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Richard Lammons Chevron Global Gas Doha, Qatar March 9-12, 2009

Managing the United States LNG Terminal Capacity Cycle 7th Doha Natural Gas Conference & Exhibition. Richard Lammons Chevron Global Gas Doha, Qatar March 9-12, 2009. Cautionary Statement.

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Richard Lammons Chevron Global Gas Doha, Qatar March 9-12, 2009

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  1. Managing the United States LNG Terminal Capacity Cycle7th Doha Natural Gas Conference & Exhibition Richard Lammons Chevron Global Gas Doha, Qatar March 9-12, 2009

  2. Cautionary Statement • Chevron has obtained the permission and consent to make the information contained in this presentation available to the recipients of the presentations. Chevron does not make any representations or warranties either express or implied as to the accuracy or completeness of the information, the text, graphics, links or other items contained herein or with respect to the suitability, feasibility, merchantability, title or condition of any of the information contained herein. To the extent the presentation contains forward looking statements by Chevron, these statements are made based on Chevron’s current assessment, and future events may change the basis for the statement. Recipients’ use of the information contained in this presentation is at their own risk, and Chevron expressly disclaims any liability for any errors or omissions and for the use or interpretation thereof by others. The information contained in this presentation is for informational purposes only.

  3. US LNG Terminal History 30 $3.00 Cycle 1 25 $2.50 20 $2.00 Terminal Gas Production Construction $ / MMbtu TCF 15 $1.50 / Mothball 10 $1.00 LNG 5 $0.50 Imports US Wellhead Gas Price PL Gas Imports 0 $0 1940 1950 1960 1970 1980 1990 Source: eia The 1970-1980s realized the US’ first LNG terminal cycle • Domestic gas production plateau • Rising price • Supply outlook

  4. Renewed LNG Interest Oil 25 - 20 - 15 - 10 - 5 - 0 - 30 $9 Gas Cycle 2 $8 25 Consumption1 $7 Production 20 $6 $/MMBtu $5 TCF Million Barrels per Day Production2 15 $4 10 $3 $2 Net Imports 5 US Wellhead $1 Gas Price 1950 1960 1970 1980 1990 2000 0 $0 1990 1995 2000 2005 2010 • Petroleum products supplied is used as an approximation for consumption • Crude oil and natural gas plant liquids production Source: eia Source: EIA • Oil imports exceeded production • Domestic gas production reached plateau • Gas prices began dramatic rise

  5. 2002 Major Turning Point Chevron and others in industry worked to remove economic and regulatory barriers November 2002: Legislation amended DWPA allowing offshore terminal development December 2002: FERC revised onshore terminal policy with the Hackberry decision July 2003: LNG terminals gained national attention Rush of applications underway 5

  6. LNG Terminal Growth 7 6 4 3 2 5 1 Canada or Mexico Source: FERC As of January 15, 2009 • Existing or under construction: 18 (22 Bcfd) • Approved—On Hold: 21 (26 Bcfd) • Proposed: 10 (13 Bcfd) • Potential: 13 (13 Bcfd)62 (74 Bcfd)

  7. Recap of the LNG Terminal Cycle Cycle 1 Terminal Construction Cycle 2 Terminal Re-openings, Expansions, New Construction $9 $8 $7 $6 $5 $/MMBt $4 Excess Capacity, Mothball Excess Capacity, Rationalization $3 $2 $1 $0 30 25 20 15 Gas Production TCF / Year 10 5 PL Gas Imports US Wellhead Gas Price LNG Imports 0 Source: EIA 1940 1950 1960 1970 1980 1990 2000 2010 • As observed from 1970-1980 and 2000–2009 occurrences, there are three fundamental stages Opportunity Growth Rationalization

  8. US Natural Gas Supply Outlook Alternate Views of LNG Imports Unconventional Gas Highly Dependent on Unconventional Gas Performance

  9. Managing the Terminal Cycle • Recognize and promote the value of a strong US natural gas market • Promote active industry initiatives • Build organizational capability

  10. Valued US Natural Gas Market Largest Working Gas Storage Capacity Capture Seasonal Price Differentials 4.0 4.5 2.7 0.1 “ “ ” ” Source: eia Accommodate Seasonal LNG Supply Swings High Liquidity & Extensive Gas Distribution System 120 Source: eia 100 80 215,000 miles Interstate PLs 87,000 miles Intrastate PLs 60 40 20 0 J A S O N D J J F M A M 10

  11. Industry Initiatives Organizations LNG Start-up and Operations Consortium (SOC) Prepare for growth in terminal operations Safe, reliable and efficient operations Center for Liquefied Natural Gas (CLNG) Clearinghouse of educational and technical information Single voice representing LNG issues affecting public policies LNG Shipping Societies Joint Industry Projects for technology development Regulatory Cooperation and Compliance Waterway safety Awareness and training 11

  12. Organizational Capability Grow skilled operational resource base Prepare for increased operations of LNG receiving terminals and vessels Create options to enhance flexibility 12

  13. LNG : The Long ViewAn IOC Perspective • Final Thoughts • Chevron believes the long term fundamentals support investment • LNG is a great fit for our portfolio • We have the resources and balance sheet to succeed

  14. Chevron Global Gas Thank you

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