Pembina Takes FID on the $4-Billion Cedar LNG Project

The project's floating LNG facility will be installed in the traditional territory of the Haisla Nation on Canada’s West Coast.

A rendering of the proposed Cedar FLNG vessel to be constructed by Samsung.

Pembina Pipeline and partner the Haisla Nation reached a final investment decision (FID) on the Cedar LNG project planned for Canada’s West Coast near Kitimat, British Columbia. The project consists of a floating liquified natural gas (FLNG) facility with a nameplate capacity of 3.3 mtpa, associated pipelines, and infrastructure.

Cedar LNG is majority-owned by the Haisla Nation, in partnership with Pembina Pipeline Corp., with 50.1% and 49.9% ownership, respectively.

The project’s $4-billion price tag includes estimated capital costs of approximately $3.4 billion, of which $2.3 billion, or about 70%, is under a fixed-price, lump-sum agreement, and $600 million of interest during construction and transaction costs.

The FLNG facility is being designed and constructed by Samsung Heavy Industries and Black & Veatch. The project is anticipated to be in service in late 2028.

According to the partnership, the project is positioned to leverage Canada’s natural gas supply from the region’s robust Western Canadian Sedimentary Basin.

“Together with our partner, the Haisla Nation, we are honored to have made Cedar LNG a reality,” said Scott Burrows, Pembina’s president and CEO. “This is a historic moment, and we are proud to be moving forward with a project that will deliver industry-leading, low-carbon, cost-competitive Canadian LNG to overseas markets and contribute to global energy security, while delivering jobs and economic prosperity to the local region. Cedar LNG 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.”

Cedar LNG made several design decisions to minimize the project’s environmental footprint such as powering the facility with renewable electricity from BC Hydro. In addition, the choice of site location allows the project to leverage existing LNG infrastructure, including the Coastal GasLink pipeline, a deepwater port, roads, and other infrastructure.

Under a long-term transportation agreement with Coastal GasLink Pipeline Limited Partnership, the Cedar LNG facility will receive 400 MMcf/D of Canadian natural gas via the Coastal GasLink pipeline.

Cedar LNG has secured 20-year take-or-pay liquefaction tolling services agreements with ARC Resources Ltd. and Pembina for 1.5 mtpa each. Commercial discussions are continuing with other prospective customers as Pembina intends to assign its contracted capacity to a third party.

The location of the Cedar LNG facility near Kitimat, British Columbia.

The project is expected to be funded with asset-level debt financing for approximately 60% of the project cost. Cedar LNG has secured a construction term loan with a syndicate of banks.

The remaining 40% of the project costs are expected to be financed through equity contributions from both partners. The Haisla Nation have obtained committed capital through the First Nations Finance Authority to fund their 20% equity contribution to the project.

Pembina anticipates its equity contribution will be funded from cash flow from operating activities.

Cedar LNG received its Environmental Assessment Certificate from the British Columbia Environmental Assessment Office in March 2023. The partners said then that a final investment decision for the project was anticipated in the third quarter of 2023. However, the decision was put off as the partners continued negotiations for commercial offtake agreements, worked to obtain certain third-party agreements, and firmed up project financing.