CREATING NEW MARKETS FOR CLEAN ENERGY

Project Overview

July 2020 Introduction

PILOT LNG IS AN ENERGY PILOT LNG IS WORKING WITH SOLUTIONS COMPANY, THE ON FOCUSED ON THE DELIVERY OF THE DEVELOPMENT OF AN LIQUEFIED NATURAL GAS (LNG) LNG BUNKER TERMINAL THAT TO BOTH NEW AND EXISTING WILL BE LOCATED ON MARKETS BY DEVELOPING AND PELICAN ISLAND. THE LNG OPERATING LNG IMPORT AND BUNKER FUEL WILL SERVE THE LNG FUEL/BUNKERING GREATER GALVESTON / TERMINALS AND RELATED PORT COMPLEX BY INFRASTRUCTURE. THE SUPPLYING CLEAN BURNING COMPANY AIMS TO ESTABLISH LNG TO THE RAPIDLY LNG TERMINAL AND LOGISTICS EXPANDING FLEET OF LNG- OPPORTUNITIES WORLDWIDE FUELED VESSELS. TO MEET GROWING NATURAL GAS DEMAND. 1 Why LNG as a Marine Fuel?

• New international regulations effective January 01, 2020 require the shipping industry to burn fuels with <0.5% Sulphur (SOx) globally • In certain regions (US, Europe), the regulations are more stringent <0.1% • LNG has much lower emissions than conventional marine fuels • LNG emits zero SOx • LNG has virtually no particulate matter • LNG emits 90% less NOx vs. conventional HFO • LNG as a marine fuel is less costly when compared to low Sulphur fuel oil

Pilot LNG Source: DNV-GL 2020 2 LNG as a Marine Fuel: Emissions

• LNG has a much better emissions performance than conventional fuels and solutions. • LNG emits zero Sox, and very low particulate matter. • Compared to existing heavy marine fuel oils, LNG can, depending on the technology used, emit 80% to 90% fewer NOx emissions. • Utilizing best practices and appropriate technologies to minimize methane leakage, realistic reductions of GHG by 10-20% are achievable, with a potential for up to 25% compared with conventional oil-based fuels.

80% 70% 75% 20%

Nox Emmission Reduction Carbon Monoxide Emissions Particles Reduction Greenhouse Gas Reduction Reduction

Pilot LNG Source: SEA/LNG, Avenir & Pilot LNG 3 LNG as Marine Fuel Market Penetration & Growth

New IMO 2020 ECA regulations has spurred market growth of LNG as Fuel Development of LNG Fueled Fleet • From January 2020, the marine sector will have to abide by the steepest one-time cut to In Operation On Order LNG Ready sulphur emissions ever imposed, slashing them by more than 80pc to help fight harmful air pollution. As part of their response, ship owners are including a shift towards LNG propulsion

143 143 143 143 143 143 • “The upside for LNG is that the growth in LNG propulsion is concentrated in larger vessels, 141 with larger bunker fuel demands,” says Jack Sharples, natural gas research fellow at the 123 190 213 217 220 221 222 Oxford Institute for Energy Studies thinktank. 136 112 61 80 • Consultancy Wood Mackenzie expects the use of LNG for bunkering to rise roughly 53 34 seven-fold by 2025 to 9mn t/yr. 13 175 182 182 182 182 182 182 182 182 118 143 76 96 21 25 35 46 56 • Such demand results, in part, from LNG bunker fuel becoming more readily available. 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 LNG bunkering services now are provided at 79 ports worldwide

LNG Fueled Ships in Operation: 182 LNG Fueled Ships on Order: 222 • Rotterdam: Expects sales of around 1.0 mtpa LNG for bunkering by 2025-30 in port, up from Areas of Operation just 9,500t last year. A sizeable jump of 300% is Development across the industry and vessel type 31 4 1 already expected for this year, “What we 33 In Operation On Order expect in 2020 is we will have around 7-8 LNG bunker vessels in our port area. 149 12 • Spain: 185 LNG bunkering operations have 41 28 81 38 15 been carried out in Spanish ports up to the end 44 33 8 12 2 8 17 9 22 20 16 of April this year, with volumes doubling 7 9 12 12 10 6 6 3 2 3 6 3 compared to the same period last year. In 2019, a total of 195 LNG bunkering operations 105 were carried out, over a three-fold increase Global Europe Norway America Asia Oceania from the 60 gas fuel deliveries undertaken in Middle East 2018.

Pilot LNG Source: DNV-GL, Wood-Mac, Oxford Institute 2020 4 : Ports of Houston, Galveston & City – Market Depth Platform: Marine market access to the largest Port Complex in the US

• Port of Galveston: Cruise industry early adopters of LNG as marine fuel gives GLBP situated <5 nm from #4 cruise Port in US ideal platform for GLBP to develop comprehensive solution for Galveston Bay Port Complex. Downtown Houston • ~300 sailings in 2019 (#4 cruise ship Port in US) • New terminal (T3) under construction for increased sailings to ~350 to 400 • Cruise Lines using Galveston (Carnival & Royal Caribbean) have 12 new vessels under construction the are LNG fueled • POG Total 2019 - 840 vessel arrivals, & #52 ranking in US ports for tonnage • Port of Houston: • 2nd busiest port by tonnage in the US (Busiest port in the US for foreign tonnage only) • 6th Ranked US Container Port by TEU • Largest petrochemical port in US • Port of Texas City: 15th busiest port by tonnage in the US GLBP Site 140,000 140000 Estimated Market Growth by Volume in Galveston Bay 120,000 120000 Texas City (and Port of 100,000 100000 Texas City) 80,000 80000

60,000 60000 Mcf/day 40,000 40000

20,000 20000

0 0 2024 2025 2026 2027 2028 2029

Galveston (and Port) Cruise Industry Marine Other FLNG Volumes

Pilot LNG Source: Houston, Texas City, Galveston Ports, ABS & DNV-GL, Pilot LNG 2020 5 Galveston LNG Bunker Port Pelican Island ~180 acre “remote/isolated” site location

• Ideal location that has limited development opportunities for traditional Port functions – containers, cruise, etc. • As a remote location it fits well with LNG development • Pilot LNG will utilize proven Floating LNG (FLNG) technology • Similar to “Tango FLNG” unit (see picture lower right) and built by Wison, currently operating in Bahia Blanca, Argentina • Pilot FLNG unit can produce 0.5 Mtpa nameplate or ~71,400 Mcf/day

• Shipyard based construction lowers costs significantly providing a platform to provide major component of the “terminal” at competitive economics • Existing LNG bunkering facilities in Florida are land based with higher cost per ton making competitiveness challenging • LNG can be delivered to end-users at significant discount to low sulphur diesel oil

Pilot LNG Source: Port of Galveston, Wison, Pilot LNG 6 Galveston LNG Bunker Port : Economics

Illustrative Cost Competitiveness of the LNG Bunkering Value Chain (Based on 2024 Henry Hub Forecast)

16 $700/MT LNG FOE $/MT 14 $390.00

$380.00 12

Δ $7.88/Mmbtu $370.00

10 $360.00 $400/MT $350.00 8 Δ $1.48 /Mmbtu $340.00 6 US$/Mmbtu $330.00

4 $320.00 $310.00 2 $300.00 0 $290.00 GLBP NW Europe

Pilot LNG Source: EIA AEO 2020 Forecast Data – Henry Hub & US GC Diesel Prices 7 Floating LNG Bunkering Technology & Terminal Design

FLNG Topside Layout (Baker Hughes/Encryo SMR) • Project: Galveston LNG Bunker Port • System: Floating gas liquefaction and storage unit • Description • Length 148m (486 ft.) * Breath 32m (105 ft.) * Depth 21m (69 ft.) • Design Draft: 6.0m (19.7 ft.) • Throughput • Liquefaction: 66 Mmscf/d (≈ 0.50 Mtpa nameplate) • Storage: 18,000m3 (Type-C tank) • Hull: permanently-moored, non-propelled

• Project: Galveston LNG Bunker Port • System: Marine/Jetty infrastructure – Main Platform • Description: Key Components • Gangway Tower • High Pressure Gas Arm • Berth Operator Shelter • Diesel Firewater Pump Package • Ship to Shore Power Supply

• Hydraulic Power Unit Jetty Topside Layout Topside Jetty

Pilot LNG Source: Wison Offshore & Marine, CHIV Basis of Design/Pre-FEED for Pilot LNG 8 Land-based Terminal Facility & Gas Supply/Pipeline

Shore Side Layout • Project: Galveston LNG Bunker Port • System: Land-based infrastructure – Site/shore layout • Description: Key Components • Control Room/Administration Building • Warehouse/Workshop Building • Switchgear/MCC Building • Firewater Pumphouse Building • Feedgas Compressor • Potable Firewater Tank

Gas Supply & Pipeline Routes

• Project: Galveston LNG Bunker Port • System: Houston Pipeline System (Energy Transfer) Intrastate System • Description • Expansion of the current 12 inch HPL system on Pelican Island approximately 2.79 miles in length to GLBP “City Gate” • Alternative route is a new build lateral from the Texas City system down the Texas City dyke approximately 6.91 miles

Pilot LNG Source: Wison Offshore & Marine, CHIV Basis of Design/Pre-FEED for Pilot LNG 9 Regulatory & Permitting Process

Stage 4 Stage 1 Stage 2 Stage 3 Pre-Operational, Origination & Consultation & Regulatory Review Final Permit Review Stage 5 Development Coordination & Risk Assessment & Approval Operational

Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Determine the scope of File preliminary Conduct the risk Prepare for operations by Begin Operations by fulfilling the project, identify application(s), consult assessments required by filing all permits, the proscribed requirements. potential locations, & with Government local, state & federal establishing all programs, determine regulatory agencies (Federal, State, regulators. and submitting plans, • Training/Credentialing requirements. and Local) and other processes, and procedures, Program stakeholders, to • Fire risk assessment for review & final approval. • Safe Work Practices Execute key early determine permitting, • Process hazard Program agreements; site certification & regulatory analysis • Emergency Response • Incident Investigation exclusivity & 3rd party requirements needed. • Siting study: exclusion Plan Program engineering and design, area analysis • Spill Response Plan • Corrective & Preventative regulatory & permitting Evolve engineering & • Simultaneous • Operations Actions Program expertise. design and subsequent operations Manual/Operations • Hot Work Permit Program environmental impacts assessment Procedures • Process Safety Evolve engineering & and mitigation, based • Waterway Suitability • Vessel Fuel Transfer Management Program design for initial on agency feedback, Assessment: safety & Procedures • Contractor Safety Program application(s), continue with security • Letter of Intent & WSA • Safety Management stakeholder outreach stakeholder outreach • Security Plan & Security System (agency & community) (agency & community) Assessment • Risk Management Plan

Pilot LNG Source: ABS, EXP, & Pilot LNG 10 Development Schedule

Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021

Phase 1 Mar Q1 2020 Phase #1: Executed agreement with Eng. & Design Teams & • Execute site agreement with Port of Galveston ◆ Reg road map. • Prepare Permitting Roadmap (Part of the Critical Issues Analysis) Executed agreement with Port of Galveston on site exclusivity (MOU) Phase 2 • Identify Stakeholders and Adjacent Landowners Mid-May Q2 2020 • Prepare and Issue Agency Pre-Application Consultation Letters ◆ Phase #2: Completed conceptual Eng., desk top • Outreach for Application meetings with regulatory agencies Env. & Reg. Outreach

Phase 3 • Draft and Submit Permit Applications and Consultations Requests • Perform environmental and cultural surveys if required (based on agency consultation) June Q2 2020 • Begin to prepare EA to support Permit Applications and Regulatory Compliance ◆ Phase #3 & 4: Expected Filing of Application: Will have engaged regulatory agencies in Phase 4 discussions related to concept and • Begin WSA Process and draft Preliminary WSA opportunity. • File Public Notices • Submit Preliminary WSA and hold WSA Workshops • Submit Follow On WSA ◆ August Q3 2020

Phase 5 • Answer Agency Data Requests • Respond to Permit Public Commits • Receive and Review Draft Permit Conditions ◆ Feb Q1 2021

Phase 6 • Receive Letter Of Recommendation • Receive Permits (Construction Permits and Clearance Letters) • Perform Mitigation (if required, can be done at FID or during construction) Q3 2021 ◆ FID • Request Notice to Proceed to Construction

Pilot LNG Source: CHIV, EXP, & Pilot LNG 11 Key Benefits

• Ideal location to produce LNG marine fuel within the largest port complex in the USA • Providing LNG bunker fuel at the market avoids costly transportation from remote supply sources along the US Gulf Coast • Producing LNG bunkers in Texas provides access to less expensive feed gas • Eliminates LNG shipping and terminal costs when compared to LNG bunkers in Europe or Asia • Using proven floating liquefaction technology reduces execution risk and costs • Permitting process reduces time to market by ~2 years compared to FERC timeline • Final Investment Decision (FID) expected Q4 2021 • In-Services date estimated Q4 2024 • Pilot LNG offering flexible commercial structures

Pilot LNG 12 Key Strategic Partners

• Port of Galveston • Site exclusivity agreement executed • Wison • FLNG Basis of Design • FLNG FEED (Front End Engineering & Design) • FLNG EPCIC (Engineering, Procurement, Construction, Installation, & Commissioning) • EXP Environmental Services Inc. • Regulatory and Permitting • CH-IV/Clough • Land-based fixed infrastructure including marine topsides Basis of Design, Pre-FEED & FEED • W. F. Baird • Marine/Jetty fixed infrastructure civil engineering & design and dredge disposal plan • Energy Transfer Partners / Houston Pipeline Co. • Gas pipeline infrastructure

Pilot LNG 13 What is LNG?

• LNG is an odorless, non-toxic and non- corrosive liquid • LNG is not stored under high-pressure, is not flammable and is not explosive • LNG has been safely and securely shipped around the world for more than 50 years • LNG does not pose a contamination risk

Natural gas is At which point it converted to LNG becomes a liquid, by super-cooling it reducing its volume by a factor of more to -260° F than 600.

Pilot LNG 14 Common Myths & Misconceptions

LNG as a liquid is non-flammable and non-explosive LNG is explosive Unlike oil refineries and complex chemical facilities, LNG LNG facilities smell terminals do not put out noxious or malodorous emissions US LNG projects undergo an extremely rigorous review process LNG projects are rubberstamped by the ensuring safety and environmental responsibility government & agencies In the unlikely event of an incident, any potential significant impacts would be contained onsite, as required by regulation The proposed LNG terminal is too close to Channel operations would continue mostly unaltered with safety communities to be safe and security procedures controlled by the Coast Guard LNG vessels will shut down the channel for The agency environmental review process ensures that projects meet or exceed all environmental requirements days at a time LNG projects must meet or exceed all air quality requirements, LNG facilities will destroy the local which are in place to protect the public health and environment environment and poison the air In ports around the world, LNG terminals coexist with thriving LNG facilities will ruin the tourism industry tourism and local industries In fact LNG is becoming the fuel of choice for the Cruise Industry LNG is explosive

Pilot LNG 15 LNG – Excellent Safety Record

• The bulk LNG transportation industry, where LNG is commonly used as a fuel for the transporting vessel, has an excellent safety record. • Over the past 50 years, more than 77,000 commercial LNG cargoes have been safely delivered and global LNG shipments have covered more than 100 million miles – about 4,000 times around the earth – without any major safety incidents in port or at sea. • This is testament to the LNG industry’s rigorous design guidelines for both ships and shore facilities, as well as high standards of training and operational procedures.

• The use of LNG as a marine fuel outside the LNG carrier business is a relatively new technology, as are gas only and dual-fueled engines. • Since its introduction as a marine fuel at the turn of the century, LNG-fueled vessels and associated bunkering operations have had an exemplary safety record. • For example, the Viking Grace cruise ferry has bunkered, without incident, more than 1,000 times in Stockholm since its entry into service in 2012.

Pilot LNG Source: SEA/LNG & Pilot LNG 16 Location, Size & Safety

Galveston LNG Bunker Port is a small scale LNG facility and compared to the export projects in Texas & Louisiana, only a fraction of the size. It is more like a corner gas station for marine vessels, than a major industrial export complex.

Distance Location Texas/LA Export Small Scale (in Miles) 7 Compare Projects & Metric Project & Metric 1. Texas A&M Galveston: Dorm Complex 2.13 Galveston LNG 2. Texas A&M Galveston: main Campus 2.4 Cheniere Sabine versus Bunker Port 6 Pass 3. Port of Galveston: Office 2.9 (GLBP)

4. Galveston Ferry Terminal 2.3 Storage: 5 Tanks Storage: 3 Tanks 5. 1.7 3 @ 160,000 m3 3 @ 6,000 m3 2 @ 180,000 m3 2.1% 6. Bolivar Roads Ferry Terminal 1.73 Total: 18,000 m3 Total: 840,000 m3 7. Texas City Dyke 1.15

Production: 6 Production: 1 5 Trains 2.2% Train Total: 30 Mtpa Total: 0.65 Mtpa 1 Freeport LNG versus GLBP

2 Storage: 3 Tanks 4 Storage: 3 Tanks 2 @ 160,000 m3 3 @ 6,000 m3 1 @ 165,000 m3 3.7% Total: 18,000 m3 Total: 485,000 m3

Production: 3 Production: 1 3 Trains 4.3% Train Total: 15 Mtpa Total: 0.65 Mtpa

Pilot LNG Source: Cheniere website, Freeport website & Pilot LNG 17 Summary

• Strong outlook for LNG bunker market due to new emissions standards • Strong fundamentals highlighted by rapid growth in Europe & Asia, and marine industry order book for LNG powered vessels • LNG as a marine fuel is highly competitive with low sulfur marine fuels • Long term economics favor LNG over petroleum based marine fuels • Excellent location to serve the growing LNG marine fuels market including the cruise ship sector in Galveston, as well as the dual fuel tanker, container, car carriers calling the ports of Houston/Galveston/Texas City • Unmatched location for a combination of early adopters, and market depth (largest port complex in US) • Pilot LNG has exclusivity on the site and has completed initial due diligence & fatal flaw analysis and has not found any show stoppers • Well defined, Non-FERC, expedited clear permitting path identified • Strong team assembled to perform pre-FEED & FEED to FID • Highly experienced management team with proven track record in developing both US energy & global energy infrastructure projects

Pilot LNG 18 Thank You! We look forward to further discussions.

Contact: [email protected]