Transport of Light Gases Blended with LNG

LNG Transport Industry Summary

LNG Production Worldwide

LNG supply by year: 2005 to 2013

Supply by country: 2013 YOY

Markets: 2013 YOY

LNG Tankers – Plentiful, Many Sizes LNG Sources – Growing Number LNG Receiving – Slowly Growing Number Limited Excess Capacity –Oversupply in 2008 has virtually disappeared –Lower gas cost has seen increase in LNG transport by about 40% since 2008 –US Gas Supply Increasing Promising Substantial LNG Exports within a decade Shipping LNG: Supply & Demand

226 ships built through ships built in 2007 through ships planned for delivery in 2014 or later Growing Industry & Transport Capacity

LNG Value Chain

Transport of Natural Gas costs about $3.50/MSCF using LNG from source to destination (5000 km) Natural Gas sells for about $4 to $16/MSCF ($200 to $800/tonne) Natural Gas can be bought for $1 to $4/MSCF Profit highest transporting to Far East from Middle East Cost of Transporting LNG

Established LNG Sea Links

Qatar Gas -Major LNG Source

LNG TransportEquipment

LNG Storage

LNG Terminals

The LNG Transport Cycle

Blended LNG Transport of Valuable Gases: Ethylene, Ethane, Propylene

Traditionally made from Ethane and Naphtha Cracking –Ethane reserves are falling except in USA –Ethane Uneconomical for Shipping as Gas Naphtha easily shipped to Manufacturers (has destination value) All Major Future Ethylene Production Growth in Africa, Middle East and Far East Ethylene: Prime Raw Material for Chemicals

Ethylene Production

Chemical Production needs Raw Materials

Synfuels GTE makes Ethylene from Low Cost Natural Gas Economically GTE Ethylene market needs: –Local Chemical Industry –Mode of Transport to Traditional Market Potential New Ethylene Technology

Methane - $200 to $800/tonne Ethylene - $1100 to $1600/tonne Propylene – $1600 to $2000/tonne Destination Value of Gases

Cryogenic Separation of Ethylene from LNG Chemicals made from Ethylene Ethylene Transport Using LNG Few Changes to Existing LNG Facilities are Needed

LNG Gasification Facilities Gasify LNG and Deliver Natural gas to Pipelines Ethylene/LNG Gasification Facility will Separate Ethylene from Methane –Deliver Natural Gas to Natural Gas Pipeline –Deliver Ethylene to Ethylene Pipeline Handling Ethylene/LNG Blend

Pipeline from Ethylene source to LNG Liquifaction Plant Cross exchanger for Ethylene/LNG Pumps to Move Blend to Storage Tank Optional Separate Storage Tank for Cryogenic Blend Liquifaction Equipment Additions are Minimal

Cryogenic Tower to Separate Ethylene from Natural Gas Cold Box Condenser Fin-Fan Air-heated Reboiler Ethylene Pipeline Extension at Destination Gasification Equipment Additions are Minimal

o Ship Size – 138,000 cu meters o tonnes displacement* 100% Methane $ 35.0 Million 75 wt% Ethylene $ 63.4 Million 75 wt% Propylene $ 95.1 Million All examples above for equal displacement shipping from USA to Japan Cost to manufacture ethylene and propylene set at $350/tonne Example Case - Load Value

LNG shipping capacity – 60 Million cubic meters ( 25.4 Million Tonnes) LNG annual transport – 562 Million cubic meters (237.7 Million Tonnes) Worldwide Ethylene Production – million tons per year (252 Million cubic meters) Market Opportunity is Enormous

Process Description

1.Bring ethylene by pipeline to site of existing LNG Liquefaction Plant 2.Cool and liquefy the ethylene with existing LNG refrigeration 3.Load the ethylene and LNG separately on a slightly modified LNG tanker 4.Unload the ethylene at the ethylene receiving site 5.Unload the LNG at the LNG receiving site Opportunity A (Add Synergy to Close Ethylene and LNG plants)

1.Load some LNG onto LNG Tanker from LNG production site 2.Move ship to distantethylene production site and load refrigerated ethylene into separate LNG cooled storage 3.Unload the ethylene at the ethylene receiving site 4.Unload the LNG at the LNG receiving site Opportunity B (Utilize far apart LNG and ethylene plants)

1.Bring ethylene by pipeline to site of existing LNG Liquifaction Plant 2.Cool and liquify the ethylene with existing LNG refrigeration 3.Blend the ethylene with LNG and ship in existing LNG tanker 4.Separate blend at receiving site Opportunity C (Simplify Transport through Blending)

Potential GTE/LNG Sites Co-Locations of Ethylene production and LNG Loading (Blue) and Receiving (Green)