Liquefied Natural Gas (LNG) Information

1. Liquefied Natural Gas (LNG) Information Answering questions about a proposed LNG facility at Sparrows Point, MD

2. What is Liquefied Natural Gas? LNG is natural gas that has been super cooled to minus 260 degrees F becoming liquid for easier storage and shipping LNG is a clear, odorless, colorless, non-corrosive and non-toxic liquid LNG takes up 1/600th of the space –simplifying storage and transportation

3. Where is LNG Produced and Exported? The U.S. receives most of its LNG from Trinidad and Tobago Currently 12 countries export LNG The largest LNG exporters are in the Middle East and Asia Russia and Norway will begin exporting LNG in 2007

4. Do Other Countries Import LNG? Fourteen countries currently import LNG Japan is the largest importer of LNG with 29 LNG terminals China and Britain* have plans to import LNG *Great Britain imported LNG briefly in the early 1960’s and now plans to re-establish that market

5. U.S. Marine Mainland LNG Import Terminals

6. What Does an LNG Terminal Look Like? LNG tanks Docks

7. How is LNG Transported by Sea? Specially-designed double-hulled tankers The double-hull provides increased structural safety The liquefying process allows for efficient transport in bulk – about 3.0 billion cubic feet of gas per tanker Insulation allows the ships to act like thermos bottles to keep the LNG cold

8. Typical LNG Tanker Holding tanks

9. How is LNG Stored at Marine Terminals? LNG is transferred from arriving tankers to secure storage tanks on land Storage tanks are double-walled – a tank within a tank – for safety Outer walls of tanks are made of carbon steel and prestressed concrete Safety walls are built around the tanks to contain full content spill

10. Cove Point LNG Terminal LNG tanks

11. Cross-section of a Modern LNG Tank

12. Off-Loading at Cove Point

13. Is LNG Stored at Other Locations? LNG storage has become commonplace across the U.S. Today, 96 LNG liquefaction, storage, and regasification plants operate in 29 states LNG tanker trucks, governed by U.S. Department of Transportation regulations, use many highways

14. LNG Storage in the U.S.

15. Where Are U.S. Natural Gas Processing Plants Located?

16. Why is my Natural Gas Bill So High? Natural gas is now used to produce a great deal of electricity, in addition to “traditional” uses in home heating and industrial Many natural gas production fields in the U.S. and Canada produce less and less gas each year Less domestic natural gas supply and greater demand mean higher prices unless new sources, such as LNG, can be delivered

17. Natural Gas Consumption is Projected to Increase Outstripping Domestic Production

18. Why do Importers Say There is a Benefit in Importing LNG? It is becoming more difficult for producers to find natural gas in the U.S. or obtain it from Canada and Mexico Other countries have substantial natural gas but are located too far away to construct pipelines to the U.S. Natural gas is a relatively clean fuel for home heating, industrial processing and electricity production

19. Canadian and Mexican Natural Gas Exports to U.S. are Slowing

20. What are the Chief Economic Reasons for Increasing LNG Imports? More LNG increases natural gas supplies to meet U.S. demand New import facilities increases delivery capacity Expanded delivery capacity should help lower (and stabilize) heating and electricity costs

21. Does Maryland & the Mid-Atlantic Area Need Additional Natural Gas Capacity? Mid-Atlantic

22. Who Regulates LNG Safety? The FERC (Federal Energy Regulatory Commission) is responsible for permitting new LNG onshore import and export terminals The U.S. DOT (Department of Transportation) prescribes LNG and pipeline safety standards The U.S. Coast Guard is responsible for the safety of the LNG tankers

23. Why is LNG Considered Safe to Import and Use? LNG has been safely delivered across the ocean for over 40 years 33,000 LNG carrier voyages have occurred, covering more than 60 million miles, without major accidents For example, a LNG tanker enters Tokyo Bay every 20 hours with no spills The LNG industry maintains extremely high standards for safe and efficient operation The LNG industry continuously improves its operational standards

24. Why is LNG Considered to be Safe? In its liquid state, LNG is not explosive When LNG is heated and becomes a gas, the gas is not explosive if it is unconfined Natural gas is only flammable within a narrow range of concentration in the air (5% to 15%)

25. Which Studies Speak to the Safety of LNG? According to the December 2004 report issued by Sandia National Laboratory: Risks from accidental LNG spills, such as from collisions and groundings, are small and manageable within current safety policies and practices Risks from intentional events, such as terrorist acts, can be significantly reduced with modern engineering, enhanced security, planning, accident prevention, and on-going training Sandia National Laboratory primarily serves the U.S. Department of Energy

26. LNG-related Accidents: Causes and Resulting Safety Upgrades Cleveland, Ohio, 1944 Cause: Inadequate war-time material used Upgrade: High quality stainless steel and modern construction techniques now used Cove Point, Maryland, 1979 Cause: Human error and inadequate electronic monitoring Upgrade: Lessons learned led to changes in monitoring and practices that are now used industry wide Algeria, 2004 and 1977 Cause: Human error and a bad valve (1977) Cause: Improper boiler repair (2004) Upgrade: improved operating procedures

27. LNG-related Accidents: Lesson Learned • LNG accidents are rare • In spite of an excellent record, the industry has not ignored those rare incidents • The result is better containment, materials, procedures, monitoring and training • The extremely low accident rate is the result of effective, industry-wide safety efforts

28. Types of Potential LNG AccidentsExample 1: LNG Explosion • Explosions could occur if a sufficient amount of natural gas vapors release into a confined area and encounter an ignition source of sufficient strength • Just like motor gasoline, propane, or even electricity, human error can cause problems • Experience with LNG shows that this is highly unlikely because of on-going industry efforts to improve monitoring and training

29. Types of Potential LNG AccidentsExample 2: LNG “Pool” Fire As a result of an accident at sea, LNG could seep out of the breached tank and form a pool on the surface of the water As the pool forms, some of the liquid will turn into LNG vapors If an ignition source is present, vapors could ignite, resulting in the ignition of the LNG pool on the surface of the water Experience shows that this scenario is unlikely because where severe collisions have occurred, no vessel tanks leaked

30. Possible Effects of a LNG Pool-fire Within up to 4,220 feet of an LNG-related firepeople and major commercial/industrial areas could be seriously affected According to the Sandia Report, if the LNG is ignited, the impact of the fire should generally be low beyond 2,460 feet for small accidental spills and beyond 4,250 feet for large spills The proposed Sparrows Point facility would be approximately 7000 feet from the surrounding public areas

31. Effects and Types of Injuries Resulting from an LNG Pool-fire? • Radiant heat is the main hazard • Up to 2,460 feet from the fire, the predominant injuries would be third degree burns • Beyond approximately 2,460 feet victims would suffer lesser degree burns • Beyond approximately 4,250 feet there would be little or no injury or property damage

32. Is a Terrorist Attack Likely? • The U.S. will continue to face the risk of domestic terrorist attacks • The energy industry continues to take extensive steps to protect critical infrastructure • LNG components are built to much higher standards than many other energy facilities and are much harder to penetrate and damage • Creating the events necessary to cause a significant LNG incident is unlikely • No one can say a determined perpetrator would not try

33. Recapping the Benefits of LNG The potential to slow the increase, or reduce, natural gas prices in the Mid-Atlantic region and Baltimore Added assurance that there will be adequate natural gas for Maryland homes and industry Meet the growing demand for the use of natural gas to generate electricity in Maryland

34. Are There Other Benefits of LNG? Safety relative to other forms of energy such as stored motor gasoline Safety relative to other chemicals regularly shipped through the bay such as chlorine Reduced asthma and other air quality problems related to coal and oil fuels High quality, technical jobs and expertise in the local community

35. Preventing and Managing Spills • LNG tanks and tankers are built to extremely high standards. • Storage tank are built with extensive monitoring and alarm systems plus other safety installations required by the state fire marshal • Company safety procedures are promulgated, checked continuously and personnel are trained regularly • U.S. Coast Guard escorts minimize external threats

36. Final Words on LNG Safety • The industry’s operating history demonstrates that incidents at an LNG facility are extremely unlikely • The proposed facility would be constructed and managed to minimize any harm to the public • The LNG industry has a strong economic incentive to maintain and operate a safe facilities • The proposed facility would be located a safe distance from neighborhoods and businesses