Corporate History Fifteen Years of Entrepreneurship ABOUT Overview Corporate History Board of Managers Brief History of Freeport LNG Founded in 2002, the company started with a different objective: to design, build and operate an LNG import and regasification terminal. When construction of the import terminal began in 2005, a major increase in U.S. LNG imports was projected due to what was then widely recognized as rapidly decreasing reserves of natural gas in the United Sates. Upon completion of the facility in June 2008, it featured two 160,000 cubic meter LNG storage tanks, a marine dock that could accommodate the largest LNG tankers in service, and an LNG vaporization system capable of delivering over 2 billion cubic feet (Bcf) of gas per day into the domestic pipeline grid. As part of the import project, Freeport LNG developed the environmentally friendly VE air tower that extracted heat from the air to regasify LNG, rather than using the conventional method of burning natural gas for LNG regasification. However, by the time the import terminal commenced operations in 2008, the North American natural gas industry had begun to experience a sea change—the shale gas revolution. Domestic natural gas reserve estimates were rapidly increasing and, today, the U.S. Energy Information Administration and private analysts estimate that the United States has sufficient domestic natural gas supplies to meet U.S. demand for more than one hundred years. By 2010, it was obvious that the United States could become a source for LNG exports, without significant impact to the price or availability of natural gas supplies to U.S. consumers, and Freeport LNG launched its natural gas liquefaction and LNG export project. In late 2010, Freeport LNG began the process to obtain permits from the U.S. Federal Energy Regulatory Commission (FERC) for construction and operation of the LNG export facility, and the U.S. Department of Energy (DOE) for the export of LNG. In April 2012, Freeport LNG, Osaka Gas and Chubu Electric (now JERA, after combining its energy supply operations with TEPCO to form the new venture) executed a heads of agreement outlining the terms of two liquefaction tolling agreements (LTAs) for 2.2 million tons per annum (mtpa) each (4.4 mtpa in total) and an equity investment in Freeport LNG’s initial liquefaction train (Train 1). In July 2012, definitive agreements were executed. By October, financing discussions had started with Japanese government entities, The Japan Bank for International Cooperation and Nippon Export and Investment Insurance, for the sourcing of Train 1 financing. In February 2013, an LTA for 4.4 mpta was executed with BP Energy. With the commercial agreements concluded for the production capacity of the first two liquefaction trains, EPC contracts were executed in December 2013 with a joint venture of Zachry Construction and CB&I, followed shortly thereafter by the equity arrangement for Freeport LNG’s second liquefaction train (Train 2) with IFM Global Infrastructure Fund. In November 2014, FERC and DOE final approvals were granted, the financings for Train 1 and Train 2 were closed, and construction commenced. At the time, the financing was the largest fully non-recourse construction project financing in history. LTAs had also been executed in 2013 with SK E&S and Toshiba Corporation for 2.2 mtpa each, providing the offtake commitments necessary to commercialize Freeport LNG’s third liquefaction train (Train 3). Freeport LNG opted to develop Train 3 using 100% debt financing rather than third party equity as it had for Train 1 and Train 2. In early 2015, a Train 3 EPC contract was executed with a joint venture of Zachry Construction, CB&I and Chiyoda and, in April 2015, Freeport LNG closed the Train 3 financing and commenced construction. Train 1 operations were initially anticipated to begin in September 2018, followed by Train 2 and Train 3 in February and August 2019, respectively, but the project did not go without incident. EPC contractor execution delays, combined with the impacts of Hurricane Harvey in August 2017, resulted in delays to construction of over a year. In 2019, after experiencing financial difficulties, one of Freeport LNG’s EPC contractors, CB&I, was acquired by McDermott International, who subsequently declared bankruptcy in early 2020. Further, beginning in early 2016, Toshiba experienced financial difficulties that resulted a series of credit downgrades, ultimately to sub-investment grade levels. As part of a corporate reorganization, Toshiba decided to abandon its LNG-to-Power strategy and sought to divest its LNG business. This process culminated in a sale of Toshiba’s U.S. LNG business, including the LTA with Freeport LNG, to Total in September 2019. Despite the difficulties experienced along the way, Train 1 was successfully commissioned and began commercial operations in December 2019, with Train 2 and Train 3 commencing operations shortly thereafter in January and May 2020. Combined, the three trains can produce over 15 mtpa of LNG. In May 2019, Freeport LNG received FERC and DOE approvals to add a fourth liquefaction train (Train 4). The Train 4 expansion will allow for the export of an additional 5 million tons of LNG per year, increasing the total export capability of the facility to over 20 mtpa of LNG. Train 4 could be in commercial operations as early as 2025. Freeport LNG Milestones 2002 Freeport LNG is founded to build the first U.S. LNG import and regasification terminal in over two decades. 2003 FERC application to build the LNG import terminal is filed. Dow executes HOA for a third of the regasification capacity under a terminal use agreement (TUA). ConocoPhillips executes TUA for remaining two-thirds of capacity, and agrees to provide the financing for construction, and purchase of 50% of the Freeport LNG general partner. 2004 Dow TUA is executed. Definitive agreements with ConocoPhillips are executed. FERC issues its final approval of the LNG import project. 2005 Construction begins on the LNG import project. Freeport LNG applies with FERC for an expansion of the regas terminal. A third TUA is executed with Mitsubishi for expansion volumes. 2006 FERC approves the regasification terminal expansion. Freeport LNG begins construction of an underground natural gas storage cavern. 2008 Testing and commissioning cargoes for the regasification facility are delivered in April and May. Regasification facilities enters commercial operations in June. 2009 Freeport LNG is the first company to file with DOE to allow LNG to be imported, stored and then reexported. 2010 First storage and reexport cargoes are processed for ConocoPhillips. Presentation to Freeport LNG board launches the development of the liquefaction project. 2011 Underground natural gas storage cavern begins operations. DOE approves LNG exports equivalent to 511 Bcf/year of domestic natural gas to Free Trade Agreement countries. Formal FERC process for the liquefaction project begins. 2012 DOE approves second export license for FTA countries for additional 511 Bcf/year. 2.2 mtpa LTAs executed with each of Osaka Gas and Chubu Electric. 2013 4.4 mtpa LTA with BP Energy. DOE grants authorization to Freeport LNG to export 656 Bcf/year of gas to non-FTA countries. 2.2 mtpa LTAs executed with each of Toshiba and SK E&S. Train 1 and 2 EPC contracts are executed with the CB&I/Zachry joint venture. Equity arrangement for Train 2 is executed with IFM Global Infrastructure Fund. 2014 FERC approves the liquefaction project. Financings for Trains 1 and 2 are closed and construction commences. 2015 Train 3 EPC contracts executed with the CB&I/Zachry/Chiyoda joint venture. Financing for Train 3 is closed and construction of Train 3 begins. Chubu Electric and TEPCO conclude alliance and foom JERA Energy. The FERC process for Train 4 is started. 2016 The first refinancing of Train 2 bank debt occurs with a $1.25 billion bond issuance. 2017 Hurricane Harvey hits Southeast Texas. 2018 Train 1 commissioning begins. Tank 3 achieves mechanical completion. 2019 CB&I acquired by McDermott International. Toshiba sells its LNG business to Total, including its LTA with Freeport LNG. Freeport LNG completes refinancing of all original Train 2 bank debt. Train 1 achieves commercial operations, and services under the Osaka Gas and JERA LTAs begins. First commercial cargo is loaded. FERC approves Train 4. 2020 McDermott International declares bankruptcy. Train 2 and 3 commercial operations commence, and services commence under the BP, SK and Total LTAs. Freeport LNG completes refinancing of all original Train 3 bank debt. Environmental Stewardship At Freeport LNG, we do act to prevent harm to the environment. You’ll see this in the way we operate our facilities and how vigilant we are in protecting it. READ MORE Community Involvement Committed to Our Community JOIN US NOW! 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