Woodford Marfa Permian Barnett Ft. Worth Maverick Sub Haynesville Bossier Texas Louisiana Mississippi Salt Shale Gas Plays s Pearsall Eagle Ford Rio Grande Embayment Sabine Pass LNG 5 Source: EIA, March 2010; Advanced Resources Intl (Lower 48 Unconventional Recoverable Reserves), ARI shale estimates updated April 2010
U.S. Natural Gas Consumption vs Production Since 2005, U.S. production growth = 4.8 Tcf; demand growth = 2.6 Tcf Imports cut 2.2 Tcf ( 56%) over this period The U.S. is on pace to be a net gas exporter by mid decade TCF EIA Forecast 30 25 20 15 22.0 21.7 18.1 18.5 23.1 23.3 22.9 19.3 20.2 20.6 24.1 24.4 21.3 22.9 25.5 25.7 24.0 24.0 10 5 US Gas Production US Gas Consumption 0 2005 2006 2007 2008 2009 2010 2011 2012 2013E Source: EIA 2012 Natural Gas Annual
U.S. Demand vs. Productive Capacity Bcf/d 110 100 90 80 The U.S. holds vast natural gas resources recoverable at low prices Domestic demand cannot keep pace with supply growth U.S. Demand High/Low Range Productive Capacity at $4.70/MMBtu wellhead (2010 2035 average) 26 Bcf/d Surplus 70 60 50 40 2010 2015 2020 2025 2030 2035 Source: EIA Annual Energy Outlook 2012 (U.S. Demand). Range includes Low Economic Growth, High Economic Growth and $25 Carbon Tax Scenarios Advanced Resources International Inc., U.S. Natural Gas Resources and Productive Capacity: Mid 2012 Update (Productive Capacity). In constant 2010 $. 7
Projected Global LNG Demand Growth Regional LNG Import Outlook (mtpa)* Europe 27 70 101 2015 2020 2030 Americas 20 15 21 2015 2020 2030 Middle East/N. Africa 6 14 30 2015 2020 2030 Asia 356 196 254 2015 2020 2030 *Base case scenario From 236 mtpa (~32 Bcf/d) in 2012 to 514 mtpa (~69 Bcf/d) in 2030 4.4% CAGR ~ 15 mtpa average growth (~three 4.5 mtpa trains) 8 Source: Wood Mackenzie
Cheniere s LNG Export Facilities Offer Attractive Pricing for Global LNG Buyers Worldwide LNG Prices = 11% to 15% of Crude Oil Estimated Prices Henry Hub: $4.00 / MMBtu Brent Crude: $100 / Barrel $/MMBtu 20 Regional Natural Gas & LNG Prices As of September 27, 2013 ($/MMBtu) Americas Europe Asia LNG Cost (1) $ 4.60 $ 4.60 $ 4.60 Liquefaction Fee 3.50 3.50 3.50 Shipping 0.50 1.00 3.00 18 16 14 12 10 8 $15.05 $11.00 $10.42 Delivered Cost $ 8.60 $ 9.10 11.10 $ 6 4 $3.54 LNG Price (% Crude) @ 15% @ 12% @ 15% 15.00 12.00 15.00 Net Difference $ 6.40 $ 2.90 $ 3.90 2 0 Sep 09 Sep 10 NBP Japan Avg LNG Sep 11 Sep 12 IFERC HH Monthly European Gas Contract Sep 13 (1) LNG Cost is calculated as 115% of Henry Hub price. 9 Source: Cheniere Research estimates
SPL Project: Development Utilizing Existing Assets Current Facility ~1,000 acres in Cameron Parish, LA 40 ft ship channel 3.7 miles from coast 2 berths; 4 dedicated tugs 5 LNG storage tanks (17 Bcf of storage) 4.3 Bcf/d peak regasification capacity 5.3 Bcf/d of pipeline interconnection to the U.S. pipeline network Liquefaction Trains 1 & 2 2 trains, each 4.5 mtpa nameplate capacity LSTK EPC contract w/ Bechtel Operations estimated 2015-2016 Liquefaction Trains 3 & 4 2 trains, each 4.5 mtpa nameplate capacity LSTK EPC contract w/ Bechtel Construction estimated to start 2013 Operations estimated 2016-2017 Liquefaction Expansion Trains 5 & 6 Bechtel commenced preliminary engineering Permitting process initiated Significant infrastructure in place including storage, marine and pipeline interconnection facilities; pipeline quality natural gas to be sourced from U.S. pipeline network. 10
Corpus Christi Liquefaction Project Design production capacity is expected to be ~4.5 mtpa per train Houston New Orleans Corpus Christi Gulf of Mexico Artist s rendition Proposed 3 Train Facility >1,000 acres owned and/or controlled 2 berths, 3 LNG storage tanks (~10.1 Bcfe of storage) ConocoPhillips Optimized Cascade Process Key Project Attributes Marine environment conducive to large tankers 45 ft ship channel 13.7 miles from coast Protected berth Premier Site Conditions Established industrial zone Elevated site protects from storm surge Soils do not require piles Local labor, infrastructure & utilities Proximate pipeline interconnections to 4.5 Bcf/d receipt/takeaway capacity Project Update Contract price received from Bechtel Estimated costs, including owner s cost, ~$800/ton Proceeding with commercialization Anticipating FID toward the end of 2014 First LNG expected 2018 All major permit applications have been filed, EPC contract price received 11
ConocoPhillips Optimized Cascade SM LNG Train Bechtel and ConocoPhillips Collaboration Agreement 40 plus year history Proven, Reliable Design Template Designs exist for a variety of conditions and compressor configurations Kenai Alaska, 1969 Atlantic LNG Trains 1, 2, 3 and 4*, 2005* Egyptian LNG Trains 1 & 2, 2005 Darwin LNG, 2006 Equatorial Guinea LNG, 2007 Angola LNG, under construction Process Advantages Reliability design concept based on two 50% compressors for each refrigeration cycle Turn down Two in one concept provides for ~100% efficiency at 60 80% utilization Intermittency fast start up and cool down 3.5 mtpa Liquefaction Train at Darwin LNG
It ll be BIG Refrigerant Compressor (6 for each LNG Train) Turbines are based on GE CF6 airplane jet engine, used on the Airbus 330 & Boeing 747 LNG Cold Box weighs over 1000 tons Compressor Piping up to 72 inches in diameter Over 200 air coolers with 15 ft fans Pickup Truck 13 13
Sabine Pass Liquefaction Construction As of February 2014
15 Aerial View of Sabine Pass LNG February 2014
Aerial View of SPL Construction February 2014 Cold Box Area Propane Condenser Area Train 4 Train 4 Pile driving Train 2 Air Coolers Compressor Area Cold Box Area Train 3 Train 3 Condenser Foundation Propane Condenser Area Compressor Area Train 1 16
Cheniere Project Benefits The First Four Trains of Sabine Pass Liquefaction will: Add 250 full time permanent jobs at the facility for Engineers, Operators and Technicians; 170 permanent contractors Employ a peak construction work force of over 4,500 skilled construction workers for a period of approximately 5 years Each 2 Bcf/d of incremental gas demand, via either export or domestic gas consumption, is estimated to stimulate an additional 50,000 permanent jobs in the upstream exploration and production sector Permanent staffing payroll and ad valorem taxes will represent over $30 million annually to the local communities in Southwest Louisiana and Southeast Texas Reduce our Nation s trade deficit by over $7 billion annually 17
Sabine Pass Liquefaction A $2.3 Billion Investment in American Manufacturing SUNDYNE CORPORATION GE ROSEMOUNT INC. CHART GE ATLAS COPCO MN GE ENERGY P&W FLOWSERVE EBARA PUMPS GE ENERGY CONTROL COMPONENTS GAS LAND INC. CRYOQUIP INC. CA NV UT CO OK IA IL TN OH PA WV VA NY MA AQUATECH INTERNATIONAL CHROMALOX ALFA LAVAL GE ENERGY ABB CHROMALOX CHEMINEER FLOWSERVE CORP. PUFFER SWEIVEN, LP CUMMINS SOUTHERN PLAINS GOULDS PUMPS INC. ATLAS COPCO COMPRESSORS LLC OHMSTEDE, LTD. AMERICAN ANCHOR BOLT COMMERICAL METALS COMPANY HUDSON PRODUCTS GE OIL & GAS ADAMS VALVES SULZER CHEMTECH USA NEWMENS, INC. FLUIDIC TECHNIQUES BGI CONTRACTORS, LLC ACS AMSTICO, INC GLNG CCI EATON KONECRANES YOKOGAWA SUNDYNE CORPORATION TX LA SPL UOP PAX, LLC DELTA ENVIRONMENTAL PRODUCTS PAX, STEEL INC. LINDE AG PETROCHEM SOUTHWEST FILTER COMPANY ZEECO 17 States 54 Manufacturers $2.3 billion USA $0.5 billion foreign 18
Expanding U.S. Natural Gas Exports Will Promote stability in domestic natural gas pricing Stimulate state, regional and national economies Reduce reliance on foreign sources of oil Improve U.S. balance of payments Promote liberalization of global natural gas trade Advance national security Increase economic trade 19
About Our Energy Moment Our Energy Moment is a coalition of diverse companies, organizations, individuals and institutions that educates opinion leaders and the public about America s ongoing transformation from an energy consumer to an energy producer. Organized as a 501(c)(4) Emphasis on education and public engagement Provides a central information clearinghouse on LNG export issue at www.ourenergymoment.org
AMERICA IS IN THE MIDST OF AN ENERGY TRANSFORMATION TECHNOLOGICAL BREAKTHROUGHS MORE EFFICIENT PRODUCTION EXPANDED RESERVES EXPANDING LNG MARKETS WOULD GENERATE AS MUCH AS LNG DEVELOPMENT COULD GENERATE MORE THAN LNG EXPORTS WILL PLACE THE U.S. IN A POSITION OF IN NET BENEFITS TO THE U.S. ECONOMY* AMERICAN JOBS BY 2035** * A recent NERA Economic Consulting study concluded that exporting LNG would generate as much as $47 billion in net benefits to the U.S. economy (www.nera.com/67_8081.htm.) ** A recent IHS Global Insight study estimated that increased development of natural gas could generate more than 2.4 million American jobs by 2035.
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