TETCO Gas Quality Meeting

Crown Landing LNG Project – January 23, 2007

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Legal Disclaimer

This presentation is provided for information only. It should not be treated as representing the views or advice of BP, or as representing any responsibility by BP for decisions about gas quality management and operational matters. BP and its affiliates make no representation as to the accuracy or completeness of the information contained herein or otherwise provided by BP, its affiliates or third parties, and accept no responsibility or liability, in contract, in tort, in negligence, or otherwise, should the information be found to be inaccurate or incomplete in any respect.

BP and its affiliates are not acting as an advisor to the recipient of this information, and the ultimate decision to proceed with any transaction rests solely with the recipient of this information. BP disclaims all liability arising out of the information provided or matters discussed. You should obtain your own independent, expert technical advice on specific matters.

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Outline

• BP and our LNG Business

• Crown Landing Project

• LNG importation and Interchangeability

− What are the Core Issues?

− Difference between LNG and Pipeline gas

− Potential Sources of Supply

− Interchangeability Data, Studies and Experience

− Gas Quality Specifications

− Managing Interchangeability and Future Trends

• Summary

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What we Do

BUSINESS SEGMENTS

RESOURCES

Exploration & Production

CUSTOMER FACING

Gas, Renewables, Supply & Trading

Refining & Marketing (incl. Aromatics & Acetyls)

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BP in LNG

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BP in North America Gas• BP has built an extraordinary presence in the North American gas value chain

• Top tier natural gas producer and reserves holder

• Number 1 marketer of natural gas

• BP NA Gas & Power has over 800 people in 25 offices managing over 25 bcf/d of gas sales

• Serving over 1200 end-user customers groups; links to 1000+ additional customers

Top North America Gas Marketers

Rank Company S&P Rating 4Q05

1 BP AA+

2 ConocoPhillips A- 11.8

3 Coral (RD Shell) AA 11.0

5 Chevron AA 6.2

6 Constellation BBB+ 5.6

7 Nexen BBB- 5.1

8 Louis Dreyfus E.S. Not Rated 4.4

9 Cinergy BBB+ 4.2

4 Sempra BBB+ 9.6

Not Rated

26.3

10 Tenaska 4.1

Source: Gas Daily, S&P ratings as of March 20, 2006

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• 1.2 bcf/d send-out; 1.4 bcf/d peak

• Single pier sized for up to 200k m3 ships

• Three 150,000m3 storage tanks

• Nitrogen blending

• Access to three major interstate pipelines

• 36 month construction period; Start-up 2012

• Located in Logan Township, New Jersey

• 75 miles up the Delaware River

• Industrial area, low population density

• 174 acres site, only 40 acres actually utilized

Crown Landing Project Scope

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Crown Landing Project Status

• FERC approval obtained in June 2006

• BP on track with Local and State permits

• Expected Project timeline:

− Final permits 2008

− Construction begins 1Q 2009

− Expected start-up 1Q 2012

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Pipeline Interconnects

• Three pipeline interconnects

• Transco and Columbia on site

• TETCO requires a 12 mile interconnect

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LNG Importation – Core Issues

• Gases from multiple sources have different compositions and properties

• New gas to an existing market may not be interchangeable with current supplies

• Gas quality and interchangeability standards are required to meet the needs of customers and suppliers alike

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LNG and Pipeline Gas

• LNG is still natural gas, but in liquid form for ease of transportation

• Due to the liquefaction process, its quality has some unique differences from typical pipeline gas:

− It’s drier

− Little C4+

− Low N2

− Virtually no contaminants (practically no CO2, H2S, sulfur and other solids typically found in natural gas)

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LNG Supply

• Over 71% of U.S. LNG imports currently come from Trinidad

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Data and Studies

• Examples of Key Studies Available:− AGA, USBM and other European studies on interchangeability

− AD Little study for Everett & Elba Island

− Recent GTI study

− Recent TIAX study for Cove Point

− Other LDC studies (Brooklyn, PSEG, etc.)

− Current Socal & CEC studies for California

− UK studies by Advantica

− Gasunie studies

− Current DOE testing

• Available Data: − GRI gas quality statistics for USA (1992)

− NGC+

− NAESB started the gas quality posting for pipeline (since last Qtr 2005)

− Post Katrina operational data

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Industry Experience – Some Examples

• LNGs with Wobbe number of about 1400, representing a 4% change from historical,were successfully accommodated in Everett terminal with air blending.1

• Bilbao LNG import terminal and power plant in Spain has been able to accommodate gases of varying gas qualities within a HHV of 800 – 1200 and a modified Wobbe Index of +/- 5%.2

• Recent Power Turbine Performance in California during heat content surge resulting from shutdown of some processing plants in Canada.3

• Rich gases were landed and transported via the Trunkline system with so reported problems during and after hurricanes Rita and Katrina.4

References:

1. Environ presentation: 2006 Algonquin gas quality workshop.

2. BP internal data.

3. 2005 Aspen Environmental Group report to CEC.

4. Trunkline Gas Company website.

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North East Gas Quality Specifications

NGC+ Current NE Market Historical

Heating Value (BTU/SCF)

≤ 1110 ≤ 1065

Wobbe (BTU/SCF) +/- 4% around historical averages with cap of 1400

---

N2 and Inerts ≤ 4% ≤ 2%

C4+ ≤ 1.5% ---

• Current heat content in service areas varies from 1018 to 1065 with averages of 1035 BTU/SCF or Wobbe from 1340 – 1369 with averages of 1355 BTU/SCF)

• NGC guidelines are performance based, industry consensus and included in the FERC policy statement of 2006

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LNG Supplies with NGC+ Specifications

Measure NGC+ NE Historical Experience

HHV Max 1110 ≤ 1065

Wobbe Historical ± 4% with max. 1400

Butane plus (C4+) Max 1.5%

CO2 + N2 Max 4% Max 2 %

Max HHV and Wobbe limits for LNGs before blended

with N2

HHV ≤ 1156

Wobbe ≤

1472

HHV ≤ 1087

Potential LNG Supply Sources Meeting Spec

Existing supplies:

Trinidad, Egypt, Arzew, Nigeria, Rasgas, Skikda, Qatar, Oman,

Adgas, Malaysia, Bontang

Future supplies: Tangguh, Baltic, Egypt, Nigeria, Qatar, Snovit,

Equitorial Guinea, Gorgon, Peru, Angola

Existing supplies: Trinidad, Egypt

Future supplies: Tangguh, Baltic, Egypt, Qatar,

Nigeria Brass, Angola

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Managing Interchangeability

• Inject N2 at the Crown Landing Terminal

• Blend richer LNG with leaner LNG in-tank at the Crown Landing Terminal

• Blend vaporized LNG exiting Crown Landing Terminal with pipeline gas

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Perspective on Future Trends

• Days of matching ONE supplier with ONE customer are over

• Tight supply constraint and increasing market demand will lead to some convergence of gas quality or interchangeability specifications globally

• Convergence in the US toward NGC+ recommendations

• Flexible gas specifications will result in wider availability of source of LNG and increase security of supply

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Summary

• Suppliers, Pipelines and Customers need to work together to address gas quality issues

• Introducing overly tight composition limits in tariffs will unduly restrict new sources of supply and disadvantage the U.S. market

• As per FERC policy statement, a clear demonstrable rationale to move to tighter limits would need to be evidenced

NGC+ is the consensus way forward