Mid-Scale LNG – Niche Market or Global Trend?

1. Mid-Scale LNG – Niche Market or Global Trend?

2. Liquefied Natural Gas - LNG Natural Gas is clean and environmental friendly with a major obstacle - it requires a large volume at ambient conditions. As a result natural gas is generally transported at high pressure or in chilled liquid form: • Pipeline Gas – transported at different pressure levels and ambient temperature. Long distance pipelines operate at around 80 bar. • Compressed Natural Gas (CNG) – transported at 200 bar and ambient temperature. • Liquefied Natural Gas (LNG) – transported at ambient or slightly elevated pressure and -160 °C. Volume reduction is essential for batch transportation and allows for flexible handling and transportation route selection. Volume of Natural Gas at different conditions. Natural Gas1 m³(NTP conditions) Pipeline Gas, 1/80 m³ CNG, 1/200 m³ LNG, 1/600 m³

3. Natural Gas Demand in India • Natural gas demand is expected to grow significantlyover the next years. Naturalgas contribution to the energybasket is expected to growfrom 14% to 23% in 2025. • Within the next years natural gasreplaces more and more coal asenergy source for several reasons, e.g.: • mining constraints, • rehabilitation, • environmental issues. • Increasing demand requires development of: • new transnational pipelines and LNG terminals • accelerated utilization of domestic natural gas fields and other alternative gas sources. Source: Ministry of Petroleum & Natural Gas, 2008-2009

4. Potential Gas Sources in India for Small- and Mid-Scale LNG Biogas Landfill Gas • Various smaller gas fields exist with most of them in remote areas or offshore. Only some of them are utilized due to large distances to existing natural gas infrastructures and consumers. • 1 Bill. Nm³ of gas is flared and vented each year representing 3.3% of the gross natural gas production. • Coal bed methane gas (CBM) reserves are estimated to 4.6 Trill. Nm³ which is more than four times larger than the natural gas reserves (1.1 Trill. Nm³). • Landfill gas and biogas are “new” alternatives and can be considered as renewables with neutral carbon emission. Coal Bed Gas Associated Gas Small Gas Field Flared Gas

5. Benefits of Small- and Mid-Scale LNG (I) World’s known natural gas fields in terms of reservoir size. More than 75% of the world’s gas fields can be considered as stranded and/or remote. Monetizes Remote/Stranded Gas Reserves • Stranded and/or remote natural gas reserves below 5 tcf (140 Bill. Nm³), e.g. associated gas from oil production, small onshore and offshore gas fields. • Flared and vented gas from single or multiple oil wells using a gathering system. Monetizes Alternative Gas Sources • Coal bed methane gas recovery from coal resources. • Landfill gas or biogas production with no outlook for pipeline distribution. • Gas hydrates on a long term prospective. ConventionalLarge-ScaleLNG 50 - 100 tcf 5 - 50 tcf Small- &Mid-ScaleLNG 1 - 5 tcf 0.5 - 1 tcf 0.25 - 0.5 tcf 0.1 - 0.25 tcf < 0.1 tcf Source: Infield

6. Benefits of Small- and Mid-Scale LNG (II) Comparison of fuel consumption and CO2 emissions. Solves the Energy Need for Stranded Customers • Customers that never get gas from a pipeline, e.g. small local power plants, local industry or vehicles and ships. • Customers that need LNG, e.g. due to environmental reasons or missing alternative energy sources. • Modest and widely dispersed consumers due to the ease of handling and high flexibility of LNG. Promotes Cleaner Fuel • Alternative “clean” fuel for power generation, heavy duty trucks, busses and large machinery. • Investments into LNG infrastructure establishes the bridge to renewable energy such as biogas.

7. Benefits of Small- and Mid-Scale LNG (III) Comparison of fuel prices. Cost of power generation using LNG is 50% less than with coal, when considering conventional environmental abatement. Improves Cost and Capital Efficiency • Fuel cost provides window of opportunity for small and mid-scale liquefaction plants and LNG terminals for consumers. • Lower infrastructure cost due to size and simplicity compared to pipeline installations. • Infrastructure can be adjusted in line with growing demand based on proven off-the-shelf technologies. Provides Faster Mobilization and Higher Flexibility • Faster to implement and provides locational flexibility due to ease of handling and storage. • Supply of LNG with trucks is faster than building a pipeline. • For offshore gas fields FLNGs are capable of rapid development and subsequent relocation.

8. Benefits of Small- and Mid-Scale LNG (IV) Lowers Market Entry Barriers • Makes it feasible for several suppliers of natural gas to compete for sales in a region, without being dependent on third-party access to pipelines. • Avoids committing to large investment funds against sales, reducing the overall financial risk, e.g. no commitment to a future pipeline has to be made upfront. • LNG based supply systems creates real options by leaving flexibility in whether and when to move to the next steps in developing the supply chain. This is particular relevant where traditional fuels are well established and the sales growth is generally slow. Import Terminal Small LNG Carrier Intermediate Storage Liquefaction Plant Truck Loading Truck Distribution Satellite Station Fuel / Filling Station

9. Supply Chain Elements for Small- and Mid-Scale LNG Solutions CNG Station Distribution City Gas Network Regasification Land Transport Satellite Station Liquefaction * Pipeline Cylinder Station LNG Filling Station Distribution Small Consumer LNG FPSO (FLNG) Sea Transport Sea Transport LNG FSRU CNG Fuel Station LNG Fuel Station Export Terminal Import Terminal LNG Storage * including upstream pre-treatment

10. Small- and Mid-Scale Liquefaction Cost of liquefaction plants for various plant capacities. • Various proven liquefaction technologies are available on the market using expander or mixed refrigerant cycles. • Stranded gas is too far away from the market and/or too small to monetize otherwise. The value of the gas can be considered much lower than conventional gas sources. • For world-scale plants a high efficiency is essential whereas for small- and mid-scale plants the key to success is to compensate the negative effect of the economy of scale: • Use proven of-the-shelf equipments • Keep the process as simple as possible • Standardize and modularize plant designand construction • Optimize the balance between cost and energy efficiency

11. Small- and Mid-Scale LiquefactionShan Shan Liquefaction Plant, Xinjiang, China Location: Shan Shan, Xinjiang, Western China Capacity: 1.5 Mill. Nm³/d(0.432 mtpa, 54 tph) Plot area: 490 m x 585 m Process: Linde Multi Stage Mixed Refrigerant (LIMUM) processwith CWHE (2 m / 3 m x 43 m) 8.5 MW feed gas compressor MEA gas treatment 20 MW cycle compressor driver 30,000 m³ storage tank 320 m³/h truck loading station for 100 containers in 16 hours TGE as the main contractor for the Shan Shan liquefaction plant has been the pioneer in small- and mid-scale LNG. Key drivers for the investment decision were: • Availability of remote sources of clean energy ready to monetize • Unsatisfied demand for gas in Eastern China • No pipeline system available

12. Small- and Mid-Scale LiquefactionLNG FPSOs for Small Offshore Gas Fields TGE together with TGE Marine has developed small- and mid-scale LNG FPSO solutions based on the Shan Shan plant design and LNG offshore experience to: • Monetize small stranded offshore gas fields with no nearby infrastructure • Supply energy to isolated islands • Generate early cash flow as “early production system” for larger gas fields

13. LNG Transportation • For the local transportation of LNG mobile tank container trailers and tank semi-trailers are available on the market. • Various standard tank / container volumes exist between 15 m³ and 51 m³. • Maximum gross weight for trailer trucks is generally restricted by governmental regulations, e.g. in India to 44 t. 43 m³ ISO LNG Tank Container Trailer 51 m³ LNG Tank Semi-Trailer 7,500 m³ LNG/Ethylene Carrier

14. LNG TransportationShan Shan Liquefaction Plant, Xinjiang, China All LNG produced in the Shan Shan liquefaction plant is distributed with a fleet of over 600 trucks to more than 20 satellite stations, residential and industrial consumers. Truck fleet: 600 trailer trucks with ISO 40 feet tank containers. Capacity: Loading station designed for 63 trucks per day. Distribution: To 24 satellite stations and consumers located at distances between 340 and 4,400 km (av. 2,000 km). Since first start-up in June 2004: • more than 120,000 trucks loaded • Overall traveling distance of more than 480,000,000 km • Some tucks have travelled a distance of more than 600,000 km • No leakage, spill or loss of operation Shan ShanLNG Plant SatelliteStations

15. LNG Satellite Stations • Satellite stations are located close to the consumers and include truck unloading system, storage, vaporization and related infrastructure, safety and control systems. • Typical satellite storage volumes are between 30 and 30,000 m³. Stations for residential areas are often equipped with LNG cylinders with volumes between 60 and 500 liters. • LNG is commonly vaporized with ambient air vaporizers at discharge rates between 10 and 10,000 Nm³/h and discharge pressures of 2 to 4 bar. Satellite station with air vaporizers and 4 x 150 m³ vertical LNG storage tanks. Mobile LNG cylinder

16. LNG Satellite StationsShan Shan Liquefaction Plant, Xinjiang, China The LNG from the Shan Shan liquefaction plant is delivered to 24 satellite stations, residential and industrial consumers. Considering a four days allowance in storage capacity an overall satellite storage capacity of around 10,700 m³ or 72 x 150 m³ tanks are required to handle the LNG production of 0.43 mtpa from the Shan Shan liquefaction plant. Dehua satellite station equipped with 8 x 150 m³ vertical storage tanks and cylinder filling station. LNG fuelling station for busses. Small satellite station for supply of vaporized LNG to residential area.

17. Conclusion • Easy to Use – Natural gas has become a widely easy to use source with an promising growths perspective. • Monetizes Stranded Gas – Access to alternative / non-utilized gas reserves and to smaller markets. • Bridge to Renewable Energy – Investment into LNG infrastructure establishes the bridge to renewable energy such as biogas. • Links Distant Supply / Market – Access to distant gas reserves and markets. • Environmental Friendly – Natural gas is a clean fuel with significantly lower CO2, NOX , SOX and PM emissions compared to any other fossil fuel. • Attractive Cost – Alternative to “conventional” fuel with attractive cost incentives. • Flexible – Not physically linked to one supply / market. • Geography – Where pipelines not physically or geopolitically viable. • Strategic – By-pass pipeline constraints to access market. • Safe and Reliable – Shan Shan plant demonstrated excellent safety record with impressing reliability.