Project Overview

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Project Overview CREATING NEW MARKETS FOR CLEAN ENERGY Project Overview July 2020 Introduction PILOT LNG IS AN ENERGY PILOT LNG IS WORKING WITH SOLUTIONS COMPANY, THE PORT OF GALVESTON 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 HOUSTON 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 Galveston Bay: Ports of Houston, Galveston & Texas 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 Port of Houston 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
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