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Presentation to the Committee of 100 Sabine Pass LNG and Liquefaction Pat Outtrim Vice President – Government and Regulatory Affairs February 8, 2012.

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Presentation on theme: "Presentation to the Committee of 100 Sabine Pass LNG and Liquefaction Pat Outtrim Vice President – Government and Regulatory Affairs February 8, 2012."— Presentation transcript:

1 Presentation to the Committee of 100 Sabine Pass LNG and Liquefaction Pat Outtrim Vice President – Government and Regulatory Affairs February 8, 2012

2 2 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 1933, 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 that we expect to commence or complete construction of a liquefaction facility by certain dates, or at all;  Statements that we expect to receive authorization from the Federal Energy Regulatory Commission, or FERC, or the Department of Energy, or DOE to construct and operate a proposed liquefaction facility by a certain date, or at all;  Statements regarding future levels of domestic or foreign natural gas production and consumption, or the future level of LNG imports into North America or exports from the U.S., or regarding projected future capacity of liquefaction or regasification facilities worldwide;  Statements regarding any financing transactions or arrangements, whether on the part of Cheniere or at the project level;  Statements regarding any commercial arrangements marketed or potential arrangements to be performed 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 that our proposed liquefaction facility, when completed, will have certain characteristics, including a number of trains;  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. and Cheniere Energy Partners, L.P. Current Reports on Form 8-K filed with the Securities and Exchange Commission, 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. Forward Looking Statements 1

3 3 In the Beginning…  Cheniere Energy was formed in 1996 to fund an exploration project, “the Cameron Project”, to evaluate, explore and develop drilling prospects in southwest Louisiana  Two gas discoveries were made – “Redfish” and “Stingray”  By 1999 the company had licensed 8,800 square miles of seismic data and reprocessed this data using cutting edge technology  By the late 1990’s natural gas drilling was yielding less production per well at higher costs suggesting gas production could not sustain the growing U.S. demand and providing an opportunity to import LNG  By 2001 Cheniere had assembled an experienced LNG project development team to evaluate the economic feasibility of delivering LNG to North America  This team then began to evaluate suitable locations to construct one of the first new LNG import terminals in more than 25 years

4 4 U.S. Gas Pipeline System Gulf Coast-centered transmission system reaches all US markets Terminal Capacity Holder Baseload Sendout (MMcf/d) Canaport 1,000 Repsol Everett - Suez 700 Cove Point 1,800 BP, Statoil, Shell Elba Island 1,800 BG, Marathon, Shell Gulf LNG 1,300 Angola LNG, ENI Lake Charles - BG 1,800 Freeport 1,500 ConocoPhillips, Dow, Mitsui Sabine Pass 4,000 Total, Chevron, Cheniere Cameron 1,500 Sempra, ENI Golden Pass 2,000 ExxonMobil, ConocoPhillips, QP Altamira 700 Shell, Total Costa Azul 1,000 Shell, Sempra, Gazprom Total 19,100 Everett Cove Point Elba Island Lake Charles Sabine Pass Freeport Golden Pass Cameron Costa Azul Canaport Altamira Gulf LNG

5 5  Operational since 2008  Cost ~$1.6 billion  Vaporization –~4.3 Bcf/d peak send-out  Storage –5 tanks x 160,000 cm (16.9 Bcfe)  Berthing / Unloading –Two docks –LNG carriers up to 267,000 cm –Four dedicated tugs  Land –1000 acres in Cameron Parish, LA  Accessibility – Deep Water Ship Channel –Sabine River Channel dredged to 40 feet  Proximity –3.7 nautical miles from coast –22.8 nautical miles from outer buoy  LNG Re-Exporting Capability Sabine Pass LNG Aerial view of Sabine Pass LNG Terminal 3

6 6 Cheniere in the Community  Cheniere has invested over $6 million in surrounding communities  Major Projects: Johnson Bayou Rural Health Clinic, Economic Development and Planning Office  PILOT Program: Providing advance tax payments to Cameron Parish in the aftermath of Hurricane Rita

7 7 Sabine Pass LNG The Shale Gas Revolution

8 8 TCF U.S. Natural Gas Resource Base 2,612 TCF of total recoverable reserves 700 TCF recoverable shales 400 TCF of shales economical below $6/MMBtu U.S. Natural Gas Resource Base 2,612 TCF of total recoverable reserves 700 TCF recoverable shales 400 TCF of shales economical below $6/MMBtu 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) 1,216 Tcf Unconventional 272 Tcf Proved Reserves 1,124 Tcf Conventional Global Natural Gas Reserves Unconventional gas is abundant globally, but only the U.S. has the technical capability to develop at present

9 9 U.S. Gas Consumption vs. Production Source: EIA historical, September 2011 Short-Term Energy Outlook (2011 data) Hot Summer & Cold Winter  Since 2005 U.S. production growth ~ 4.9 Tcf vs. demand growth ~ 2.6 Tcf  Net imports declined ~1.6 Tcf (-50%) over the period  ~ 1 Tcf production added each year since 2006  The U.S. is on pace to be a net gas exporter by mid-decade US Gas Production 18.0 18.5 19.3 20.1 20.6 21.6 22.9 22.0 21.7 23.1 23.2 22.8 24.1 24.6 0 5 10 15 20 25 30 2005200620072008200920102011E Tcf U.S. Gas Consumption U.S. Gas Production

10 10 Resulting Productive Capacity Estimates Vast  Existing conventional production to continue declining from current 40% share of supply  Unconventional production, led by gains in gas shales, projected to achieve capacity of 50+ Bcf/d  Total North American productive capacity 90+ Bcf/d by 2020 Unconventional gas is currently a critical component of U.S. supply and will continue to grow into the future $6.50 HH Price $5.50 to $7.00 HH Price

11 11 Gas Substitution in Transportation Sector ~40 Bcf/d Surplus with NGV Subsidy Production Data: EIA (2005-2010), Advanced Resources Intl "US Natural Gas Resources and Productive Capacity mid-2010 Update" (Post-2010), August 2010. NGV Data: EIA AEO 2010 Alternative Case – “Natural gas as a fuel for heavy trucks” 2027 Incentive Phaseout Case Actual Projected @ $7/Mcf  U.S. NGV demand w/heavy subsidies would reach 4 Bcf/d by 2032 – 21 years (EIA forecast)  Louisiana gas production +4 Bcf/d in 2 years  U.S. gas production +4 Bcf/d in 1 year

12 12 Gas Use in US Power Generation Sector Actual Projected @ $7/Mcf Production Data: EIA (2005-2010), Advanced Resources Intl "US Natural Gas Resources and Productive Capacity mid-2010 Update,“ August 2010 (Post-2010). Powergen Data: EIA AEO 2011 Reference Case; Navigant Consulting Inc.’s Spring 2010 Reference Case, "Market Analysis for Sabine Pass LNG Export Project", August 23, 2010 ~26 Bcf/d surplus with CO 2 limits  $4 gas prices have caused ~2.5 Bcf/d of coal switching – not sufficient to absorb supply growth  Near-term switching limited by 40+ GW of modern coal & renewables due online thru 2015

13 13 Sabine Pass LNG The Future

14 14 Proposed SPL Project: Brownfield Development Utilizing Existing Assets Current Facility  1000 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 US pipeline network Liquefaction Expansion  Construction contract w/Bechtel for Phase 1  Up to four liquefaction trains designed with ConocoPhillips’ Optimized Cascade® Process technology  Six GE LM2500+ G4 gas turbine driven refrigerant compressors per train  Gas treating and environmental compliance  Modifications to the Creole Trail Pipeline for bi-directional service  Sixth tank if needed for fourth train Significant infrastructure in place including storage, marine and pipeline interconnection facilities; pipeline quality natural gas to be sourced from U.S. pipeline network

15 15 Sabine Pass Liquefaction Infrastructure and Jobs  Infrastructure Investment ~ $10 B including –$2.3 B materials & equipment –Over $2 B potential U.S. sourced equipment –More than $1 B construction wages/benefits  Direct Jobs –100-200 permanent jobs at the terminal –Average construction jobs of 1,800 for four to six years –Peak of 3,000 –13 million man-hours  Indirect Jobs –Will support ~50,000 permanent jobs in natural gas industry –Construction timeline 2012-2018

16 16 Sabine Pass Liquefaction Approximate Project Timeline – Trains 1 & 2 2010 NEPA Notice (beginning of 6 month consultation period w. FERC) Initial commercial discussions with counterparties under CA Initial discussions with local, political, and regulatory constituents Public Announcement 2011 2012 2015 File FERC Application Obtain construction financing commitments FERC Authorization to Commence Construction Full Notice to Proceed for EPC Commence Full Commercial Bi- directional Service NOTE: Timeline represents an estimate of expected events and is continually changing. Actions outlined in red are completed. Start up Liquefaction Train 1 All Permits granted DOE Authorization to export LNG to Free Trade countries As of January 2012 FEED Complete Sales Purchase Agreeme nts Signed Train 2 will start up 6 to 9 months after Train 1. Trains 3 and 4 start up will be similarly staggered. DOE Authorization to export LNG to non-Free Trade countries File DOE Applications to export LNG produced in USA

17 17 Sabine Pass LNG The Case For LNG Exports

18 18 Cove Point Lake Charles Sabine Pass Cameron Export Terminals Source: Office of Oil and Gas Global Security and Supply, Office of Fossil Energy, U.S. Department of Energy; U.S. Federal Energy Regulatory Commission U.S. LNG Export Projects Jordan Cove CompanyCapacity (Bcf/d) DOE Filing FERC Filing Sabine Pass Liquefaction 2.2 Corpus Christi Liquefaction 1.8 * Freeport LNG Expansion 2.8 * Lake Charles Exports 2.0 Dominion Cove Point 1.0 Jordan Cove Energy Project 1.2 Cameron LNG 1.7 Gulf Coast LNG Export 2.8 Freeport Corpus Christi Gulf LNG * FERC Pre-Filing Process

19 19 Attractive Oil Linked Market Prices ~ 12% – 15% of Oil Prices Source: PIRA, Platts $3.85 $9.51 $14.97 $12.45 Regional Natural Gas & LNG Prices 0 6 12 18 Jan-04 Mar-04 May-04 Jul-04 Sep-04 Nov-04 Jan-05 Mar-05 May-05 Jul-05 Sep-05 Nov-05 Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 $/MMBtu NBPIFERC HH MonthlyJapan avg LNGEuropean Gas Contract Spread between oil linked and U.S. natural gas prices averaging $9–$11/mmbtu

20 20 Europe - LNG Import Terminals (Bcf/d) 10.14 5.46 Mediterranean 20092015 2.39 2.53 5.92 NW Europe 20092015 2 3.42 7.68 UK & Ireland 20092015 2009 LNG Imports 6.8 Bcf/d LNG Terminals (Bcf/d) Existing 16.09 Firm 7.50 Proposed 19.06 Total 42.65 3.11 Current Importers Potential Importers BelgiumBulgaria FranceCroatia GreeceCyprus ItalyGermany Netherlands*Ireland PortugalPoland SpainRomania TurkeySweden UKUkraine

21 21 Asia – Emerging Markets Krishna Godavari Basin 2.5 1.1 Central Asia 11 Proved* China West-East #2 Pipeline +2.9 Bcf/d China West-East #2 Pipeline +2.9 Bcf/d Turkmenistan- China Pipeline +3 Bcf/d Turkmenistan- China Pipeline +3 Bcf/d Unconventional Gas Potential Proved Reserves (Tcm) Major Pipelines 22.5 26 131 India KJV Pipeline +2.8 Bcf/d India KJV Pipeline +2.8 Bcf/d 20092020 LNG Terminals (Bcf/d) Existing Under Construction Planned

22 22 Regas Terminals in Latin LNG Terminals (Bcf/d) Existing Firm Proposed 0.5 3.4 6.4 20092015 Current ImportersPotential Importers Argentina Brazil Chile Dominican Republic Mexico Puerto Rico Honduras Jamaica Uruguay Pipelines Existing Under Construction 17 234 12 Proved Reserves (Tcf) 13 Source: BP Statistical Review 2011, Cheniere Research

23 23 Expanding U.S. Natural Gas Exports Will…  Promote stability in domestic natural gas pricing by raising domestic natural gas productive capacity; and  Stimulate state, regional and national economies through job creation, increased economic activity and tax revenues, including the direct creation of approximately 3,000 engineering and construction jobs during the course of the project and, indirectly, 30,000 - 50,000 permanent jobs in the exploration and production sector  Reduced reliance on foreign sources of oil by promoting domestic production of petroleum and by encouraging the drilling of wells in areas where there is a significant amount of natural gas associated with crude oil and natural gas liquids (“NGL”)

24 24 Expanding U.S. Natural Gas Exports Will…  Improve U.S. balance of payments through the exportation of approximately 2 Bcf/d of natural gas valued at approximately $5 billion, and the displacement of $1.7 billion in NGL imports thus furthering the President’s National Export Initiative  Promote liberalization of the global natural gas trade through the fostering of a global, liquid market, based on prices cleared in free and openly traded natural gas markets  Advance national security and the security of U.S. allies through diversification of global natural gas supplies  Increase economic trade and ties with foreign nations, including neighboring countries in the Americas, and displace environmentally damaging fuels in those countries

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