UNCTAD 11 th Oil & Gas, Trade & Finance Conference Nairobi, 23 rd May 2007 Options for stranded gas in Africa – the CNG alternative Angus Campbell Head of OSG Gas DAY 1, Session 3, Room B, 14: 00 – 15:30 NOT AN OFFICIAL UNCTAD RECORD

Overseas Shipholding Group - OSG Market leader in providing marine energy transportation services and solutions. Controlled, dual flagged fleet, of 105 vessels; in excess of 12m DWT. 39 new builds / rebuilds under construction in Korea, China, Japan and the United States. Focused on four market sectors: Crude, Products, U.S. Flag and Gas. Our goal is to achieve market leading positions in all sectors. Global Operations, listed on NYSE since 1973, second largest publicly traded tanker company in the world. 3,980 employees (3,579 seagoing personnel and 401 shore side staff).

OSG – operational performance

TransCanada introduction Competitively positioned in natural gas transmission & power services $25.9 billion of premium pipe and power assets ($US at Dec. 31, 2006) Skilled, expert people with strong technical knowledge Strong financial position Leading North American energy company

TransCanada – extensive energy network approx. 59,000 km (36,500 miles) of wholly owned pipeline. transports 15 billion cubic feet/day (Bcf/d) from virtually all major supply basins on the continent. 2,969 km of proposed oil pipeline, capable of transporting 435,000 barrels per day. 16 power facilities with 7,700 megawatts of power generation. two proposed liquefied natural gas facilities total capacity 1.5 Bcf/d. significant gas storage capacity in Canada and the United States, 360 Bcf.

Safe and reliable delivery of energy TransCanada and OSG joined forces to provide a complete CNG marine transport service to customers worldwide. TransCanada and OSG  have well respected and established management organizations with extensive technical support, leadership and expertise.  are committed to high standards for environmental and safety performance and have records and operating standards that confirm this commitment.  are financially capable and able to achieve competitive financing structures for any CNG transport solution.  are committed to long term energy transportation.

The TransCanada/OSG partnership

Energy demand - the role of natural gas. “World energy consumption is projected to increase by 71% from 2003 – 2030” Source: EIA International Energy Outlook Environmentally attractive primary energy source, providing 26% of world energy needs by Many fields are too small and remote from markets to be economically developed for pipelines or LNG. This is the niche that marine CNG occupies.

Energy demand – stranded gas? Definition: reserves discovered but not developed for physical or economic reasons. On a global scale, this represents a huge energy resource. Increased demand and rising costs drive the search for new solutions. Marine CNG is the key to unlock this resource.

Stranded gas in sub-Saharan Africa Rovuma Basin Orange Basin

Economic volume and distance for CNG transportation

More flexible than LNG Market location Gas field location Gas field characteristics Project portability Handles both lean and rich gas Smaller gas processing overhead compared with LNG More energy efficient process than LNG - energy loss (5-8% vs. 15%) Source : DNV Key drivers for marine CNG

High energy costs driven by oil price. Increase in global gas demand/price. Increase and more interest in gas discoveries. Power and industrial plant fuel replacement. Anti-flaring regulations/Kyoto accord. Government directives/incentives for cleaner fuels. The ability to provide secure and reliable delivery. Key drivers for marine CNG

Bulk CNG transportation – robust and proven process NPT was a subsidiary of NOVA Corporation, a part of the present day TransCanada.

Bulk CNG transportation – robust and proven process Compression Loading/Unloading Delivery Station

Marine CNG transportation

Marine CNG training facility

Marine CNG system – typical process schematic

Gas Transport Module (GTM) – fully tested and approved Prototype under test Demonstration Unit ASME Code Case #2390 approval - October 2002 All containment system testing completed in 2001

GTM general layout

Larger size and lower cost than conventional seamless tube steel and all composite gas cylinders; minimizes valving and manifolding. GTMs are up to 40% lighter than an all-steel pressure vessel of the same rating. Ships operate at ambient temperature so require no complicated loading schemes or refrigerated hold. Loading facilities require only compression, cooling, dehydration, and loading connections - similar to offshore crude loading. Unloading facilities require letdown station, compression and unloading connections. GTM system advantages

Simplicity of system provides low initial capital commitment to initiate gas flow. Easily developed by adding ships and additional loading facilities to increase gas deliveries. Flexibility of system allows ships to be re-deployed to other production areas or markets when no longer needed. Simplicity of loading and unloading facilities means little stranded capital. GTM system advantages

Pressure vessel manufacture. Deep Water Loading, Unloading and Ship Outfitting Capability World Class Facility: ASME Section VIII, Div 3 and Section X Manufacturing License awarded to FPC Inc. – Plant Developed in Saint John, New Brunswick, Canada.

Flexible delivery - the GTM truck trailer Volume: up to 250,000scf (7,100 m3) Weight: ~ 42 tonnes Length: 20 ft - 45 ft Number of GTMs: 2 or 3 ISO Container Frame Standard ISO Container Chassis Trailer

Flexible delivery – the GTM ISO container Volume: up to 250,000scf (7,100 m3) Weight: ~ 29 tonnes Length: ft Number of GTMs: 2 or 3

Conclusion – the CNG alternative works for Africa Natural gas is the fastest growing primary energy source. Many fields too small to be developed for LNG or too far for pipelines. Marine CNG can supply to stranded markets without the need for expensive infrastructure. Fuel replacement projects are ideal for marine CNG and can provide local solutions for local markets. Stimulation of economic and industrial growth.

The driving force to deliver Africa’s stranded gas? Length Over All Appr.: 149,90 m Length Between P.P.: 142,00 m Breadth mld.: 23,50 m Depth to double bottom: 2,00 m Depth mld. to Main Deck: 15,00 m Draught Design : 7,50 m Draught Summer / Scantling : 8,00 m Hull Displacement : tons