In a long awaited announcement Tuesday, the Haisla Nation and Pembina Pipeline Corp. agreed to move forward with Cedar LNG Partners LP’s 3.3 million metric ton/year (mmty) export project on Canada’s west coast.
Late 2028 is the target to begin natural gas exports from the floating liquefied natural gas (FLNG) project in British Columbia (BC). Built on Haisla territory, Cedar would be powered with renewable electricity provided by BC Hydro. As designed, it would be one of the lowest emitting LNG projects in the world.
The Haisla Nation, with 50.1% ownership, and Pembina, with a 49.9% stake, “have made history as the world’s first Indigenous community to develop an LNG facility as majority owners," Haisla Chief Councillor Crystal Smith said.
A positive final investment decision (FID) had been expected this summer after a notice to proceed was given to contractors in April.
Cedar has two 20-year take-or-pay liquefaction tolling services agreements on the books for 1.5 mmty. One is with Arc Resources Ltd., one of Canada’s largest natural gas producers. The other is with Pembina, a major gas pipeline operator.
“Commercial discussions are continuing with multiple other prospective customers as Pembina intends to assign its contracted capacity to a third-party,” the partners noted.
‘Economic Reconciliation’
The FLNG project “will make the most significant mark on economic reconciliation ever in our country,” Smith said. “With Cedar LNG, we have proven that indigenous communities can successfully forge a path to economic independence and generational prosperity. We have created a model for how sustainable energy development should be done, with Indigenous Nations as owners, balancing environmental interests with global demand for cleaner energy."
Pembina CEO Scott Burrows said the “historic moment…aligns perfectly with our strategy and where we want to be as a company moving forward. The Cedar LNG project will enhance the resiliency of Pembina’s business, provide much needed new egress and greater access to global markets for our customers, and reflects the Haisla Nation and Pembina’s shared values and commitment to supporting a more sustainable future."
The positive FID demonstrates Canada’s “ability to sustainably grow its LNG export sector to support the global clean energy transition,” Cedar CEO Doug Arnell said. “Moreover, the Haisla Nation and Pembina, as true partners, are demonstrating a new model for how industry and Indigenous communities can work together for mutual benefit."
Cedar is projected to cost about US$4 billion, including estimated capital costs of $3.4 billion. Before the FID, Pembina was required to provide financial assurances to advance project-related upstream infrastructure projects. The required financial assurances are being transferred to Cedar.
Cedar would be the second export terminal after LNG Canada to anchor TC Energy Corp.’s Coastal GasLink Pipeline (CGL). Under a long-term transportation agreement, Cedar would receive 400 MMcf/d via CGL. Shell plc-led LNG Canada, set to begin commercial operations this year, also is to receive gas from CGL.
According to the Haisla Nation and Pembina, Cedar’s location “provides one of the shortest shipping routes to key Asian markets. The Douglas Channel, leading to and from the site, offers an established, reliable shipping route and deepwater marine inlet, with year-round ice-free conditions.”
The FLNG facility is being constructed by Samsung Heavy Industries and Black & Veatch.
“Given the project will be a floating LNG facility, manufactured in the controlled conditions of a shipyard, it is expected that the project will have lower construction and execution risk,” executives said.
“Critical to Cedar LNG’s success to date has been the strong support of neighboring Nations,” they noted. “Cedar LNG is committed to sharing value with indigenous and local communities in the region through construction jobs and contracting, training opportunities, long-term employment, and other measures that will contribute to economic prosperity in the region.
“The project is expected to create up to 500 jobs during peak construction and approximately 100 full-time jobs during operation.”
Round Of Applause
Operators involved in the project, as well as those that will compete with it, were quick to praise the decision to move forward.
TC CEO François Poirier said the Haisla Nation and Pembina “have redefined the future of energy development in North America. Through indigenous-ownership, Cedar LNG will create opportunities that will support indigenous and local communities in northern British Columbia and deliver benefits to the world by meeting global demand for more secure, affordable and sustainable energy.”
Arc CEO Terry Anderson noted that the “demand for cost-competitive natural gas from key consuming nations around the world is evident. We look forward to delivering low-cost Canadian LNG to global markets with partners who share our commitment to responsible energy development and innovation.”
LNG Canada CEO Jason Klein called the Cedar project a “remarkable achievement.” It has taken “years of hard work, careful planning and innovative thinking from the Haisla Nation and its members, Pembina Pipeline, and adjacent and local communities. On behalf of LNG Canada, we offer Cedar LNG our heartfelt congratulations…and wish them every success as they prepare to deliver made-in-BC LNG to the world.”
With a number of Western Canada LNG projects in the queue, NGI’s North American LNG Export Project Tracker has estimated that the west coast could be exporting up to 4 Bcf/d by the end of the decade. The capacity estimates include supply from Cedar, an additional phase at LNG Canada, and the proposed Ksi Lisims LNG and Woodfibre LNG terminals.
The decision to proceed shows the “perseverance of the Haisla Nation in achieving this historic milestone,” BC Premier David Eby said. It also showcases the “confidence of investors in BC’s economy,” as the “future for the natural resources sector is bright and will continue to support BC’s strong economic performance.”
Tudor, Pickering, Holt & Co. (TPH) analysts on Wednesday said Cedar will offer another “outlet for Western Canadian Sedimentary Basin-produced gas destined for international markets.” Pembina has “reiterated there will be no change to its 2024 capital plan, and it intends to fund future contributions to the project via cash flows from operations.”
Arc intends to hold its gas capacity, but Pembina “is having ongoing discussions to assign their capacity to a third party,” according to TPH.
Jefferies analysts on Wednesday said Western Canada’s natural gas inventory “is on pace to test capacity limits, translating into downward pressure on AECO and likely requiring a supply response until there is a meaningful ramp” in exports from LNG Canada.
“We believe the combination of diversified marketing strategies, strong hedging profiles, and favorable liquids-rich economics have producers well insulated until the market begins to turn in 2025,” the Jefferies team said.
