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Lake Charles Clean Energy Secures Offtake Contracts with Denbury, Air Products and BP

Lake Charles Clean Energy, LLC announced today that it has secured major long-term commercial offtake contracts with BP Products North America Inc., Air Products and Chemicals, Inc. and Denbury Onshore LLC, a subsidiary of Denbury Resources Inc., for the Lake Charles Clean Energy project located at the Port of Lake Charles, Louisiana. LCCE is a subsidiary of Leucadia Energy, LLC.

Securing long-term commercial offtake contracts is a major milestone, as it enhances Leucadia Energy's ability to seek and obtain necessary third-party financing for the project prior to commencing construction. This project, employing commercially proven gasification technologies to cleanly manufacture industrial products from petroleum coke, would be the first of its kind in the U.S. LCCE is expected to be one of the world's lowest-cost producers of methanol and hydrogen and a low-cost producer of other products used in the chemical and refining industries. In addition to extraordinary limitations on emissions of Criteria Pollutants, the plant is designed to capture, compress and sell 90 percent of its carbon dioxide ("CO2") production for use in Enhanced Oil Recovery ("EOR") in the US Gulf Coast.

BP Products North America Inc. will purchase the majority of the methanol production and Air Products will purchase all of LCCE's hydrogen and argon and also provide the air separation units to supply the required oxygen for the project. Denbury Onshore LLC will purchase all of the captured CO2.

Thomas E. Mara, President of Leucadia Energy (an indirect wholly owned subsidiary of Leucadia National Corporation) (NYSE: LUK), said: "The commercial offtake contracts with BP and Air Products, together with the existing long-term CO2 contract with Denbury Onshore LLC, are major commercial milestones required to facilitate financing for the project. Having these companies as our customers validates our business model and our vision of bringing a clean fuels facility to Lake Charles. These offtake contracts, along with our success at obtaining all required federal, state, and local permits and approvals, mean the ongoing site work will continue and should facilitate project construction next year. Our current success is a direct result of the ongoing strong support of the Port of Lake Charles, Calcasieu Parish, the Cities of Sulphur and Lake Charles as well as the many local businesses working with LCCE to turn this project into a reality."

A final investment decision in the project remains subject to third party financing and board approval by Leucadia National Corporation. As part of its financing efforts, Lake Charles Clean Energy has retained Credit Suisse AG and its affiliates, Citigroup and its affiliates, and Jefferies & Company, Inc. and its affiliates to provide advisory services related to potential placement of project equity.

The project represents a capital investment of more than $2.5 billion and is expected to provide up to 1,500 construction jobs during the 3-4 year construction period, beginning in 2013. Leucadia Energy will be managing construction of the project. Turner Industries Group, LLC of Baton Rouge, La., will construct the project, and Kellogg, Brown and Root, ("KBR"), will provide design, engineering and procurement services.

Located on property leased from the Port of Lake Charles ("the Port"), the project site will be adjacent to ship, barge and rail facilities, and the Port will provide logistical services such as storage and loading and unloading of cargoes. LCCE will acquire petcoke from Koch Carbon, LLC, under a long-term feedstock supply and logistics service agreement, which will amount to 7,000 metric tons of petcoke a day from Gulf Coast refiners. Through this process, LCCE would extract the beneficial energy in petcoke while avoiding harmful emissions and producing no waste product.

After completion, there will be approximately 165 full-time skilled employees (including contract employees) at the clean fuels plant, with competitive wages and benefits for the technical jobs needed to operate and maintain this first-of-its-kind U.S. clean energy plant. Operations and management at the plant will cost approximately $2 billion during its 30-year life. The majority of costs will go to pay local workforces and purchase locally procured materials and services. The project would have a tremendous economic multiplier effect in the surrounding area, through housing demand and services needed for the facility and its employees.

Former United States Senator Bennett Johnston (D-La.), whose Johnston Development Company is a joint venture partner of Lake Charles Clean Energy, said: "Commercial offtake agreements with BP and Air Products demonstrate the strength of the project and the viability of clean energy technologies and investment. Our project is a great demonstration of how government incentives and private enterprise can work together to implement clean energy technologies."

Jeff Byrne, vice president and general manager, Tonnage Gases for Air Products, said: "We are pleased to be part of this project on both the supply side, as well as receiving product that we can use to serve to our customers. The hydrogen we receive from LCCE will again demonstrate the value of our Gulf Coast Connection Pipeline. We can take this hydrogen and supply the vast number of refinery and petrochemical customers on our Texas to Louisiana pipeline. On the Merchant side of our business, the argon will be a valuable source to our existing and new customers in North America."

William Rase, Executive Director of the Port of Lake Charles, said: "We are very pleased that Lake Charles Clean Energy has reached this important commercial milestone. We fully support the Lake Charles Clean Energy project, which will be an important part of the future of the Port of Lake Charles. We look forward to working with Leucadia Energy to fully implement this clean energy project."

LCCE was awarded $1.56 billion of Gulf Opportunity Zone ("GO Zone") and Hurricane Ike tax-exempt bonds by the Louisiana State Bond Commission. The issuance of these bonds demonstrates the state of Louisiana's strong financial support for the project. The low-cost GO Zone financing provided by the state was a large incentive to develop the project in Lake Charles.

In addition to the state bond financing, the LCCE project is one of three large-scale industrial carbon capture projects that were awarded a Department of Energy ("DOE") grant as part of an effort to capture carbon dioxide from industrial sources for storage or beneficial use. The DOE grant is for approximately $261 million.

As part of the clean fuels aspect of the project, all of the captured CO2, which is expected to equal approximately 4.5 million tons annually, will be sold to Denbury Onshore, LLC for use in its Gulf Coast EOR operations Denbury currently produces over 35,000 barrels of oil per day from its Gulf Coast CO2 EOR operations and will use the captured CO2 to further increase this production. When used in EOR, CO2 is stored in underground oil producing formations.

Phil Rykhoek, President and CEO of Denbury Resources Inc., commented, "Denbury Onshore and its affiliated companies are pleased to see Lake Charles Clean Energy reach another key milestone in the development of this first-of-its-kind domestic project. The CO2 from the plant would supplement our other Gulf Coast CO2 sources and be used to drive additional growth in our Gulf Coast EOR operations. The captured CO2 would be transported through the 320-mile Green Pipeline, which was built to move CO2 to Gulf Coast oil fields ideally suited for CO2 EOR from natural sources near Jackson, Mississippi and projects like this one. From an environmental standpoint, EOR using man-made CO2 results in a net reduction in carbon emissions as the amount of CO2 captured and stored exceeds the amount of CO2 contained in the oil produced. Also, CO2 EOR allows us to recover oil that would otherwise be stranded in existing domestic oil fields, reducing our country's dependence on foreign oil imports. As a result, when coupled with our EOR operations, this project is a positive for the environment and for domestic energy supply, a true win-win."

In addition, the project has been awarded a $128 million federal investment tax credit under IRS Section 48B, which was a further indication of the support of the federal government for this clean fuels project.


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