Pembina Pipeline seeing increased interest from potential Cedar LNG suppliers: CEO

Pembina Pipeline Corp. logo. (THE CANADIAN PRESS/HO, Pembina Pipeline Corp.

One of the partners behind the Cedar LNG project says it has seen an uptick in interest from potential long-term contracted natural gas suppliers since the project was green-lit in June.

Calgary-based Pembina Pipeline Ltd. and its project partner, the Haisla First Nation, made a final investment decision at that time to go ahead with the US$4-billion facility.

Pembina CEO Scott Burrows said Wednesday the positive final investment decision has given potential suppliers more confidence, and he expects the facility's remaining uncontracted capacity will be in demand.

"The interest in the project has increased, just given that it's real in people's eyes now," Burrows said on a conference call with analysts.

"We do believe that, coupled with the fact that this will be a scarce resource in terms of (being) some of the only uncontracted LNG capacity off the west coast of Canada, (means) that it should garner a premium."

The Cedar LNG project will involve the construction, expected to start in mid-2025, of a floating liquefied natural gas terminal near Kitimat, B.C.

The facility will use natural gas from Western Canada to produce liquefied natural gas for export to Asian markets, with a capacity of 3.3 million tonnes per year.

Cedar LNG will be linked to the Coastal GasLink pipeline, which will transport 400 million cubic feet of Western Canadian natural gas to the facility each day.

Pembina has already signed a 20-year contract with natural gas producer ARC Resources Ltd., which will supply the natural gas for about half of Cedar LNG's total production.

Pembina senior vice-president Stu Taylor said the company is currently in commercial talks with other potential suppliers, and expects those talks to continue until early 2025.

"We're in conversations with Canadian producers, (about) the opportunity of Cedar possibly being an outlet for Canadian natural gas on a go-forward basis," Taylor said.

"We've been pushing those conversations."

Cedar LNG is only the third LNG export facility in Canada to receive the go-ahead by its proponents.

The first, the Shell-led LNG Canada facility, is currently nearing completion near Kitimat and will have an export capacity of 14 million tonnes per year.

A smaller facility called Woodfibre LNG is under construction near Squamish, B.C.

Natural gas producers in Alberta and B.C. have been eagerly awaiting the start-up of LNG export capacity from Canada. A Canadian LNG industry will give natural gas drillers a new market for their production, and is also expected to help draw down some of the existing over-supply of natural gas in storage in Western Canada — an over-supply that has resulted in rock-bottom prices for natural gas producers in 2024.

Proponents of a Canadian LNG industry also say liquefied natural gas from Canada could help reduce global greenhouse gas emissions by replacing coal in countries that still rely on the dirtier fuel.

But environmentalists argue that LNG creates its own emissions through the liquefaction and transportation process, as well as through the drilling and flaring of natural gas in Western Canada.

This report by The Canadian Press was first published Nov. 6, 2024.