KITIMAT LNG TERMINAL:

1

• KITIMAT LNG TERMINAL
• The shortest route to North Americas energy
  market

2
Kitimat LNG Inc.

• A privately owned and capitalized Canadian energy
  development company
• Capitalized with Canadian and US institutional
  investors, management and private investors
• Core management team of 6
• Average career spanning 20 years in energy
  markets and infrastructure projects

3
Kitimat LNG Terminal

• 500 million regasification terminal located on
  the Pacific Coast of North America
• Provides access to the largest natural gas market
  in the world
• Community and First Nations fully supportive and
  Regulatory approvals are imminent
• Construction in 2006 Operational in 2009

4
What is LNG?

• LNG is natural gas cooled to -160 C where it
  condenses to a liquid
• Volume reduced 600 times
• Odorless, colorless, non-corrosive, non-toxic
• Kept at atmospheric pressure

5
LNG Supply Chain
Exporter
Importer
6
LNG Safety Record

• Excellent safety record
• In existence for 40 years
• 80,000 carrier voyages worldwide with no sea
  related accidents
• Advances in technology and monitoring have made
  LNG even safer
• Vessels must meet stringent international,
  national and regional safety codes
• State-of-the-art LNG double-hulled carriers used

7
Kitimat LNG key commercial drivers
8
LNG Supplements Canadian gas supplies
Net U.S. imports of natural gas, 1990-2030
(trillion cubic feet)
Source EIA
9
North American Gas Supply Price impacts

• North American supply comes from
• Conventional gas
• Coal gas
• Tight sands
• Arctic gas
• Exotics - coal gasification and gas hydrates
• With or without LNG - the marginal supply source
  is higher cost domestic production or expensive
  crude oil product substitutes
• LNG is becoming a significant solution to the
  growing gap between supply and market demand
• LNG supply will not depress the market

10
Western Canadian Sedimentary Basin Initial
Production Rates

• 3.5x as many wells drilled in 2005 vs. 1998, yet
  total production added from new wells was the
  same at 4.0 bcf/d
• Initial Production rates have fallen by 75 to
  262 mcf/d over the past 10 years

Source GeoScout
11
LNG import terminal opportunities

• 69 existing, proposed, or potential North
  American LNG terminals
• 5 constructed
• Only 1 currently approved on Pacific Coast
• Kitimat LNG Terminal approval imminent

As of June 1, 2006
12
Kitimat LNG Terminal Location
13
Kitimat LNG Terminal location benefits

• Grass roots community support
• First Nations agreement in place
• Douglas Channel offers a deepwater all season
  port
• Access to significant Pacific Basin LNG supplies
• Pacific Northern Gas Pipeline provides access to
  Westcoast Pipeline and the North American grid
• Two days shorter return sailing times to Kitimat
  for Pacific Basin suppliers compared to other
  proposed North American locations

14
Terminal configuration

• Offshore LNG tanker berth and unloading jetty
• Two LNG storage tanks ( permitted for 3)
• NGL separation unit
• Send-out pipeline for natural gas

15
LNG Receiving Terminal at Kitimat, BC
16
Connection to market
PNG Current Flow
PNG Proposed Flow
17
Easy access to Canadian and US markets

• Supply enters major transmission pipelines
• Access to markets in
• BC
• Alberta
• Pacific Northwest
• California
• Mid West and
• North East

18
Market interest in Kitimat terminal

• Considerable capacity interest
• Off-take customers believe their portfolios
  should contain LNG supply
• Off-take customers have long-term core need in
  natural gas with few long term supply
  alternatives
• LNG can provide the long term supply alternatives
• Off-take customers include
• industrials
• oil sands projects
• utilities
• independent power projects and
• energy marketers

19
Kitimat LNG Terminal gas supply options
Additional Pacific Basin supply currently
on-stream or under construction is 26 mt/a
20
Kitimat LNG strategic advantages
21
Shipping days compared to West Coast terminals
Significant shipping cost advantage at Kitimat LNG
22
At least 2 days shorter sailing times to Kitimat
from Pacific Basin ports
Kenai 2.1 days
Sakhalin 7.2 days
Qatar 22 days
Indonesia 14 days
NW Shelf 16 days
Bolivia 15 days
23
Lower marginal shipping costs to Kitimat
Based on number of shipping days and additional
ships required to move same volume of LNG per year
24
Advantages of Supply Basin location

• The supply basin provides
• Back-stopping and supply security for down-stream
  markets
• Sophisticated physical and financial
  counter-parties
• Optimization of liquefaction, shipping, storage
  and send-out positions
• Significantly reduced risks of terminal start-up
  delays
• Supply basin terminals provide
• Significantly lower mitigation costs re planned
  or unplanned outages
• Supply redundancy and flexibility for LNG
  suppliers
• Suppliers with ability to divert cargoes and
  source domestic replacement gas

25
Exposure to a sophisticated energy market

• The market is comprised of hundreds of
  credit-worthy counter-parties
• Demand is growing despite record high gas prices
• The consuming market is interested in long-term
  price stability
• LNG supply will provide long-term stable supply

26
Upside pricing exposure
27
Comparative netbacks of Westcoast terminals
10-year from Cal 2009
Basis relationships have changed and will change
but LNG netbacks will be similar whether received
at Kitimat or Socal.
Supplier FOB Price 4.96
Aeco basis .73
Supply Side
Shipping to Kitimat 1.52
Regas and Tport .80
Market Side
Tangguh
Henry Hub 8.01
Supplier FOB Price 4.67
Socal Basis .60
June 1, 2006 settlements
Shipping to Costa Azul 1.94
Regas and Tport .80
28
Kitimat LNG Terminal - Benefits

• North America is the largest natural gas market
  in the world
• Canada and the US are highly sophisticated energy
  markets
• Two days shorter return sailing times to Kitimat
  for Pacific Basin suppliers compared to other
  proposed North American locations
• Provides access to main gas pipelines that access
  all of the North American market
• Kitimat Terminal provides low risk exposure for
  Pacific Basin suppliers to diversify portfolios
  into North America

29
In closing

• When suppliers enter Kitimat, they enter North
  America
• Regulatory approvals imminent
• Community support in place
• Shorter sailing times, lower costs
• This project is ready to go - now

30

• KITIMAT LNG TERMINAL
• The right project at the right time

31

• www.kitimatlng.com