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LNG A BRIDGE TO OUR ENERGY FUTURE

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411. 204. 198. 125. Total. Industrial Market. 6.3 Tcf (17.2 Bcf/d) 2002. 1.1 ... Canada. Mexico. Southeast. Gulf Coast. Cheniere's receipt network provides ... – PowerPoint PPT presentation

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Title: LNG A BRIDGE TO OUR ENERGY FUTURE


1
LNG A BRIDGE TO OUR ENERGY FUTURE
  • PAT OUTTRIM
  • VICE PRESIDENT GOVERNMENTAL REGULATORY AFFAIRS

2
Safe Harbor Act
  • 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 and Section
    21E of the Securities Exchange Act of 1934, as
    amended, or the Exchange Act. All statements,
    other than statements of historical facts,
    included herein are forward-looking statements.
    Included among forward-looking statements are,
    among other things
  • statements that we expect to commence or
    complete construction of each or any of our
    proposed liquefied natural gas, or LNG, receiving
    terminals by certain dates, or at all
  • statements that we expect to receive
    authorization from the Federal Energy Regulatory
    Commission, or FERC, to construct and operate
    proposed LNG receiving terminals by a
    certain date, or at all
  • statements regarding future levels of domestic
    natural gas production and consumption, or the
    future level of LNG imports into North America,
    or regarding projected future capacity of
    liquefaction or regasification facilities
    worldwide regardless of the source of such
    information
  • statements regarding any financing transactions
    or arrangements, whether on the part of Cheniere
    or at the project level
  • statements relating to the construction of our
    proposed LNG receiving terminals, including
    statements concerning estimated costs, and the
    engagement of any EPC contractor
  • statements regarding any Terminal Use
    Agreement, or TUA, or other commercial
    arrangements presently contracted, optioned,
    marketed or potential arrangements to be
    performed substantially in the future,
    including any cash distributions and revenues
    anticipated to be received statements regarding
    the commercial terms and potential revenues from
    activities described in this presentation
  • statements regarding the commercial terms or
    potential revenue from any arrangements which may
    arise from the marketing of uncommitted
    capacity from any of the terminals, including the
    Creole Trail and Corpus Christi terminals which
    do not currently have contractual commitments
  • statements regarding the commercial terms or
    potential revenue from any arrangement relating
    to the proposed contracting for excess or
    expansion capacity for the Sabine Pass LNG
    Terminal or the Indexed Purchase Agreement
    (IPA) Examples described in this presentation
  • statements that our proposed LNG receiving
    terminals, when completed, will have certain
    characteristics, including amounts of
    regasification and storage capacities, a
    number of storage tanks and docks and pipeline
    interconnections
  • statements regarding Cheniere and Cheniere
    Marketing forecasts, and any potential revenues
    and capital expenditures which may be derived
    from any of Cheniere business groups
  • statements regarding Cheniere Pipeline Company,
    and the capital expenditures and potential
    revenues related to this business group
    statements regarding our proposed LNG
    receiving terminals access to existing
    pipelines, and their ability to obtain
    transportation capacity on existing pipelines
  • statements regarding possible expansions of the
    currently projected size of any of our proposed
    LNG receiving terminals
  • statements regarding the payment by Cheniere
    Energy Partners, L.P. of cash distributions
  • statements regarding our business strategy, our
    business plan or any other plans, forecasts,
    examples, models, forecasts or objectives any or
    all of which are subject to change
  • statements regarding estimated corporate
    overhead expenses and
  • any other statements that relate to
    non-historical information.
  • These forward-looking statements are often
    identified by the use of terms and phrases such
    as achieve, anticipate, believe,
    estimate, example, expect, forecast,
    opportunities, plan, potential, project,
    propose, subject to, and similar terms and
    phrases. 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. Annual Report on Form 10-K for the
    year ended December 31, 2006, 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, and we
    undertake no obligation to publicly update or
    revise any forward-looking statements.

3
CERA/IHS North American Production Not
Sustainable _at_ 10/Mcf
Lower 48 Canada Productive Capacity
75
70
65
60
55
50
45
Note Prices for a 10 rate of return
40
4.00
6.00
8.00
10.00
4
New Supply Must Come from New Areas
We've got to make sure that we have enough
natural gas to meet our home heating and
industrial needs. And one of the best ways to
secure supply is to expand our ability to
receive liquefied natural gas. President Bush,
February 20, 2006
Arctic Gas
Our limited capacity to import liquefied
natural gas effectively restricts our access to
the worlds abundant supplies of natural gas
Alan Greenspan, Former Federal Reserve Chairman,
May 21, 2003
Building LNG terminals is one thing that we can
do and we should continue to do to create a
more global market for natural gas, Ben
Bernanke, Federal Reserve Chairman, February 15,
2006
Rockies
LNG
LNG
Deep Gulf
5
What Is Liquefied Natural Gas (LNG)?
  • LNG is natural gas that has been super-cooled to
    -260F 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

6
Production and Imports vs. Consumption
Replace production decline consumption growth
15 Bcf/d Forecast at average 6.00 HH per MMBtu
70
3 Bcf/d
60
LNG
Canadian Imports
12 Bcf/d
50
Lower- 48 Production
40
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Dry Production
Pipe Imports
LNG Imports
Consumption
Source Lower- 48 IHS 2006 Canadian Imports
Consumption EIA, AEO 2006
7
New Liquefaction Competes for Market Share
Existing Liquefaction
Under Construction
Proposed Liquefaction
Atlantic Basin 12 Bcf/d
2005 Europe 4.7 Bcf/d
2005 NA 1.8 Bcf/d
ME Gulf 11 Bcf/d
Asia Pacific 13 Bcf/d
2005 12.3 Bcf/d
Bcf/d Liquefaction Capacity
45
35
36
35
30
25
26
24
23
15
5
Source CERA, Cheniere Research
2005
2006
2007
2008
2009
2010
8
Major Players Global LNG Supply
Qatar
Nigeria
Tier 1
Russia
?
Iran
Australia
Indonesia
Tier 2
Algeria
Trinidad
Malaysia
Egypt
Tier 3
Other
Tier 3 Oman, Brunei, Yemen, Norway, Libya,
Eq.Guinea, Abu Dhabi, Angola, Peru, USA
0
2
4
6
8
10
12
Bcf/d
Source Cheniere Research
9
Liquefaction Growth
  • Global liquefaction capacity in 2005 was 23 Bcf/d
  • Liquefaction in 2010 is estimated to be 36 Bcf/d
  • Growth in liquefaction is 13 Bcf/d
  • Where will it go?

10
NYMEX vs. NBP May 30, 2007
Historical Data Futures as of 05/30/07
11
LNG Trade Today
Source CERA, 2006
12
LNG Trade 2010
Source CERA, 2006
13
North America Onshore Regasification Capacity By
2010
15.8 Bcf/d North American Atlantic Basin
capacity _at_ 65 utilization 10.3 Bcf/d
Canaport
Everett
Cove Point
Elba Island
Sabine Pass
Golden Pass
Costa Azúl
Lake Charles
Freeport
Cameron
Altamira
Existing Under Construction
Source Websites of Terminal Owners, Wood
Mackenzie Limited, Poten Partners
14
LNG IMPORTS BENEFIT THE STATES
  • Increased supply results in downward pressure on
    price.
  • Gas is the near term fuel for electric generation
    as coal plants are canceled across the nation and
    nuclear plants are slow to develop.
  • Renewable energy is years away from making a
    substantial impact in the total amount of power.
  • Gas is the cleanest fossil fuel.
  • Gas is vital for industrial processes.

15
Industrial Sector Gas ConsumptionManufacturing -
Detail
Bcf
2002
2,500
Total Industrial Market 6.3 Tcf (17.2 Bcf/d)
2,246
2,000
1,500
1,000
854
686
567
490
500
411
204
198
125
0
Chemicals
Petroleum Coal
Primary Metals
Food
Paper
Nonmetallic Mineral
Fabricated Metal
Transportation Equipment
Plastics Rubber
Source EIA, Manufacturing Energy Consumption
Survey, 2002
16
Logic Of U.S. Gulf Coast As Preferred Destination
2005
  • Depth of U.S. Gulf Coast market
  • Pipeline takeaway to all major North American
    markets
  • Complimentary seasonal peak

0.7
0.2
0.6
3.0
1.0
1.9
10
1.7
0.8
6.1
0.6
0.5
In Bcf/d
9.9
3.5
1.1
1.0
Top 5 Coastal Consumers TX, CA, LA, NY, FLA
Creole Trail
2.1
Sabine Pass
Source EIA, Natural Gas Annual 2006
Corpus Christi
17
GETTING REAL ABOUT THE ENVIRONMENT
  • The McCain Lieberman Climate Act
    (S.280)estimate a reduction in natural gas
    consumption by 2030.
  • Also an addition of 145 new Nuclear power plants.
  • Wind generation of 38GW. 2X historical build
    rate.
  • Biomass generation growing from 2GW. To 112GW.
  • Today wind and solar together account for ½ of
    1.
  • The Natural gas Council estimates gas consumption
    will in fact increase 20 from 2019 to 2030.
  • Global CO2 emissions are growing faster in
    nondeveloped countries than in the developed
    world.

18
WHAT ROLE FOR THE STATES?
  • Promote diverse energy portfolios that include
    LNG as a key component.
  • Support longer term contracts for LDCs that
    attract LNG supplies.
  • Recognize the global supply market and become a
    player.
  • Encourage realistic Greenhouse Gas assumptions.

19
Cheniere LNG Receiving Terminals
  • 4 Deep water channels
  • 7 Unloading Docks
  • 15 Storage Tanks (51 Bcf equivalent)
  • 11.4 Bcf/d Regas Capacity

Midwest Canada
Northeast
Fully Permitted
Sabine Pass 4.0 Bcf/d
Southeast
  • 274 Miles of pipeline
  • 42 - 48 diameter
  • 20 Bcf/d interconnect capacity

Gulf Coast
Under Construction
Gulf of Mexico
Mexico
Chenieres receipt network provides high
reliability and liquidity
Fully Permitted
20
Sabine Pass Terminal ConstructionJanuary 2008
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