Pembina Updates Progress on Cedar LNG Project in Canada

Researched by Industrial Info Resources (Sugar Land, Texas)--Last week, Pembina Pipeline Corporation (NYSE:PBA) (Calgary, Alberta) provided updates on its proposed Cedar LNG project, a floating liquefied natural gas (FLNG) facility in Kitimat in British Columbia, including a boost to the expected capital investment in anticipation of a final investment decision (FID) by the middle of the year, as well as a notice to proceed for engineering, procurement and construction (EPC) services.

"Significant milestones have been completed to date and the project is continuing to progress towards an FID by the middle of 2024, with an anticipated in-service date in late 2028," Pembina said in an April 4 press release.

Pembina announced an increase in the projected cost for the Cedar LNG project, now estimated at US$3.4 billion, up from the previously estimated $2.7 billion. The revised cost estimate includes US$2.3 billion (approximately 70%) under a fixed-price, lump-sum agreement, for the FLNG production unit.

The company also said it issued a notice to proceed to EPC contractors Samsung Heavy Industries (Seoul, South Korea) and Black & Veatch Incorporated (Overland Park, Kansas) to continue work on the "design, fabrication and delivery" of the production unit.

The day after Pembina released the update, Baker Hughes Company (NASDAQ:BKR) (Houston, Texas) said it was awarded an order from Black & Veatch to provide liquefaction technologies for the production unit, including four electric-driven main refrigeration compressors, two electric-driven boil-off gas compressors and six centrifugal pumps.

Cedar LNG would feature a nameplate capacity of 3.3 million tons of LNG per year and have storage capacity of 136,000 cubic meters. Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Production Project Database can click here to read a detailed project report.

Pembina also said it finalized a previously announced agreement with ARC Resources Limited (Calgary, Alberta) to offtake 1.5 million tons per year of LNG. Pembina has executed an identical agreement to offtake 1.5 million tons per year itself; the company said it "intends to assign its capacity to a third-party following a positive FID, with commercial offtake discussions continuing with multiple other customers."

As part of the agreement, ARC Resources will provide the Cedar LNG project with about 200 million cubic feet per day of natural gas via TC Energy Corporation's (NYSE:TRP) (Calgary, Alberta) Coastal GasLink natural gas pipeline, which is now mechanically complete. TC Energy said earlier this year that post-construction and reclamation activities will continue throughout 2024. The pipeline is designed to carry 2.1 billion cubic feet per day (Bcf/d) of natural gas, with the potential to expand up to 5 Bcf/d in the future, from Dawson Creek to Kitimat in British Columbia. For more information on the pipeline, see November 1, 2023, article - All Pipe in Ground for TC Energy's Coastal GasLink Pipeline.

As a result, Pembina plans to construct a 5.3-mile, 24-inch-diameter pipeline that will connect Cedar LNG to Coastal GasLink with a capacity of about 400 million standard cubic feet per day. Subscribers can click here to read more information.

"We are extremely pleased to be working with ARC Resources to deliver Canadian LNG to world markets, given their expertise and track-record as a responsible producer of natural gas and knowledge of global LNG dynamics," said Scott Burrows, chief executive officer of Pembina, in the recent press release.

The first phase of another LNG export facility in Kitimat ("LNG Canada") is almost complete, which also could help expand Canada's LNG exports from almost exclusively the North American market to other world markets. Click here to read the related project report.

Energy Minister Jonathan Wilkinson recently told CTV the federal government is not "interested in investing in LNG facilities," so projects such as Cedar LNG and LNG Canada will need to continue to be developed by the private sector.

For more information, see April 2, 2024, article - Canada Unwilling to Invest in New LNG Export Projects.

Last week, Pembina completed its acquisition of Enbridge Incorporated's (NYSE:ENB) (Calgary, Alberta) stake in three joint venture companies, which includes a 50% stake in a natural gas liquids (NGLs) pipeline that runs from Alberta to the Chicago area in Illinois. For more information, see April 3, 2024, article - Pembina Pipeline Completes C$3.1 Billion Asset Acquisition from Enbridge.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 trillion (USD).