A Presentation by Sarah Emerson, President, ESAI Energy. October 2013.

1. The LNG Gamble
Sarah A. Emerson
ESAI Energy
October 2013
10/4/2013 1

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4. U.S. Heading towards Net Exporter
10/4/2013 4
(2.0)
-
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
40.0
45.0
50.0
55.0
60.0
65.0
70.0
75.0
80.0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
U.S. Natural gas Balance (bcf/d)
Net Imports
Supply
Demand
Source: ESAI, EIA

5. Demand Growth Depends on Sector
10/4/2013 5
22.09 23.45
20.01
22.44
3.85
5.00
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Composition of Demand Growth (bcf/d)
Other
To NGLS
Transport
Commercial
Residential
Industry
Electricity
Source: ESAI Energy LLC

6. Chevron Phillips, Cedar Bayou, TX
1500 (2018)
Dow Chemicals, Taft, LA
384 (2013)
Westlake, Lake Charles, LA
106 (2013),
80 (2014)
106 (2015)
Williams, Geismar, LA
272 (2013)
Debottlenecks/feedstock conversionsNew facility RestartExpansion
INEOS, Chocolate Bayou, TX
115 (2013)
LyondellBasell, Channelview, TX
113 (2015)
La Porte, TX
362 (2014)
Eastman,
Longview, TX
90 (2013)
BASF, Port Arthur, TX
180 (2014)
LyondellBasell, Corpus Christi, TX
362 (2015)
Dow, Freeport, TX
1500 (2017)
ExxonMobil, Baytown, TX
1500 (2017)
OxyChem, Ingleside, TX
550 (2020)
Sasol, Lake Charles, LA
1400 (2018)
Formosa, Point Comfort, TX
800 (2016)
The Marriage of Natural Gas Liquids and Petrochemicals
Ethane Supply and Ethylene Capacity from ESAI’s Study:
A Perfect Storm Of Liquids: Global NGL Forecast & Analysis 2013 – 2023
Source: ESAI Energy LLC:
A Perfect Storm Of Liquids: Global
NGL Forecast and Analysis 2013 – 2023

7. Likely US Natural Gas Exports
7
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
U.S Raises Natural Gas Exports (bcf/d)
To Canada by Pipe to Mexico by Pipe LNG outside of region
US Import
Requirement Net Imports
Volumes of
Additional
Exports
LNG
Capacity?
# of
terminals
2012 (3.8) 3.8 - -
2013 (3.6) 3.6 - -
2014 (2.5) 2.5 - -
2015 (2.4) 2.4 0.0 -
2016 (1.8) 2.4 0.6 1.3 2.0
2017 (1.2) 2.4 1.2 3.0 2.0
2018 (0.6) 2.4 1.8 4.1 3.0
2019 0.0 2.4 2.4 5.1 4.0
2020 0.8 2.4 3.2 8.4 5.0
ESAI Energy, Confidential
One Scenario for Natural Gas Exports bcf/d
Source: ESAI Energy LLC

8. Global LNG, September 2013 ($/MMBtu)
Henry
Hub
$3.62
Japan
$15.75
Korea
$15.75
China
$15.35
U.K
$9.79
India
$13.95
Belgium
$9.83
Spain
$10.25
Rio de
Janeiro
$14.95
Source: FERC, ESAI

9. How Much Can Asia Absorb?
10/4/2013 9
-40
-30
-20
-10
0
10
20
30
40
50
60
70
80
90
100
110
2005 2010 2015 2020
Asia Pacific Natural Gas Balance (bcf/d)
Net Regional Import Requirement Asia-Pacific Supply Asia-Pacific Demand
Source: ESAI Energy LLC

10. Global LNG Liquefaction Capacity (bcf/d)
Region Existing Capacity Under
Construction
Planned
Asia 12 9.8 14
Middle East 13 0 10.5
Europe 1 0 1
FSU 1 0 10
Africa 8 1.3 13.1
N. America 0 2.4 32
Latin America 3 0 2.4
Total 38 13.5 83
Notes:
List Includes coal-bed methane to LNG and floating LNG projects
Includes Algeria’s Skikda , commissioned 03/13
Sources include ESAI Energy, GIIGNL and IEA

11. Angola LNG
0.7 bcf/d
2013
Algeria, Gassi Touil
LNG
0.6 bcf/d
2013
Qld Curtis LNG
1.1 bcf/d
2014-2015
Papua New
Guinea, PNG LNG
0.9 bcf/d
2014-2015
Indonesia, Donngi Senoro
LNG
0.3 bcf/d
2014
Gorgon LNG
2.0 bcf/d
2015-2016
Gladstone LNG
1.0 bcf/d
2015-2016
AP LNG
1.2 bcf/d
2015-2016
Wheatstone LNG
1.2 bcf/d
2016-2017
Prelude LNG
0.5 bcf/d
2017
Ichthys LNG
1.1 bcf/d
2017-2018
Sabine Pass LNG
2.4 bcf/d
2015-2017
Malaysia LNG
0.5 bcf/d
2014
LNG Projects Currently Under Construction
Americas: 1 (2.4 bcf/d) Middle East & Africa: 2 (1.3 bcf/d) Asia: 10 (9.8 bcf/d)

12. View from the Casino
• Beginner’s Luck:
o First movers in LNG terminal construction benefit
• Gambler’s Conceit:
o Demand for natural gas will go up forever and there is unlimited demand
for LNG
• Stacked Deck:
o Some LNG terminal investors/companies are better situated than others
• House Loses:
o Prices at Henry Hub will rise with exports
• Count Cards:
o There will be a tipping point with these LNG investments, and the
economics will justify a volume far below 34 bcf/d. Analysts need to keep
track of the impact of each new increment of export capacity
10/4/2013 12

13. 10/4/2013 13
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outcomes from any decisions made or attributed to this communication. The estimates, forecasts and analyses
in this report are our judgment and are subject to change without notice. No warranty is made or implied.
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