Customer: The United States Department of Energy National Energy Technology Laboratory Date of Issue: 24 April 2003 Document Title: Report III: Comparisons Between LNG Receiving Terminals: Conventional, Salt cavern Based, and “Energy Bridge®” Doc # & Version: Doc 07 r2.0 Page 1 of 7 Filename: 41653R01 Comparisons between LNG Receiving Terminals: Conventional, Salt cavern Based, and “Energy Bridge®” BY MICHAEL M. MCCALL WILLIAM M. BISHOP D. BRAXTON SCHERZ r 1.0 For client review 02/09/03 BS MM Issue Orig. Chk. Appr. Chk. Appr. Review Version Reason for Issue Date CGI NETL Document Title: Document No: Comparisons Between LNG Receiving Terminals: Conventional, Salt cavern Based, and “Energy Bridge®” CGI/DOE_DOC 07 DE-FC26-02NT41653
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Customer:
The United States Department of Energy National Energy Technology Laboratory
Date of Issue: 24 April 2003
Document Title:
Report III: Comparisons Between LNG Receiving Terminals: Conventional, Salt cavern Based, and “Energy Bridge®”
Doc # & Version: Doc 07 r2.0 Page 1 of 7
Filename: 41653R01
Comparisons between LNG Receiving Terminals:
Conventional, Salt cavern Based, and “Energy Bridge®”
BY MICHAEL M. MCCALL WILLIAM M. BISHOP
D. BRAXTON SCHERZ
r 1.0 For client review 02/09/03 BS MM
Issue Orig. Chk. Appr. Chk. Appr. ReviewVersion Reason for Issue Date CGI NETL
Document Title: Document No: Comparisons Between LNG Receiving Terminals: Conventional, Salt cavern Based, and “Energy Bridge®”
CGI/DOE_DOC 07 DE-FC26-02NT41653
Customer:
The United States Department of Energy National Energy Technology Laboratory
Date of Issue: 24 April 2003
Document Title:
Report III: Comparisons Between LNG Receiving Terminals: Conventional, Salt cavern Based, and “Energy Bridge®”
3. EL PASO’S ENERGY BRIDGE........................................................................................................................4
4. SUMMARY OF ESTIMATED CAPITAL, OPERATION, AND FUEL COSTS..................................................6
Customer:
The United States Department of Energy National Energy Technology Laboratory
Date of Issue: 24 April 2003
Document Title:
Report III: Comparisons Between LNG Receiving Terminals: Conventional, Salt cavern Based, and “Energy Bridge®”
Doc # & Version: Doc 07 r2.0 Page 3 of 7
Filename: 41653R01
1. EXECUTIVE SUMMARY
The technologies in the LNG industry have remained essentially unchanged over the years. “Energy Bridge,” a notable exception developed by El Paso Global LNG Co., combines LNG shipping and regasification on a single ocean-going vessel. Energy Bridge because of its mobility, “zero footprint”, and offloading flexibility may have advantages in markets where spot trades command higher prices. The LNG spot market continues to grow, but long term baseload LNG sales contracts have yet to be eclipsed. Whether or not Energy Bridge realizes its true competitive advantage has yet to be confirmed. Five representative LNG terminals were evaluated to determine an indicative cost of service required to achieve a 15% IRR on each project. A summary review of the findings (Table 4.1) prepared for this Document 07, indicates that the Bishop Process Exchanger LNG terminals generate the lowest terminal fees required to achieve the 15% IRR condition. This is attributable to competitive CAPEX costs, very high sendout rates, excellent fuel efficiencies, and lower operating costs.
2. LNG TERMINALS – FIVE CASES
Five generally defined LNG terminals were selected for the basis of this study. There were no attempts to “equalize” the terminals by establishing a base line capacity, or any other common element that might skew the results of the matrix. Rather, each terminal is based upon an actual or proposed LNG project. The Bishop Process Onshore and Offshore terminals in this section are representative also and are not to be confused with the onshore and offshore terminals in Task 2.0. Terminals in Task 2.0 are site specific and estimated costs reflect each terminal location. Terminal send-out is a product of design, and the results of the comparisons have been based on a 100% load factor for each project and unitized on a BTU basis. Regarding El Paso’s Energy Bridge®, there are no provisions for a land based receiving terminal. For cost comparison purposes the estimate for an LNG vessel of 138,000 m3 of membrane tank design was used. An LNG specific cost estimating model using factored analysis was chosen as a basis of the calculated results. LNG receiving terminals have many machinery items in common and the costs for these items remain common throughout the comparison. There are of course major differences in the methods used to store LNG, the design of the marine facility, and the methods used to vaporize LNG. These major differences are reflected in capital costs, fuel cost, and personnel required to staff the terminals. For the first case, an LNG terminal located on the Pacific Coast of the Americas (North or South) was selected. Pacific coast LNG sites typically share several major design similarities including, (1) the requirement for a breakwater and a long approach trestle to protect and access the LNG berth, and (2) large LNG storage tanks to allow for adequate reserve due to the long distances from LNG supplier (Asia in most cases) to the receiving terminal. These requirements generally increase the cost of the terminal as indicated in the following tables. An estimate of an LNG terminal located on the Atlantic coast of North America forms the basis of the second case. This terminal will serve as a baseload LNG receiving facility, and benefits from a good location directly adjacent to deep water. For this reason a short approach trestle connects the dock with the shore facility, and no breakwater is required. Storage can be optimized because there are several LNG supply terminals located within reasonable shipping distances from the receiving facility. Cases three and four reflect LNG receiving terminals based on the use of the Bishop Process Heat Exchanger (BPT) and use salt caverns for storage. A detailed discussion of the Onshore and Offshore BPT terminal is included in Task 2.0 of this study. El Paso’s Energy Bridge® concept represents the fifth case.
Customer:
The United States Department of Energy National Energy Technology Laboratory
Date of Issue: 24 April 2003
Document Title:
Report III: Comparisons Between LNG Receiving Terminals: Conventional, Salt cavern Based, and “Energy Bridge®”
Doc # & Version: Doc 07 r2.0 Page 4 of 7
Filename: 41653R01
3. EL PASO - ENERGY BRIDGE®
The fifth LNG terminal used in the comparison is based on El Paso’s Energy Bridge concept. EL PASO’S ENERGY BRIDGE developed by El Paso Global LNG Co., combines LNG shipping and regasification on a single ocean-going vessel. Proven technologies are employed by Energy Bridge allowing natural gas to be delivered directly to coastal markets. With this new system, scheduled gas delivery from remote regions could take place on a baseload or seasonal basis, using highly reliable offshore moorings and subsea pipelines to shore. Figure 3.1 above is an artist’s rendering of what an EPEB vessel might look like. A new ship design is not required, simply modification of an existing LNG carrier. Shown are some of the major components, such as onboard vaporizers and a view of the turret with the docking buoy attached to the receiving housing. The EPEB inter-connection design uses the APL Submerged Turret Loading (APL) system, with a docking buoy that provides a single-point mooring system with high reliability for offshore LNG-vessel unloading. The APL system has been proven in actual conditions and under very severe conditions in the North Sea off the coast of Norway. Connections with the APL buoy have been made in seastates over 5 meters and operational loading has taken place on seastates over 13 meters. There are currently 19 APL buoys in service, used for traditional oil and gas
Fig. 3.1
Customer:
The United States Department of Energy National Energy Technology Laboratory
Date of Issue: 24 April 2003
Document Title:
Report III: Comparisons Between LNG Receiving Terminals: Conventional, Salt cavern Based, and “Energy Bridge®”
Doc # & Version: Doc 07 r2.0 Page 5 of 7
Filename: 41653R01
production operation. Over 1,000 connections have been made to date in the North Sea with a 100% success rate. El Paso envisions a fleet of specially equipped EPEB vessels bringing LNG to market. Figure 3.2 shows the general system layout. Upon arrival in the terminal area, the EPEB ship connects to a submerged offloading system which moors the vessel and connects it to an offload pipeline. This takes place well offshore and
typically over the horizon. Once connected to the offload pipeline, the ship begins onboard regasification to provide safe LNG conversion to vaporous natural gas at pressures up to 1,400 psi. Referring to Figure 3.2, the gas is sent through the offloading system and riser to a seabed pipeline that leads to an onshore customer’s facility, or a nearby as transmission pipeline. At conclusion of the transfer the ship releases the offloading system to its idle position safely beneath the ocean’s surface where it remains until the next ship arrives. Each 138,000 m3 tanker carries about 3 Bcf of gas and will typically off load in 7 to 10 days. At 100% load factor the vessel can discharge its cargo in about 5.5 days.
Figure 3.3 shows how the system will look when gas is being offloaded. The APL system is suitable for water depths of 35 meters to well over 100 meters. Once the ship is connected to the mooring buoy, it freely weathervanes with the wind and the current, thus mitigating much of the stress on the mooring lines and anchors. Once connected send-out to shore can occur in seas of 10 to 11 m, providing for high reliability. The typical offshore gas installation have two offloading buoys and risers to accommodate simultaneous docking and undocking assuring continuous flow.
Fig. 3.2
Customer:
The United States Department of Energy National Energy Technology Laboratory
Date of Issue: 24 April 2003
Document Title:
Report III: Comparisons Between LNG Receiving Terminals: Conventional, Salt cavern Based, and “Energy Bridge®”
Doc # & Version: Doc 07 r2.0 Page 6 of 7
Filename: 41653R01
A detailed review of the marketing aspects of this innovative design is beyond the scope of this study. However, general reactions to Energy Bridge and its comparison to the other four LNG terminal options will be assessed in the matrix of Doc 08 of this study Task.
4. SUMMARY OF LNG TERMINAL ESTIMATED CAPITAL, OPERATION, AND FUEL COSTS
LNG terminal estimated Operating and Maintenance costs are based on historical LNG operation and maintenance data. The major engineering firms estimate OPEX costs at 1.5% of the TIC capital cost of the terminal for the first year of operation and 1% thereafter. For the purposes of this study, CGI will use that assumption for all five terminal examples and average costs over a 20 year period. The O&M costs do not include fuel gas or imported power. The estimated fuel consumption of each terminal and fuel efficiencies have been derived from engineering studies listing the power requirements, or from fuel requirements published in existing tariffs. Table 4.1 includes a summary of all critical elements involved in the analysis, and it is understood that the results are indicative rather than actual. As the table indicates, the BPT LNG terminals due to competitive CAPEX costs, excellent fuel efficiencies, and lower operating costs generate the lowest terminal fees required to achieve the 15% IRR condition. The equipment list used to generate the factored analysis and the summary sheet of the financial model for each terminal is included in Doc 07 Attachment I. The following document (Doc 08) includes the matrix used to summarize the advantages and disadvantages of each LNG terminal design.
Fig. 3.3
Customer:
The United States Department of Energy National Energy Technology Laboratory
Date of Issue: 24 April 2003
Document Title:
Report III: Comparisons Between LNG Receiving Terminals: Conventional, Salt cavern Based, and “Energy Bridge®”
Doc # & Version: Doc 07 r2.0 Page 7 of 7
Filename: 41653R01
Table 4.1 – LNG Terminal Cost Comparison
Cav
ern
Term
inal
s ar
e sh
ip li
mite
dTr
aditi
onal
Ter
min
al
Trad
ition
al T
erm
inal
Send
out
(d
aily
full
desi
gn ra
te in
mm
cfd)
Est.
Ann
ual S
endo
ut 1
00%
load
fact
or
(m
mcf
)(m
mBt
u)M
illio
n M
etric
Ton
nes
per A
num
Max
imum
Car
goes
per
yea
r
Estim
ated
Tot
al In
stal
led
Cos
t
(TIC
$U
SD)
TIC
per
Pla
nt C
apac
ity
($
/mm
Btu)
Estim
ate
O &
M
($U
SD/y
r)
Estim
ated
Fue
l Cos
t
($U
SD/y
r @ 3
.00/
mcf
)
OPE
X (O
&M
+ F
uel)
/ Pla
nt C
apac
ity
($/m
mB
tu)
Fuel
Con
sum
ptio
n
(p
erce
nt o
f thr
ough
-put
Fee
Req
uire
d to
Rea
lize
Proj
ect P
re-T
ax IR
R o
f 15%
1.00
%
292,
000
182,
500
639,
000
639,
000
175,
200
311,
564,
000
194,
727,
500
681,
546,
250
681,
546,
250
1.20
%0.
85%
0.33
%0.
33%
2,94
4,50
2
0.05
00.
045
0.01
70.
016
0.04
6
4,26
2,23
22,
079,
790
3,01
3,72
63,
048,
409
Dire
ct to
Gas
Pip
elin
eEn
ergy
Brid
ge
235
13.1
03.
60 64480
186,
938,
400
1750
/300
0 pe
ak
Pac
ific
Coa
stB
isho
p P
roce
ss/S
alt S
tore
Offs
hore
Ter
min
alA
tlant
ic N
orth
Eas
t
6.00
107
13.1
0
235
673.75
800
500
1750
/300
0 pe
ak
294,
022,
086
297,
405,
735
Ons
hore
Pro
cess
Bis
hop
Pro
cess
/Sal
t Sto
re
287,
268,
472
1.33
1.04
0.43
0.44
1.54
415,
827,
479
202,
906,
294
0.29
5
11,2
00,0
006,
610,
000
8,50
0,00
08,
000,
000
5,60
0,00
0
0.25
00.
220
0.09
40.
090
Note : Table 4.1 references LNG terminals representative of geographic locations and as such do not refer specifically to the Pro-Forma estimates for the LNG Onshore and Offshore terminals presented in Task 2.0
Facility Basis - Firm Service Facility Costs, $ Financial Structure % Capital RateCargos per Year 107 Marine Port Facilities 50,910,255 Sr. Debt Percent of Capital 50.0% 6.75%LNG Discharge per Ship, cubic meters LNG 138,000 LNG Vaporization & Process 74,108,000 Jr. Debt Percent of Capital 0.0% 0.0%LNG Btu content, Btu/scf 1067 Terminal Utility System 28,288,700 Equity Percent of Capital 50.0% 15.0%Storage Working Gas Volume, Bcf 16.00 Storage Surface Facility 166,070,000Storage Base Gas Volume, Bcf 7.30 Site Specific Misc 31,423,797 Senior Debt Term 20
Header Pipeline 0 Junior Debt Term 5Engineering & Const. Mgmt. 19,674,248 Base Gas Lease Carrying Cost, %/YR 6.75%
Pricing Project Acquisition & Tech. Rights 50,000Throughput Fee, $/MmBtu 0.250 Owner Costs, Permits, Misc. 7,191,583 FINANCIAL RESULTSOther Revenue - % of Terminal Throughput Rev. 0.0% Financing Fees 21,048,045Terminal Energy Use Charge, % of throughput 0.00% Contingency 56,133,750Assumed Henry Hub Index for initial year $3.50 Total Facility Cost 454,898,378 Cost of CapitalGas Storage Net Revenue Realized $MM/year $0.0 Pretax WACC 10.88%
LNG Terminal Project Metrics WACC 9.60%Other Assumptions Load Factor (based on 240 cargos/yr max) 100% Equity Return (assumed from above) 15.0%Base Gas Price (Delivered), $/Mcf 3.50 Reference Annual throughput, mcf/yr 291,076,745Base Gas Source ("Lease" or "Buy") buy Annual LNG Offloaded, BCF/yr 291 Project EconomicsTotal Operations Cost, $M/Year 2,499 Reference throughput, million mmBtu/yr 310,578,887 Project NPV@Pretax WACC, $M 218,660 - Labor & Maintenance, $M/Yr 2,299 Daily equivalent amount (mcf/day) 808,547 Project Pretax IRR 15.7% - Electrical Demand Charge, $M/Yr 200 Tax Rates NPV @ WACC (tax-effected), $M 142,174Management Overhead, $M/Year 360 Federal, %/YR 35.0% Project IRR (tax-effected) 12.5% Property Taxes (assumed amount), $M/Yr 4,000 State, %/YR 4.50%Storage Site Lease Fee, $M/yr 500 Blended Rate, %/Yr. 37.93% Yr. 1 EBITDA $M/year $57,241% Revenue Stream to Inflation Protect, %/yr 100% Property, %/YR, initial year/capital cost 0.88% Avg. EBITDA, Yrs 1-5, $M/year $61,059General Inflation Rate 3.0% Capital Gain Rate for Terminal Value 20%Inflation applied to certain annual costs, %/yr 1.5% Depreciation Equity Returns, AFTER-TaxEnergy Use for Terminal ops., % of throughput 1.20% Depreciation (Straight-Line or Accel) Straight-Line Equity NPV@ Assumed Equity Return, $M 41,816Full storage cavern compression charge rate 0.00% Depreciable Life, Years 20 Equity IRR (calculated) 17.1%% of throughput requiring compression at cavern 0% Project Life, Years 20Project & Technology Rights Debt Coverage Pre-tax
Running Royalty, as % of Henry Hub index 0.00% based on mmBtu throughput Minimum EBITDA/Interest Coverage 3.7Project & License Upfront Payment, $MM 0 Minimum EBITDA/Debt Service 2.7
LNG Terminals Cost Comparison Equipment Summary SheetTraditional Land Based Terminal Bare Steel Installed Freight Taxes Contract TotalWest Coast w/Breakwater Equipment Concrete Direct & Spares Duties Engineering CostCapacity - 0.8 Bcfd I/E & Piping Indirect Other Insurance (12%)
Facility Basis - Firm Service Facility Costs, $ Financial Structure % Capital RateCargos per Year 67 Marine Port Facilities 50,910,255 Sr. Debt Percent of Capital 50.0% 6.75%LNG Discharge per Ship, cubic meters LNG 138,000 LNG Vaporization & Process 48,250,000 Jr. Debt Percent of Capital 0.0% 0.0%LNG Btu content, Btu/scf 1067 Terminal Utility System 28,288,700 Equity Percent of Capital 50.0% 15.0%Storage Working Gas Volume, Bcf 16.00 Storage Surface Facility 57,000,000Storage Base Gas Volume, Bcf 7.30 Site Specific Misc 1,116,097 Senior Debt Term 20
Header Pipeline 0 Junior Debt Term 5Engineering & Const. Mgmt. 11,634,948 Base Gas Lease Carrying Cost, %/YR 6.75%
Pricing Project Acquisition & Tech. Rights 50,000Throughput Fee, $/MmBtu 0.220 Owner Costs, Permits, Misc. 7,191,583 FINANCIAL RESULTSOther Revenue - % of Terminal Throughput Rev. 0.0% Financing Fees 11,133,903Terminal Energy Use Charge, % of throughput 0.00% Contingency 30,142,500Assumed Henry Hub Index for initial year $3.50 Total Facility Cost 245,717,986 Cost of CapitalGas Storage Net Revenue Realized $MM/year $0.0 Pretax WACC 10.88%
LNG Terminal Project Metrics WACC 9.60%Other Assumptions Load Factor (based on 240 cargos/yr max) 100% Equity Return (assumed from above) 15.0%Base Gas Price (Delivered), $/Mcf 3.50 Reference Annual throughput, mcf/yr 182,263,008Base Gas Source ("Lease" or "Buy") buy Annual LNG Offloaded, BCF/yr 182 Project EconomicsTotal Operations Cost, $M/Year 2,499 Reference throughput, million mmBtu/yr 194,474,630 Project NPV@Pretax WACC, $M 108,531 - Labor & Maintenance, $M/Yr 2,299 Daily equivalent amount (mcf/day) 506,286 Project Pretax IRR 15.3% - Electrical Demand Charge, $M/Yr 200 Tax Rates NPV @ WACC (tax-effected), $M 69,959Management Overhead, $M/Year 360 Federal, %/YR 35.0% Project IRR (tax-effected) 12.2% Property Taxes (assumed amount), $M/Yr 4,000 State, %/YR 4.50%Storage Site Lease Fee, $M/yr 500 Blended Rate, %/Yr. 37.93% Yr. 1 EBITDA $M/year $29,640% Revenue Stream to Inflation Protect, %/yr 100% Property, %/YR, initial year/capital cost 1.63% Avg. EBITDA, Yrs 1-5, $M/year $31,751General Inflation Rate 3.0% Capital Gain Rate for Terminal Value 20%Inflation applied to certain annual costs, %/yr 1.5% Depreciation Equity Returns, AFTER-TaxEnergy Use for Terminal ops., % of throughput 0.85% Depreciation (Straight-Line or Accel) Straight-Line Equity NPV@ Assumed Equity Return, $M 17,846Full storage cavern compression charge rate 0.00% Depreciable Life, Years 20 Equity IRR (calculated) 16.7%% of throughput requiring compression at cavern 0% Project Life, Years 20Project & Technology Rights Debt Coverage Pre-tax
Running Royalty, as % of Henry Hub index 0.00% based on mmBtu throughput Minimum EBITDA/Interest Coverage 3.6Project & License Upfront Payment, $MM 0 Minimum EBITDA/Debt Service 2.6
LNG Terminals Cost Comparison Equipment Summary SheetTraditional Land Based Terminal Bare Steel Installed Freight Taxes Contract TotalEast Coast no Breakwater reqd. Equipment Concrete Direct & Spares Duties Engineering CostCapacity - 0.5 Bcfd I/E & Piping Indirect Other Insurance (12%)
Facility Basis - Firm Service Facility Costs, $ Financial Structure % Capital RateCargos per Year 235 Marine Port Facilities 47,118,345 Sr. Debt Percent of Capital 50.0% 6.75%LNG Discharge per Ship, cubic meters LNG 138,000 LNG Process & HP PIpeline 51,374,800 Jr. Debt Percent of Capital 0.0% 0.0%LNG Btu content, Btu/scf 1067 Terminal Utility System 28,288,700 Equity Percent of Capital 50.0% 15.0%Storage Working Gas Volume, Bcf 16.00 Storage Surface Facility 108,000,000Storage Base Gas Volume, Bcf 7.30 Site Specific Misc 17,788,105 Senior Debt Term 20
Header Pipeline 0 Junior Debt Term 5Engineering & Const. Mgmt. 18,630,050 Base Gas Lease Carrying Cost, %/YR 6.75%
Pricing Project Acquisition & Tech. Rights 50,000Throughput Fee, $/MmBtu 0.090 Owner Costs, Permits, Misc. 7,385,958 FINANCIAL RESULTSOther Revenue - % of Terminal Throughput Rev. 0.0% Financing Fees 15,154,197Terminal Energy Use Charge, % of throughput 0.00% Contingency 41,242,500Assumed Henry Hub Index for initial year $3.50 Total Facility Cost 335,032,655 Cost of CapitalGas Storage Net Revenue Realized $MM/year $0.0 Pretax WACC 10.88%
LNG Terminal Project Metrics WACC 9.60%Other Assumptions Load Factor (based on 240 cargos/yr max) 98% Equity Return (assumed from above) 15.0%Base Gas Price (Delivered), $/Mcf 3.50 Reference Annual throughput, mcf/yr 639,280,701Base Gas Source ("Lease" or "Buy") lease Annual LNG Offloaded, BCF/yr 639 Project EconomicsTotal Operations Cost, $M/Year 4,832 Reference throughput, million mmBtu/yr 682,112,508 Project NPV@Pretax WACC, $M 162,142 - Labor & Maintenance, $M/Yr 4,632 Daily equivalent amount (mcf/day) 1,775,780 Project Pretax IRR 15.7% - Electrical Demand Charge, $M/Yr 200 Tax Rates NPV @ WACC (tax-effected), $M 106,352Management Overhead, $M/Year 360 Federal, %/YR 35.0% Project IRR (tax-effected) 12.5% Property Taxes (assumed amount), $M/Yr 4,000 State, %/YR 4.50%Storage Site Lease Fee, $M/yr 500 Blended Rate, %/Yr. 37.93% Yr. 1 EBITDA $M/year $41,618% Revenue Stream to Inflation Protect, %/yr 100% Property, %/YR, initial year/capital cost 1.19% Avg. EBITDA, Yrs 1-5, $M/year $44,576General Inflation Rate 3.0% Capital Gain Rate for Terminal Value 20%Inflation applied to certain annual costs, %/yr 1.5% Depreciation Equity Returns, AFTER-TaxEnergy Use for Terminal ops., % of throughput 0.35% Depreciation (Straight-Line or Accel) Straight-Line Equity NPV@ Assumed Equity Return, $M 31,006Full storage cavern compression charge rate 0.00% Depreciable Life, Years 20 Equity IRR (calculated) 17.1%% of throughput requiring compression at cavern 0% Project Life, Years 20Project & Technology Rights Debt Coverage Pre-tax
Running Royalty, as % of Henry Hub index 0.00% based on mmBtu throughput Minimum EBITDA/Interest Coverage 3.7Project & License Upfront Payment, $MM 0 Minimum EBITDA/Debt Service 2.7
LNG Terminals Cost Comparison Equipment Summary SheetLNG On-shore Terminal with Salt Cavern StorageBishop Process Bare Steel Installed Freight Taxes Contract TotalAverage capacity 1.75 Bcfd Equipment Concrete Direct & Spares Duties Engineering Cost
Facility Basis - Firm Service Facility Costs, $ Financial Structure % Capital RateCargos per Year 235 Marine Port Facilities 127,722,695 Sr. Debt Percent of Capital 50.0% 6.75%LNG Discharge per Ship, cubic meters LNG 138,000 LNG Process & HP Pipeline 51,374,800 Jr. Debt Percent of Capital 0.0% 0.0%LNG Btu content, Btu/scf 1067 Terminal Utility System 28,288,700 Equity Percent of Capital 50.0% 15.0%Storage Working Gas Volume, Bcf 16.00 Storage Surface Facility 55,900,000Storage Base Gas Volume, Bcf 7.30 Site Specific Misc -10,670,245 Senior Debt Term 20
Header Pipeline 0 Junior Debt Term 5Engineering & Const. Mgmt. 15,733,050 Base Gas Lease Carrying Cost, %/YR 6.75%
Pricing Project Acquisition & Tech. Rights 50,000Throughput Fee, $/MmBtu 0.095 Owner Costs, Permits, Misc. 7,653,250 FINANCIAL RESULTSOther Revenue - % of Terminal Throughput Rev. 0.0% Financing Fees 15,156,957Terminal Energy Use Charge, % of throughput 0.00% Contingency 40,814,850Assumed Henry Hub Index for initial year $3.50 Total Facility Cost 332,024,057 Cost of CapitalGas Storage Net Revenue Realized $MM/year $0.0 Pretax WACC 10.88%
LNG Terminal Project Metrics WACC 9.60%Other Assumptions Load Factor (based on 240 cargos/yr max) 98% Equity Return (assumed from above) 15.0%Base Gas Price (Delivered), $/Mcf 3.50 Reference Annual throughput, mcf/yr 639,280,701Base Gas Source ("Lease" or "Buy") lease Annual LNG Offloaded, BCF/yr 639 Project EconomicsTotal Operations Cost, $M/Year 8,039 Reference throughput, million mmBtu/yr 682,112,508 Project NPV@Pretax WACC, $M 167,500 - Labor & Maintenance, $M/Yr 7,839 Daily equivalent amount (mcf/day) 1,775,780 Project Pretax IRR 15.9% - Electrical Demand Charge, $M/Yr 200 Tax Rates NPV @ WACC (tax-effected), $M 110,676Management Overhead, $M/Year 360 Federal, %/YR 35.0% Project IRR (tax-effected) 12.7% Property Taxes (assumed amount), $M/Yr 4,000 State, %/YR 4.50%Storage Site Lease Fee, $M/yr 500 Blended Rate, %/Yr. 37.93% Yr. 1 EBITDA $M/year $41,821% Revenue Stream to Inflation Protect, %/yr 100% Property, %/YR, initial year/capital cost 1.20% Avg. EBITDA, Yrs 1-5, $M/year $44,792General Inflation Rate 3.0% Capital Gain Rate for Terminal Value 20%Inflation applied to certain annual costs, %/yr 1.5% Depreciation Equity Returns, AFTER-TaxEnergy Use for Terminal ops., % of throughput 0.35% Depreciation (Straight-Line or Accel) Straight-Line Equity NPV@ Assumed Equity Return, $M 33,937Full storage cavern compression charge rate 0.00% Depreciable Life, Years 20 Equity IRR (calculated) 17.4%% of throughput requiring compression at cavern 0% Project Life, Years 20Project & Technology Rights Debt Coverage Pre-tax
Running Royalty, as % of Henry Hub index 0.00% based on mmBtu throughput Minimum EBITDA/Interest Coverage 3.7Project & License Upfront Payment, $MM 0 Minimum EBITDA/Debt Service 2.7
LNG Terminals Cost Comparison Equipment Summary SheetLNG Offshore Terminal with Salt Cavern StorageBishop Process Bare Steel Installed Freight Taxes Contract TotalAverage capacity 1.75 Bcfd Equipment Concrete Direct & Spares Duties Engineering Cost
Facility Basis - Firm Service Facility Costs, $ Financial Structure % Capital RateCargos per Year 65 Marine Port Facilities 25,067,080 Sr. Debt Percent of Capital 50.0% 6.75%LNG Discharge per Ship, cubic meters LNG 138,000 LNG Vaporization & Process 19,981,000 Jr. Debt Percent of Capital 0.0% 0.0%LNG Btu content, Btu/scf 1067 Terminal Utility System 175,000,000 Equity Percent of Capital 50.0% 15.0%Storage Working Gas Volume, Bcf 16.00 Storage Surface Facility 0Storage Base Gas Volume, Bcf 7.30 Site Specific Misc 3,640,466 Senior Debt Term 20
Header Pipeline 0 Junior Debt Term 5Engineering & Const. Mgmt. 12,001,454 Base Gas Lease Carrying Cost, %/YR 6.75%
Pricing Project Acquisition & Tech. Rights 50,000Throughput Fee, $/MmBtu 0.295 Owner Costs, Permits, Misc. 7,653,250 FINANCIAL RESULTSOther Revenue - % of Terminal Throughput Rev. 0.0% Financing Fees 13,421,313Terminal Energy Use Charge, % of throughput 0.00% Contingency 35,916,000Assumed Henry Hub Index for initial year $3.50 Total Facility Cost 292,730,563 Cost of CapitalGas Storage Net Revenue Realized $MM/year $0.0 Pretax WACC 10.88%
LNG Terminal Project Metrics WACC 9.60%Other Assumptions Load Factor (based on 65 cargos/yr max) 100% Equity Return (assumed from above) 15.0%Base Gas Price (Delivered), $/Mcf 3.50 Reference Annual throughput, mcf/yr 176,822,322Base Gas Source ("Lease" or "Buy") lease Annual LNG Offloaded, BCF/yr 177 Project EconomicsTotal Operations Cost, $M/Year 8,039 Reference throughput, million mmBtu/yr 188,669,417 Project NPV@Pretax WACC, $M 121,293 - Labor & Maintenance, $M/Yr 7,839 Daily equivalent amount (mcf/day) 491,173 Project Pretax IRR 15.1% - Electrical Demand Charge, $M/Yr 200 Tax Rates NPV @ WACC (tax-effected), $M 77,396Management Overhead, $M/Year 360 Federal, %/YR 35.0% Project IRR (tax-effected) 12.1% Property Taxes (assumed amount), $M/Yr 4,000 State, %/YR 4.50%Storage Site Lease Fee, $M/yr 500 Blended Rate, %/Yr. 37.93% Yr. 1 EBITDA $M/year $34,430% Revenue Stream to Inflation Protect, %/yr 100% Property, %/YR, initial year/capital cost 1.37% Avg. EBITDA, Yrs 1-5, $M/year $36,944General Inflation Rate 3.0% Capital Gain Rate for Terminal Value 20%Inflation applied to certain annual costs, %/yr 1.5% Depreciation Equity Returns, AFTER-TaxEnergy Use for Terminal ops., % of throughput 1.00% Depreciation (Straight-Line or Accel) Straight-Line Equity NPV@ Assumed Equity Return, $M 17,392Full storage cavern compression charge rate 0.00% Depreciable Life, Years 20 Equity IRR (calculated) 16.4%% of throughput requiring compression at cavern 0% Project Life, Years 20Project & Technology Rights Debt Coverage Pre-tax
Running Royalty, as % of Henry Hub index 0.00% based on mmBtu throughput Minimum EBITDA/Interest Coverage 3.5Project & License Upfront Payment, $MM 0 Minimum EBITDA/Debt Service 2.5
OSBL INFRASTRUCTURE Includes access roads, bldgs, hospitals, stores, bridges
OSBL Infrastructure Subtotal 0 0
UNADJUSTED GRAND TOTAL 178,245 35,904 5,904 16,055 4,507 15,903 256,490
CONTINGENCY 12% OF THE TOTAL 30,779
ADJUSTED GRAND TOTAL 287,268
Customer:
The United States Department of Energy National Energy Technology Laboratory
Date of Issue: 24/04/2003
Document Title:
Task 3 Doc 08: Matrix for Comparison of Five LNG Terminal Designs Doc # & Version: Doc 08 r1.0 Page 1 of 4
Filename: 41653R01
Matrix for Comparison of Five LNG Terminal Designs
BY MICHAEL M. MCCALL WILLIAM M. BISHOP
D. BRAXTON SCHERZ
r 1.0 For client review 02/09/03 BS MM
Issue Orig. Chk. Appr. Chk. Appr. ReviewVersion Reason for Issue Date CGI NETL
Document Title: Document No: Matrix for Comparison of Five LNG Terminal Designs
CGI/DOE_DOC 08 DE-FC26-02NT41653
Customer:
The United States Department of Energy National Energy Technology Laboratory
Date of Issue: 24/04/2003
Document Title:
Task 3 Doc 08: Matrix for Comparison of Five LNG Terminal Designs Doc # & Version: Doc 08 r1.0 Page 2 of 4
Filename: 41653R01
TABLE OF CONTENTS
1. MATRIX FOR COMPARISON PURPOSES.....................................................................................................3
Customer:
The United States Department of Energy National Energy Technology Laboratory
Date of Issue: 24/04/2003
Document Title:
Task 3 Doc 08: Matrix for Comparison of Five LNG Terminal Designs Doc # & Version: Doc 08 r1.0 Page 3 of 4
Filename: 41653R01
1. MATRIX FOR COMPARISON PURPOSES
This matrix is based on a five tiered rating system with indicators depicting “Excellent to Acceptable” as follows:
The first section of the matrix is based on the quantitative results of the factored analysis (see Doc 07 for Summary Table) discussed in prior sections and other calculated parameters. The quantitative analysis for the five terminals lends itself to a ranking whereby each terminal is uniquely rated “Acceptable through Excellent” unless the numerical results were equivalent. To better interpret the quantitative results of the matrix below, the reader should refer to Table 4.3 in Doc 07 “LNG Terminal Cost Comparison.” All subjective parameters are based on a qualitative analysis and represent the experience of the Study Team and industry polling. Because the rankings in each parameter under the qualitative analysis are subjective, the five terminals may share a common ranking from time to time.
Parameter Pacific Coast
Atlantic Coast
BPT Onshore
BPT Offshore
Energy Bridge
Quantitative
Annual Sendout TIC per Capacity
OPEX per Capacity Fuel Consumption
Service Fee
Qualitative
Security
Capacity
Economy Buyer Response
= Excellent
= Very Good
= Good
= Fair
= Acceptable
Customer:
The United States Department of Energy National Energy Technology Laboratory
Date of Issue: 24/04/2003
Document Title:
Task 3 Doc 08: Matrix for Comparison of Five LNG Terminal Designs Doc # & Version: Doc 08 r1.0 Page 4 of 4