This document discusses the LNG industry from the perspective of two large engineering and construction companies, SNC-Lavalin and Kentz. It provides an overview of major LNG projects the companies have worked on globally. It also analyzes challenges in the LNG industry like rising costs, scheduling delays, and ensuring stable supply and demand. The document concludes by advocating for collaborative project teams and a focus on safety, reliability, environmental protection, and predictable outcomes.

1. Ichthys LNG, Australia
LNG Value Chain- a Canadian Contractors perspective…
Ichthys LNG, Australia

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Long History, Strong Legacy
Founded in 1911 in Canada
Expanded internationally in 1921
Became public in 1986 trading on
Toronto Stock Exchange
SNC & Lavalin merge- 1991
Acquired Kentz in Aug 2014
Founded in 1919 in Ireland
Expanded internationally in 1970
Became public in 2008 trading on the London Stock Exchange
Acquired Valerus in Jan 2014, provider of gas processing, compression and production solutions
Presence in over 50 countries, 45,000 employees, providing EPC & EPCM Services to clients in Oil & Gas, M&M, Power and Infrastructure markets

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Americas
Africa
Europe
Middle East and Caspian
Far East and Russia
Australasia
Our Global Reach

4. Nowhere too cold, too hot, or remote..
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Qatar
Exxon/Rosneft Sakhalin
PNG
Australia

5. Cold climate projects
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Exxon Neftegas Limited
Sakhalin 1-OPF, Chayvo, Crude Export Terminal & Odoptu EPF
Sakhalin 2-LUN-A Commissioning of the Sakhalin Energy Investment Company (SEIC) offshore platform

6. And warmer climes....
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Gorgon, Pearl & Ichthys

7. Regasification terminals
Canaport -New Brunswick
Rabaska Quebec

8. and leave not a trace left behind..
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Decommissioning & Reclamation of Polaris Mine, Little Cornwallis Island, Nunavut, Canada
Clean-up of Radar Station (Baffin Island) Cape Dyer, Nunavut, Canada

9. LNG Market observations
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Odoptu Field in north eastern Sakhalin

10. Market overview
Tight until 2017 until all the 94Mtpa of capacity under construction is on stream.
Developers are looking at expansions & New Build - Arctic to the Tropics
488Mtpa of new supply projects under development, - competing to serve a growing demand of some 175Mtpa by 2025 (who are the Losers?)
North American exports are unlikely to be a complete solution
Costs need to be controlled since the growing demand is in price sensitive markets.
$40/barrel?
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11. Our challenges…
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•Demand – Supply Equilibrium
•Exploration in Frontier locations
•Geo-Political friction -Security of Supply
•Greater environmental ( & safety ) challenges
•Cost & Schedule Predictability
•Technological – drilling, shipping (Artic)
•PR & Positive Legacy

12. Cost Breakdown
1%
7%
3%
29%
10%
19%
31%
Cost Breakdown by Plant Area
Site Preparation
Gas Treatment
Fractionation
Liquefaction
Refrigeration
Utilities
Offsites (Storage,
Jetty, Flare)
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•Project Scope
•Project Complexity
•Location
•Equipment & Materials
•Engineering and Project Management
•Contractor Margin
•Owner’s Costs
•Currency Exchange Risk
9%
8%
29%
19%
35%
Cost Breakdown by Category
Owner's Costs
Engineering &
Project
Management
Equipment
Balk Materials
Construction
Cost Drivers

13. Mega Projects cost escalation
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EY* Findings aligned with 2011 IPA study -70% of upstream megaprojects confronted cost overruns or delays, a deterioration from 2003, when 50% were either late or over budget EY also evaluated a sample comprised of the largest 20 post-FID projects. 65% of these projects were confronting cost overruns with an average escalation of 23% from the approved FID budget. Over 78% exceeded Base Line schedule
•Identified 5 fundamental causes of overruns and delays: # Portfolio and project commercial context # Project development # Project delivery # Regulatory challenges # Geopolitical challenges
*Source: EY Report Aug 2014

14. We are all in this together…
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65% Projects over Budget 78% Over schedule

15. Future Cost Reductions?
•Commercial Model Review
•New EPC Contractors
•Challenge the Major Vendors – Competition
•Joint Developments / Shared Services
•Get the Basics right
•One Team Concept
– Profit related to Outcomes
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16. the future? Collaborative project teams
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•Provide strong leadership
•Engage your stakeholders
•Set clear, achievable goals - environmental & safety excellence, - reliability, operating cost, capital cost.
•Communicate the messages – engage everyone, celebrate success along the way

17. And in Conclusion…..
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•Good PR & Stakeholder Management vital
•Speed to Market for new LNG facilities is both a challenge and an Opportunity
•Back to basics…
•Positive, Predictable outcomes are essential
•One Team Concept –Profit related to Outcomes?

18. Questions….
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19. Contact details:
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John J. Jeffers Group Development Director Kentz Engineers & Constructor Member of the SNC - Lavalin Group P.O. Box 34826, Abu Dhabi United Arab Emirates T: +971 2 4013200 F:+971 2 5591202 M: +971 56 6691085 john.jeffers@kentz.com