LIQUID NATURAL GAS (LNG) VS. LIQUID BIO GAS (LBG) Vaasa EnergyWeek

LIQUID NATURAL GAS (LNG) VS. LIQUID BIO GAS (LBG) Vaasa EnergyWeek 14.3.2016 Kenneth Engblom Director, Business Development LNG Infrastructure Wärtsila 1 3/14/2016 Vaasa Energy Week- LNG vs. LBG / Kenneth Engblom

AGENDA Wärtsilä is a world leader in large diesel and gas engines for power plants and ships. The technology is also prepared for renewable fuel in gas or liquid form. When will renewable fuel be the number one choice, how to make Liquid Bio Gas (LBG) the real alternative to Liquid Natural Gas (LNG)? AGENDA WÄRTSILÄ AT A GLANCE LNG LBG LNG VS LBG CONCLUSION

WÄRTSILÄ CORPORATION LEADER IN Marine/ Offshore Power Generation 18,900 Professionals SOLUTIONS FOR Net sales by business 2015 Services 43% Marine Solutions 34% Listed in Helsinki 5,0 billion turnover Energy Solutions 22% EFFICIENCY FLEXIBILITY ENVIRONMENTAL SOLUTIONS

WÄRTSILÄ LNG SOLUTIONS LIFECYCLE ONSHORE OFFSHORE LNG storage & regasification barge LNG satellite & bunkering terminals Small/Medium LNG terminals Mini LNG liquefaction & Bio Gas liquefaction plants Small LNG liquefaction plants LNG regasification BOG reliquefaction Cargo Handling System Gas and LNG Carriers Fuel gas handling system Ship and Cargo Tank design Lifecycle services Product and technical support Start up support Spares

WÄRTSILÄ CORPORATION

AGENDA WÄRTSILÄ AT A GLANCE LNG (Liquid Natural Gas) LBG (Liquid Bio Gas) LNG vs. LBG CONCLUSION

NATURAL GAS AS LNG IS CONQUERING NEW MARKETS Global interest in LNG is driven by Energy security and lower energy costs Sustainability and emission reduction in power generation and shipping Perfect balancing fuel for intermittent renewable power generation and escalating demand fluctuation. By 2035 LNG will have overtaken pipelines as the dominant form of traded gas BP Energy Outlook 2035

LNG CONSUMERS Typical consumers: Power generation Baseload & peaking power plants Energy intensive industries Mines & Drilling rigs Metal processing plants Petrochemical plants Manufacturing plants, e.g. fertilizer, cement, gypsum boards, glass, chemicals Gas driven transportation Ships Trucks Domestic gas consumption Cooking & heating

NATURAL GAS - RESOURCES

LARGE SCALE LNG- HOW IT USED TO BE!

SMALL SCALE LNG- THE FUTURE ADITION! VAASA

TORNIO- FINLAND Tornio Manga LNG Customer Type Manga LNG Oy Tank net volume 50,000 m 3 Send out Small/Mid scale terminal Max 40 tonnes per hour at 6.0 barg Scope of supply Civil works and infrastructure Full containment storage tank Regasification & gas metering BOG system Electrical and control system Unloading system Bunkering and Truck loading Delivery method Delivered 2018 EPC Turnkey Providing the only source of gas for industries in Northern Finland.

KARMØY, NORWAY Snurrevarden Customer Type Gasnor Tank net volume 2 x 250 m 3 Capacity Size of liquefaction unit Gas source Small scale liquefaction plant 60 TPD / 22,000 TPA 16 m x 18 m Pipeline gas. Inlet pressure 120-150 bar. Details LNG transported to customers by tanker truck Scope of supply Delivery method Complete plant, incl. Gas pre-treatment Cooling system (Ambient air) Reversed Brayton liquefaction process Storage tanks Electrical and control systems Truck loading system Gas engine Excl. Substructures EPCIC Delivered 2003 The first stand-alone small scale LNG plant in Northern Europe.

BERGEN, NORWAY Kollsnes II Customer Type Gasnor Tank net volume 4,000 m 3 Capacity Size of liquefaction unit Gas source Details Scope of supply Delivery method Small scale liquefaction plant 230 TPD / 84,000 TPA 12 m x 38 m Pipeline gas. Inlet pressure typically 70 bar. Extension to Kollsnes I. Includes two truck loading stations and existing loading jetty for small LNG carriers. Complete plant, incl. Gas pre-treatment Cooling system (Seawater) Double Reversed Brayton liquefaction process Storage tank Electrical and control systems Civil works EPCIC Delivered 2007 Twice the capacity, half the footprint!

PORVOO, FINLAND Gasum Kilpilahti Customer Type Gasum Tank net volume 3 x 683 m 3 Capacity Size of liquefaction unit Gas source Mini liquefaction plant 55 TPD / 20,000 TPA 16 m x 20 m Pipeline gas Details Utilization of excess nitrogen from adjacent oxygen plant. No rotating machinery Scope of supply Delivery method Pre-treatment LIN liquefaction process Storage tanks Excl. substructures EPCIC Delivered 2010 LIN consumption reduced by 60% compared to old liquefaction plant.

OSLO, NORWAY EGE Biogas Customer Type Cambi AS Tank net volume 180 m 3 Capacity Size of liquefaction unit Gas source Details Scope of supply Delivery method Mini liquefaction plant 11 TPD / 4,000 TPA 8 m x 14 m Biogas from 50,000 TPA of food waste Fuel production for 135 buses in the city of Oslo Complete plant, incl. Gas pre-treatment Cooling system (Ambient air) MR liquefaction process Storage tank Electrical and control systems Service agreement Excl. Civil works and installation EPC Delivered 2013 135 Oslo region buses will be able to run on biogas which means 10,000 tonnes emission reduction per year.

EGE BIOGAS- OSLO, NORWAY

AGENDA WÄRTSILÄ AT A GLANCE LNG (Liquid Natural Gas) LBG (Liquid Bio Gas) LNG vs. LBG CONCLUSION

BIO GAS - FEEDSTOCK

BIO GAS ANNUAL POTENTIAL Botnia region: (Västerbotten, Västernorrland, Ostrobothnia) Potential: In use: >1200 GWh >180 GWh ( 12 plants ) Finland*: Potential: 7-17000 GWh In use: >900 GWh (>82 plants) EU : Potential: 740 000 GWh In Use: 133 000 GWh (>18000 plants) Of which BioMethane: 24 000 GWh Fuel (367 plants) 740 000 GWh End use: 455 GWh Heat 160 GWh El 35 GWh Fuel Finland total energy consumption: 380 000 GWh Source : Johan Saarela, Stormossen, Ari Lampinen http://www.cbg100.net/products/finnish-biogas-statistics-2013-2014/ & European BioGas Association * Based on assumptions from 2013

BIO GAS PLANTS NEARBY Stormossen Gas Output: 16 GWh (=1,8MW) Total Capacity within 100km radius 55 GWh (6.2 MW) Jeppo Biogas Gas production: ~ 21 GWh / a ( =2,4 MW) Lakeuden Etappi Gas production: ~16 GWh / a (= 1,8 MW) Under planning! Biovakka, Lapua 52 GWh (=6 MW) Laihia Biogas Gas production: >2 GWh / a ( = 0,2 MW) Honkajoki Biogas Gas production: >36 GWh / a ( = 4 MW)

AGENDA WÄRTSILÄ AT A GLANCE LNG (Liquid Natural Gas) LBG (Liquid Bio Gas) LNG vs. LBG CONCLUSION

LOW OIL PRICE - THE COMMON CHALLENGE FOR LNG AND LBG Light Fuel Oil LNG

INCREASING THE VALUE OF BIOGAS Investment: 50GWh/year Bio Gas plant. Value of Biogas 3 M Raw material processing n.a +9M Gasification or Anaerobic digestion Flare: 0 M Heat: 5-15 /MWh El: 38% of 30-35 /MWh (With Feed in 83,5 / MWh) 12 /MWh or 32 /MWh +5 M +1,5 M Gas Upgrading or Compression (CBG) Same as above, slightly better el. efficiency CNG: 1,25 /kg- Without ALV 1,01 /kg Duty (0,21 /kg) = 0,80 / kg = 59 / MWh CBG: 1,45 /kg - Without ALV 1,17 /kg = 86 / MWh or +5 M Liquefaction (LBG) LBG >>86 /MWh

Investment (M ) & Production Cost ( /MWh) LBG PLANT INVESTMENT AND PRODUCTION COST ASSUMPTIONS: 30 % Investment support, 6,5% WACC, Feedstock delivered free of charge to plant, approx. 1/3 of Income from digestate Typical max size for Biomass collection & distrubution of digetsate Recommended size by ELY CBG (ALV0%) Sales price in Finland Ideal size for LBG Production 30-130 GWh Plant Size Wärtsilä Small LBG Wärtsilä Large LBG GWh / Year 0 40 10 20 30 Tonne LBG / day 0 20000 40000 60000 80000 m3 raw gas / day 0 Plant Size 5 10 15 20 MW (gas energy)

Investment (M ) & Production Cost ( /MWh) FUEL - SALES PRICE AND COSTS Tax Tax Tax Tax All prices without value added tax (ALV 0%) Gasoline Diesel CBG = 1,17 /kg (with ALV 24% = 1.45 /kg) CNG LFO (Polltoöljy) Logistics Profit CBG conv. Natural Gas Handling fee Handling fee Handling fee LNG Estimated landed price in Finland GWh / Year 0 40 10 20 30 Tonne LBG / day 0 20000 40000 60000 80000 m3 raw gas / day 0 Plant Size 5 10 15 20 MW (gas energy)

Investment (M ) & Production Cost ( /MWh) FUEL - SALES PRICE AND COSTS Tax Tax Tax Tax All prices without value added tax (ALV 0%) Gasoline Diesel CBG = 1,17 /kg (with ALV 24% = 1.45 /kg) CNG LFO (Polltoöljy) Logistics Profit CBG conv. Natural Gas Handling fee Handling fee Handling fee LNG Estimated landed price in Finland GWh / Year 0 40 10 20 30 Tonne LBG / day 0 20000 40000 60000 80000 m3 raw gas / day 0 Plant Size 5 10 15 20 MW (gas energy)

AGENDA WÄRTSILÄ AT A GLANCE LNG (Liquid Natural Gas) LBG (Liquid Bio Gas) LNG vs. LBG CONCLUSION

LNG VS. LBG IN FINLAND Today Natural Gas (and soon LNG) can be imported for a fraction of the cost of domestic CBG or LBG production. So why LBG? Create jobs & potential new income for farmers Reduces fuel import Almost CO 2 neutral The most efficient & environmental friendly biofuel Energy storage & potential off-taker for wind methane Synergies between LNG and LBG LNG = LBG Building LNG infra will enable LBG production & consumption Both utilizing same infrastructure and consumers (Trucks, Marine sector, Industry & Power plants) LNG is back-up to LBG and CBG/CNG LNG + LBG is a the ultimate low CO 2 fuel mix.

MAKING LBG MORE FEASIBLE How to make LBG feasible? LBG could be produced for < 60 /MWh with: Larger plants, > 40 GWh / year Co-operation/ Pipelines between neighboring bio gas plants Easier permitting of larger plant Finding valuable use for the digestate Choosing locations close to major agricultural and industrial waste Financial support for the biogas upgrading & liquefaction Further R&D to make small scale liquefaction plants more feasible Preparing the infrastructure & consumers for LNG, thereby enabling LBG THANK YOU FOR LISTENING! Please visit us at Wartsila.com or Energy Week -Stand B5