Major project to secure Ireland's natural gas supply

Minister for Enterprise, Trade and Employment, Micheál Martin TD has today (Monday 22^nd May 2006) announced that Shannon Development, the regional development agency, has entered into an `option-to-purchase' agreement with Shannon LNG, in relation to 281 acres of the 600-acre Shannon Development owned land bank between Tarbert and Ballylongford, County Kerry. The site, which has been designated by Shannon Development for deep-water projects, is about 25 km from the national gas pipeline grid.

Under the agreement, Shannon LNG, an Irish subsidiary of Hess LNG Limited, is proposing to build a €400 million liquefied natural gas (LNG) receiving terminal on the Shannon Development owned land bank on the Shannon Estuary.

Shannon Development designated their Tarbert/Ballylongford site for deep-water projects, and have been actively marketing the potential of the site to an international business audience over many years.

A sustained marketing campaign was undertaken by Shannon Development, which was facilitated by the development of a marketing prospectus for LNG. This was followed with a further call for expressions of interest from companies in the maritime industries sector in 2004. As a result Shannon LNG, an Irish subsidiary of Hess LNG Limited, a 50/50 joint venture of Hess Corporation and Poten & Partners, has been granted the purchase option on a portion of Shannon Development's Tarbert/Ballylongford site. The option allows time for the detailed design and appraisal of the proposed project and for full consultation with the relevant authorities and the local community.

Announcing the initiative today, the Minister said, "I am delighted to formally announce this exciting proposed development, which has the potential to make a real difference to long term energy costs as well as to deliver significant environmental and employment benefits. This major development has the potential to secure Ireland's long-term supply of natural gas and provide an important economic boost here in North Kerry."

Kevin Thompstone, Chief Executive of Shannon Development said, "A primary activity of Shannon Development is the provision of property based solutions for Irish and foreign industry projects in Shannon Region. We have brought the potential of this site to relevant key international industry sectors over many years and are pleased to have attracted leading global energy players of the calibre and experience of the Shannon LNG team.

Shannon Development is excited about this proposed project. Subject to feasibility studies, technical assessments and in due course, planning and other approvals the Shannon LNG project has the potential to provide over 40% of Ireland gas requirements."

"This is the first time that Shannon Development has granted a purchase option on a section of our land at Tarbert/Ballylongford site. We believe that the proposed project could bring significant long-term economic benefits to North Kerry. Securing the project would also enable us to explore the potential of our remaining lands at Tarbert/Ballylongford, and Shannon Development will be working to ensure that the overall development of this important national strategic site is progressed in conjunction with the Shannon LNG project," Mr. Thompstone added.

Gordon Shearer, CEO of Hess LNG Limited, Shannon LNG's parent company said, "I am pleased that our company will be in a position to help Ireland with security of gas supply in the future. LNG will also bring new competition to the Irish energy market."

The proposed terminal would comprise a ship unloading jetty, two or more LNG storage tanks and related buildings and facilities. In addition, a new pipeline, about 25 to 30km in length, will be built to transport the gas to the national gas pipeline system, east of the site.

Paddy Power, Managing Director of Shannon LNG said, "This is an exciting project. Ireland needs secure, diverse, competitively priced and environmentally friendly supplies of energy. A Shannon based LNG terminal will help provide this and it will give rise to increased competition in the local gas market, leading to downward pressure on prices. The terminal will provide about 50 long-term permanent jobs, along with additional support jobs and around 350 construction jobs at its peak."

He continued, "We are fully committed to active communication and consultation with the local community and all interested parties. I would also note that this is the first stage of this project. It is anticipated that we will apply for planning permission in a year's time and, subject to planning approval, we expect to begin construction work in 2008 with the terminal becoming operational in 2011 at the earliest."

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Notes to Editor

The proposed LNG terminal has the potential to deliver considerable economic and environmental benefits nationally:

It will provide new gas supplies and mitigate security of supply concerns;

It will allow Ireland to access multiple sources of gas leading to greater gas price competition, which is good news for Irish consumers;

It will introduce additional sources of natural gas, particularly welcome in the electricity generation sector where it is recognised as being substantially more efficient than other fossil fuels such as coal and oil;

It will help Ireland meet its commitments under the Kyoto Treaty as natural gas generates lower CO2 emissions than other fossil fuels when used for electricity generation;

In employment terms, the Terminal will employ about 50 long-term operating staff. Additional jobs will also be created in ancillary, support and contracted services. Employment during construction could reach more than 350 jobs at peak, leading to substantial local economic benefits.

There are 52 LNG import terminals operating worldwide and in light of the changing economics and security of future energy supply, an estimated 60 more are currently in the course of construction or planning.

LNG is natural gas that has been cooled to a very low temperature (-160^oC), at which point it becomes a liquid. It is stored and transported in insulated tanks at normal atmospheric pressure, like a cold drink in a thermos flask.

As natural gas is the most environmentally friendly fossil fuel, over the past two decades it has become the global fuel of choice for electricity generation, other industrial energy consumption, home heating and cooking.

LNG has had an exemplary operating history and is effectively the safest of all fuels to store and manage. Today's regulations and codes are very stringent, requiring very specific technology controls, multiple containment systems and the use of special construction engineering, design and materials.

LNG import terminals are quiet, there is no smell, no smoke, no steam, and no noise that can be heard beyond the site boundary. An LNG import terminal has extremely low air emissions and produces almost no wastewater.

General note on Shannon LNG

Shannon LNG was established in 2003 by Paddy Power, a native of Tralee, to pursue, develop and implement the Shannon LNG project. Paddy is the Managing Director of Shannon LNG and has over 35 years experience in the international oil and gas industry. The company is now a wholly owned subsidiary of Hess LNG Limited, which is a 50/50 joint venture of Hess Corporation and Poten & Partners; both highly experienced in the international oil and gas business.

Prior to establishing Shannon LNG he worked with the Irish National Petroleum Corporation (INPC) from 1998 as director and chief executive. Before joining INPC, Paddy worked with Marathon Oil Company from 1973 to 1998 in a variety of roles in relation to the Kinsale Head Gas Field, and latterly as President of Marathon International Petroleum Company - Worldwide Business Development.

Ends

For ref:

Shannon Development; Nandi O' Sullivan 061 361555

Keating & Associates; Pat Keating 087-2541757