Anadarko Acquires Newly Approved LNG Project in Canada

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Aug. 12, 2004

Anadarko Petroleum Corp. (NYSE:APC) today announced it has acquired Access Northeast Energy Inc. (ANEI), a private Canadian company whose sole project is a proposed liquefied natural gas (LNG) receiving terminal on the coast of Nova Scotia.

On Aug. 9, ANEI secured approval of the environmental assessment, the most critical consent needed from both the federal and provincial governments to proceed with construction of the terminal. All remaining required permits and approvals are expected by year-end. Front-end engineering and design was completed June 30 for a terminal capable of processing up to 1 billion cubic feet a day (Bcf/d) of LNG. The terminal site is at Bear Head, Point Tupper on Cape Breton Island, along the Strait of Canso in an area that is zoned industrial. The planned terminal is expected to begin commercial operations in late 2007.

"This project can provide Anadarko a competitive advantage in international natural gas development," Anadarko Senior Vice President, Exploration and Production, Bob Daniels said. "We have gained a potentially low-cost, low-risk entry into the LNG business, one of the fastest-growing segments of our industry.

"Anadarko is actively exploring and producing oil in Algeria and Qatar, two of the world's top LNG exporting countries. We are making a concerted effort to extend our gas exploration in those countries, as well as in other producing regions. Participating in the commercialization of international natural gas resources is becoming more necessary in the upstream industry and is consistent with Anadarko's growth strategy going forward," Daniels explained.

"Using the planned Bear Head terminal as a foothold, we expect to partner with other major entities such as national oil companies to facilitate the broader value chain of investment, with the primary purpose of using regasification as a leveraging vehicle into new upstream natural gas opportunities and profitability," Daniels said. "Our focus remains on the front and back ends of the value chain, and we will look to partners to provide capital and expertise particularly in the midstream segments. Our interest in developing the Bear Head terminal is to allow us to do what we do well — explore for, develop and market valuable energy resources."

The planned facility holds numerous advantages for delivering natural gas to North America's Eastern Seaboard: Situated in an industrial zone, the project enjoys a supportive relationship with the local government and surrounding community; The Strait of Canso is a sheltered, ice-free, deepwater port; Relative to other North American importation points, Nova Scotia is a short shipping distance from some of the world's largest existing and planned LNG supply regions; The project has access to growing gas markets via the nearby Maritimes & Northeast Pipeline.

"The local community and all levels of government have been exceptional supporters throughout this project and we applaud their efforts to create viable industries in the province that in turn will provide local jobs, economic benefits and a vital energy source for consumers," said Mike Bridges, Anadarko Canada Corporation President. "We look forward to working with all stakeholders to fully develop this opportunity."

"Anadarko is a strong, experienced marketer of natural gas in North America," Daniels said. "This new terminal can help us provide competitively priced, previously stranded gas resources to the premium Canadian Maritimes and New England gas markets."

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