Pembina Pipeline Corp. and its project partners in the Cedar LNG export project in British Columbia (BC) disclosed that they have given a notice to proceed to their contractors and are working on the final financial arrangements after securing binding offtake agreements for the project.
Arc Resources Ltd., one of Canada’s largest natural gas producers, has agreed to a 20-year tolling agreement with the Cedar LNG partnership for 1.5 million metric tons/year (mmty) in capacity. Calgary-based Pembina is developing the 3.3 mmty capacity floating liquefied natural gas project in BC in partnership with the Haisla First Nation.
Pembina disclosed it has also executed its own identical sales and purchase agreement (SPA) for 1.5 mmty of the capacity at Cedar LNG, allowing the partners to give a notice to proceed for the construction of the vessel and to finalize a final investment decision (FID) by the summer.
"Today’s achievements mark an exciting time for our nation as we seek to make Cedar LNG – the world’s lowest carbon and first Indigenous majority-owned LNG facility – a reality in the coming months," the Haisla Nation’s Crystal Smith, chief councilor said.
Pembina and the Haisla Nation officially selected Samsung Heavy Industries Co. Ltd. and Black and Veatch at the beginning of the year as their engineering, procurement and construction contractors. Baker Hughes Co. was selected to provide electric-driven liquefaction equipment.
The overall cost of the project was projected at $3.4 billion, up from an original estimate of $2.4 billion.
Pembina plans on signing a deal with a third-party buyer for its offtake after FID is reached, according to the company.
In a similar vein, Arc Resources signed a tentative deal with an undisclosed company “with extensive experience in the LNG value chain” to buy the entirety of its gas volumes liquefied at the Cedar project. An SPA could be finalized by the end of the year and is expected to be linked to international prices, according to the firm.
Arc Resources has been looking for ways to grow and diversify its exposure with supply agreements to LNG facilities on the Gulf Coast. Last year, it became the first Canadian producer to sign a long-term agreement linked to the Dutch Title Transfer Facility under a deal with Cheniere Energy Inc.
“With our agreement with Cedar LNG, we are able to achieve our target of linking approximately 25% of ARC's future natural gas production to international pricing," CEO Terry Anderson said.
Under the agreement, Arc Resources expects to deliver 200 MMcf/d of natural gas to the facility from its production hub in the Montney Basin.
Western Expansion
Cedar LNG, which is now targeted to begin shipping cargoes in late 2028, could become the second BC LNG terminal to anchor TC Energy Corp.’s Coastal GasLink Pipeline after LNG Canada. TC Energy disclosed in late October that the 402-mile pipeline on Canada’s Pacific Coast was mechanically complete and that it would begin flowing gas through the system.
The Shell plc-led LNG Canada is expected to add up to 1.8 Bcf/d in natural gas demand to Western Canada’s gas basins after ramping up to full capacity sometime later in the year.
Combined with Cedar LNG, Ksi Lisims LNG, a possible second phase at LNG Canada and the proposed Woodfibre LNG project, there could be as much as 4 Bcf/d in Canadian export capacity by the end of the decade, according to NGI’s North American LNG Export Project Tracker.
Pembina is also investing in growth projects to help capitalize on the rising gas demand from Canadian LNG exports. The company expects to spend at least $51 million this year on Western Canadian Sedimentary Basin (WCSB) projects.
However, consultancy Deloitte Touche Tohmatsu Ltd. recently reported that natural gas firms may be challenged to ramp up volumes ahead of LNG Canada’s start-up while a drought impacts key production areas in Western Canada.
NGI’s NOVA/AECO C forward fixed price for Summer 2025 was C$2.266/GJ Friday, compared with $1.243 for the upcoming summer balance.
