CNG Transportation Pakistans Natural Gas Solution

Pakistan Energy Conference April 2011

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The TransCanada/OSG Partnership

The Partnership between

World-class delivery of energy

Well respected and established organizations with extensive technical support, leadership and expertise. Committed to high standards for environmental and safety performance and have reputations and operating standards that confirm this commitment. TransCanada and OSG joined forces to provide a complete CNG marine transportation service to customers worldwide. Financially strong and able to achieve competitive finance and contract structures for any CNG transport solution. Committed to long term energy transportation OSG has minority ownership of Canadian manufacturer FPC Inc.

TransCanada Leading Energy Infrastructure Company

Competitively positioned in pipeline and energy infrastructure Employs approximately 3,600 people in nearly 50 professions, trades and fields Strong financial position (TRP) listed TSX and NYSE Total assets (1) $30 billion Net income (1)(2) $1,223 million Net income per share (1)(2) $2.31 Funds generated from operations (1) $2.6 billion

(1) $Cdn at December 31, 2007. (2) Includes income tax adjustments and a gain on sale of land. Excluding these items, comparable earnings were 1,107 million or $2.09 per share.
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TransCanada Corporation (TSX/NYSE: TRP)

Pipelines Proposed Pipelines Power Plants Gas Storage Facilities LNG Terminals (Proposed)

Portfolio of Quality Assets

59,000 km (36,500 mi) of wholly owned pipeline Interests in an additional 7,800 km (4,800 mi) of pipeline 15 Bcf/d 355 Bcf of natural gas storage capacity 18 power plants* 10,800 megawatts* Crude oil pipeline project and two proposed LNG terminals
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* includes recently closed Ravenswood acquisition (2,480 MW)

Overseas Shipholding Group - OSG

Market leader providing marine energy transportation services. Controlled fleet of 120 vessels; in excess of 12.7m DWT (excl new builds). 37 new builds under construction in Korea, China, Japan and the U.S. Focused on four market sectors: Gas, Crude, Products and U.S. Flag. 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. 4,000 employees (about 3,600 seagoing and about 400 shore staff).

Floating Pipeline Company

Exclusive North American TCI Pressure Vessel Manufacturer Plant in Saint John, New Brunswick, Canada Deep Water Loading, Unloading and Ship Outfitting Capability World Class Facility: ASME Section VIII, Div 3 and Section X

FPC Products Supplied Worldwide

Marine Transport Unit Light weight fibreglass reinforced steel pressure vessel Built to ASME Pressure vessel code and classified by ABS and Lloyds Register Road Transport Unit New light weight trailer for CNG road transport ABS Certified
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PROGAS ENERGY HUB

Located at Port Qasim in close proximity to Karachi and well connected to the rest of Pakistan the Progas Energy Hub has been set up to meet the growing needs of Pakistans energy sector The terminal has been set up with a view to being able to handle: LPG LNG CNG Other liquid hydrocarbons

Progas Jetty

Jetty to receive up to 15,000 DWT vessels

Annual throughput capacity 2,000,000 MT of LPG

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Progas Trestle & LPG Pipeline

3.5 km trestle / LPG pipeline for transfer of LPG from vessel to storage farm

Annual throughput capacity 2 million tonnes of LPG

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Progas Storage & Infrastructure

Pakistans largest LPG storage 6,530 MT at Port Qasim

2 spheres of 1,000 MT each 3 spheres of 1,500 MT each 1 day tank of 30 MT

LPG overland import facility at Taftan with capacity to handle 100 MT storage

Annual throughput capacity over 350,000 MT/ annum

Two further plants at Muridke and Haripur

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LPG logistics infrastructure

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CNG Introduction It is not Liquefied Natural Gas!

Simply natural gas compressed to a pressure typically between 3,000 to 3,600 psig
Operates at ambient temperature Utilizes large pressure vessels, manufactured by FPC under license from TransCanada, to store the compressed gas on marine carriers Same as CNG used in 1.5 million +vehicles in Pakistan

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Generic CNG Project Value Chain

Upstream Facilities Loading Marine Transportation System Unloading Pipeline to Powerplant

The CNG project value chain is a flexible and easily managed one needing only compression and GTMs. From loading where no liquefaction is needed as in the LNG value chain to the unloading facilities where no regasification is required the entire CNG value chain is a simple low energy and low capital intense business model.

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TCI marine CNG system - general layout

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TCI System Advantages

Simplicity of system provides low initial capital commitment to initiate gas flow. Easily scalable 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. Economic over large range of flows and transport distances lower volume and distance thresholds than LNG.

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TCI System Advantages

Larger size and lower cost than conventional seamless tube steel and all composite gas cylinders; minimizes valving and manifolding. TCI pressure vessels 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. Emergency depressuring will not result in unsafe low temperature conditions in the vessels. Loading facilities require only compression, cooling, dehydration, and loading connections - similar to offshore crude loading. Unloading facilities require letdown station, compression and unloading connections.
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Safety Systems
SOLAS and IGC (where applicable) Compliant Containment system extremely fracture resistant Open hold design with environmental protection and ventilation meeting Class Society requirements Safety procedures for hold entry Regular inspection of all systems by crew Gas Detection Fire Detection Containment System Isolation and De-pressurization O2 Monitors in Hold

Hold Deluge Systems and Bilging

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Operations Training and Support

Safety is a cornerstone of TransCanada/OSG operating philosophy Training of crew/staff of marine transportation operator during execution phase at TransCanada training facility in Canada Gas safety, handling, gas loading and unloading, operational training and emergency procedures Gas maintenance practices, troubleshooting, monitoring and simulations Hands on training in operating facilities with the same process conditions as on the ship

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Key component - marine CNG training

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TCI CNG System Approvals and Standards

American Bureau of Shipping (ABS) approval for inland barge use November 2001 Approval in Principle (AIP) of GTM based ocean going carriers received from Lloyds Register - September 2003

DNV Rules for Compressed Natural Gas Carriers

Revision 1 October 2002 for external hearing

Det Norske Veritas

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Key Drivers for Marine CNG

Record high petroleum products pricing with oil >>$100US Increase in global gas demand/price Increase and more interest in gas discoveries Power plant fuel replacement imported oil results in electricity charges >>$0.30US/kwh Anti-flaring regulations/Kyoto Government directives/incentives for CNG vehicle use CNG a local solution with price determined by regional market CNG can provide a secure and reliable delivery Diversification of energy sources Locally available gas not subject to dynamics and volatility of global gas markets
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Marine CNG Applications

Stranded and Associated gas Stranded Markets Incremental capacity Provide seed gas to create the market to support a pipeline May replace need for a pipeline Provides more market flexibility Can be moved to other fields at end of life Pipeline environmental and political issues avoided CNG well suited for broader list of reserves smaller than required for LNG Reduced capital and operating costs versus LNG

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CNG Marine Transport Market

CNG Marine is more efficient than LNG or pipelines in a medium distance between supply and market Is the optimum way to connect close supply to market (200 to 2500 nautical miles Is the ideal application for close regional markets:

Low Political Risk 85% of CNG value chain is moveable Small onshore investments Has flexibility to serve multiple supplies and markets and Is not restricted by physical barriers (sea depth and mountains) Can monetize smaller reserves not suitable for 25 pipelines or LNG

Economic Volume and Distance for CNG Transportation

Economic Volume and Distance for CNG Transport

2500

New LNG
2000 D n (na tic l m s) ista ce u a ile

1500

Marine CNG
1000

Marine CNG or Pipelines

500

0 0 200 400 600 Volume (mmscfd)

Pipelines
800 1000

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Pakistan Energy Demand

Energy demand will increase 45% over next 20 years with natural gas expected to make gains in displacing coal and oil as an energy source. Pakistan is #1 in CNG use in world with public acceptance, government encouragement and therefore high demand 10% of energy consumption (300mmscfd) used by CNG vehicles Marine CNG imports can deliver quicker than pipelines or LNG to help meet Pakistans liquid fuel displacement goals

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Current World Energy Markets

Increasing gas demand (LNG) sellers market Spot Market LNG prices >>$18 US /mmbtu ( Jan. 2008) At $90 US bbl oil ~ $15.50 US/mmbtu natural gas Woodside deal with Taiwans CPC @ $23.50 US /mmbtu Long term contracts in $10-$12 US / mmbtu range Gas prices rising due to escalating oil prices Power plant strategy to utilize gas to displace oil therefore CNG can monetize stranded gas as part of energy solution There is a convergence in all hydrocarbon pricing which means that natural gas is the preferred clean fuel alternative for power generation

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Power Plant Fuel Replacement

Power plants consider fuel oil/diesel replacement with gas Conversion costs to convert burners to gas 650 mscmd fuels 100 Mw (33% efficient) Most fuel replacement projects in 425 - 2,125 mscmd gas use Fuel oil/diesel ranges from $9 - $24 US/MMBtu >>$0.30 US kwh Gas producer negotiates delivered gas price, including gas transportation most often as a percentage of existing delivered fuel price Power plant volume will underpin CNG development for industrial use and vehicles in local area Green benefits converting from liquid fuels to CNG

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Marine CNG Pakistan Project

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Marine CNG Pakistan Project

Import 500 MMscfd per day to Karachi Progas facilities TCI marine CNG transportation system involves 8 ships with 1 filling, 3 full ships in transit, 1 ship unloading and 3 empty ships in transit More cost effective toll than either LNG or pipeline delivery First gas deliveries occur 36 months after ship order/investment decision Gas purchase agreement under discussions

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Storage Capability
Shore storage of CNG provides for:  Extra supply in event of disruption of supply chain  Extra gas for electricity peaking  Flexibility in ship unloading rate/docking configurations  Availability for establishing Mother/Daughter CNG refueling stations
Stack (3 Modules High)

Storage Module (2 GTMs)

26m 1m 2.3m

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Marine Pressure Vessels

 Lightweight Composite Reinforced Pressure Vessels (CRPV)  Built to ASME pressure vessel code and classified by ABS and Lloyds Register

Mother/Daughter CNG Stations

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On Shore Applications
Flare Gas Recovery New fields
such as Majid, Mehr go into production often natural gas is flared for signficant periods of time. CNG GTMs can capture this gas and mitigate carbon emissions while at the same time monetising what is essentially wasted gas. CNG GTMs can handle all kinds of NG as long as it has been dehydrated. This has been done succesfully in Canada and Colombia

Stranded Markets -

Town Gas

Projects where building pipeline infrastructure makes no sense NG can be delivered by CNG GTMs. This has been done succesfully within the TransCanada system for many years. CNG GTMs can be used when gas supply is curtailed due to emergency breakdowns in supply

Supply CNG stations Stranded Gas Fields

Small where Gas Reticulation System doesnt exist CNG GTMs can economically deliver more gas per MT of storage. This has been done succesfully in Thailand and India Gas fields such as Zarghoun, Nur, Bagla etc can be brought into production without having to build expensive pipeline infrastructure

Harsh, Real Life Tests at Full Scale

USDOT Bonfire test USDOT Gunfire test

In Operation
Well Head to Industrial Consumer  Colombia
  

3 mmscfd increasing to 5mmscfd 60km 8 trailers + 2

Loading Operations

Compression Unit

Loading Station

Unloading Operations

Simple Quick Connections

Unloading

Very Harsh Operating Conditions

The Mountains of Colombia Real Proof of the Technology

In Operation

Mother to Daughter Station  Bangkok, Thailand  4+ mmscfd  40km  7 trailers

Mother Station in Thailand

ICNG Units in Operation - Thailand

CNG ISO Containers ready for shipping

Trans CNG International Project Update

We are involved in a significant number of fuel substitution and industrial projects around the world, providing the key to unlock stranded energy reserves.

East Africa, West Africa and South Africa multiple projects. The Mediterranean North Africa to Europe. The Caribbean Colombia to Panama and inter-island projects. South America Ecuador and Peru. The Middle East Arabian Gulf to Pakistan. South East Asia Flare gas recovery projects. Papua New Guinea to Australia industrial project. New Zealand offshore project. Canada and North America offshore projects.
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Tanzania to Kenya Worlds 1st Marine CNG Project

35 to 50 mmscfd from Mtwara to Mombasa

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Summary
More natural gas into energy mix, displacing liquid fuels in Pakistan over next few decades Marine CNG can provide lower cost reliable gas supply to Pakistan markets by 2013 without the need for expensive infrastructure Power plant fuel replacements are an ideal candidate for CNG as the volume will underpin CNG development for industry and vehicles in local area CNG truck deliveries and storage can provide mother/daughter supply opportunities Green benefits converting from liquid fuels to CNG for power plants and vehicles

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Questions?

Thank You!

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