hawaiigas lng presentation

LNG IMPLEMENTATION PLANNING A Plan to Serve the State of Hawai‘i

The Gas Company, LLC

TOPICS

• Hawaii’s Energy Landscape

• The Price of Paradise

• Why HAWAI‘IGAS

• Strength of Macquarie Partnership

• Our Approach

• LNG Centralized Storage

• Essential support for commitment of capital

11/27/2012 Proprietary Material 2

HAWAII’S ENERGY LANDSCAPE

• Hawai‘i has no sources of naturally occurring oil or gas.

• Abundant sunlight, wind, geothermal energy - No sufficient infrastructure to capture, store and convert that energy to serve our needs.


• The two oil refineries near Honolulu produce nearly 90% of the fuel used in Hawai‘i

• Sub-scale for continued profitable operation.

Chevron Refinery Tesoro Refinery

TOPICS





• Our Approach




HAWAI‘I IS THREATENED BY OIL DEPENDENCE

• Hawai‘i is the most oil-dependent state - ~ 85% of our total primary energy, 76% of our electricity, and ~97% of our

transportation fuels are produced from oil

Petroleum 76%

Biomass ~1%

Municipal Solid Waste

3%

Hydroelectric ~1%

Geothermal 2% Wind

2% Coal 15%

Photovoltaic ~1%

Hawai‘i Power Generation By Source (2010)

Source: HI Department of Business,

WHAT WE DO

• Making SNG Converting naphtha to methane @ $35.00/MCF

• LPG distribution @ $28/MCF

THE HAWAI‘I ENERGY MARKET

7

• LNG - technically and economically feasible

• LNG for Hawai‘i underway

• Economic benefits for all Hawaii in power and industrial

• The simple price advantage is 30-45%--even after liquefaction and delivery costs

$-‐

$5

$10

$15

$20

$25

LNG-‐-‐LowCost

LNG-‐-‐HighCost

Low-‐SulfurFuel Oil

$/mmBT

U delivered

115% Henry Hub Liquefaction CostShipping to Hawaii RegasificationLSFO, Honolulu

$9.60

$6.10

TOPICS





• Our Approach




WHY HAWAI`IGAS

11/27/2012 For Intended Use Only 9

Capabilities & Experience HAWAI`IGAS

Skilled workforce – gas engineering, operations, compliance and safety

State-wide presence and operating infrastructure

Our land-based approach supports state-wide LNG service

Solid financial position and ability to scale operations

Local operating experience

Started import process

Diversifies fuel supply for state

LPG or Containerized LNG distribution capability

Gas utility franchise serving all urban centers

DISTRIBUTION CHALLENGES


Kauaì – Gas Service Oàhu- Gas Service

Hawaiì Island – Gas Service

• Island economy presents distribution challenges similar to Northern Europe

• LNG model follows current LPG model – Oàhu terminal with barge distribution

HAWAIÌGAS serves 68,658 (35,349 utility and 33,309 nonutility) residential and commercial customers

Kauaì – Electric Demand Oàhu - Electric Demand

Hawaiì Island – Electric Demand

Huki Kai Barge: 424,000 Gallons Pono Kai Barge: 657,000 Gallons

Barge

Maui County – Gas Service Maui County – Electric Demand

TOPICS





• Our Approach




MACQUARIE GROUP


Macquarie Group

$339bn+ in total AUM

14,200+ staff across 70+ offices

in 28+ countries

$9.8bn+ Market Capitalization

Global provider of: • Banking • Financial advisory • Investment & funds management

services in major international financial centers

Macquarie Infrastructure and Real Assets (MIRA)

Global leader in infrastructure and real assets management – operating in 23 countries*

Portfolio Companies Provide:

• *Data as of March 31, 2012

~100 Portfolio

Businesses

~55 Properties

$94b Assets Under Management

GAS +22 million households

ELECTRICITY +2.7 million households

TOPICS





• Our Approach




Phase I

Phase III

Phase II

LNG MOBILE EMERGENCY BACKUP

EXPANDED ISO DELIVERIES & PERMANENT STORAGE

VESSEL DELIVERIES & EXPANDED STORAGE

Portable LNG containers and vaporizers

Stationary LNG storage and vaporizers

Small-scale (Methane-Coral class) LNG/LPG carriers to Hawaii;; cryotanks

THE THREE-PHASE LNG PLAN

14

11/27/2012

LNG IMPLEMENTATION DETAIL

15 Proprietary Material

Elements Phase I Phase II Phase III Timing 2013-2015 2016-2018 2019-2025

Purpose SNG system backup Small scale thermal and power generation

Large scale power generation

Supply Logistics ISO container on conventional ships

ISO container on conventional ships

LNG tanker or barge with ongoing ISO

Volume 6% of SNG 10-15% of SNG Specialized commercial and industrial applications

75% of SNG load Neighbor Islands + Oahu power gen of 200-500 MW

Infrastructure and Equipment

Up to 20 ISOs 1-2 vaporizers

Phase I plus up to 120 ISOs and additional vaporizers

LNG terminal facility and distribution infrastructure

Storage Mobile ISOs One or more locations with 70,000 gallons

15-25 million gallons of storage statewide

FERC Yes Yes Yes

TOPICS





• Our Approach




ENTIRE STATE TO SHARE BENEFITS


• Develop up to 20 million gallons of LNG storage capacity on Oahu - Centered on Oahu – population 850,000;; 1600 MW generating

capacity

- Storage location within close proximity to Pearl Harbor and critical Dept. of Defense installations

Environmental Security

National Security Economic Security

Energy Security

TOPICS





• Our Approach




INVESTMENT IN CCGT NECESSARY

Clean low carbon alternative to petroleum

Benefits power producers, vehicles and marine transportation

Lowers costs for consumers

20

BRINGING BUSINESS AND GOVERNMENT TOGETHER

Unified approach to serving the islands

hawaiigas lng presentation

Documents

low lng

conventional lng tanker

hawaii energy market

northern europe lng

price of paradise

geothermal energy

total primary energy

hawaii cryotanks14