Pembina sees Q4 FID for Cedar LNG project [UPDATE]

Canadian energy infrastructure company Pembina Pipeline said August 3 it had signed non-binding memorandums of agreement (MoU) in relation to additional liquefaction capacity for the proposed Cedar LNG facility in BC, and expects to take a final investment decision (FID) on the project in the fourth quarter this year.

Cedar LNG had originally anticipated FID in Q3 this year, but said August 3 it had elected to progress a second front-end engineering and design (FEED) process late last year and wanted the second FEED study to catch up with a study already underway by Black & Veatch and Samsung Heavy Industries under a contract awarded in February 2022.

"In conjunction with detailed commercial discussions and ongoing negotiations between LNG Canada and Coastal GasLink, this has resulted in the anticipated final investment decision being revised to the fourth quarter of 2023," Cedar LNG said in a statement.

The 3mn tonnes/year floating LNG facility, in which Pembina holds a 49.9% interest alongside majority owner Haisla Nation, is now fully-subscribed in relation to liquefaction capacity. It also received its LNG facility permit from the BC Energy Regulator in July, Pembina said.

Pembina did not name the investment-grade counterparties, but earlier this year it entered into an MoU with Montney producer ARC Resources for about 200mn ft³/day of liquefaction capacity, enough to produce about 1.5mn tonnes/day.

On August 2, ARC Resources reported in its Q2 results that it was evaluating opportunities to supply natural gas to international markets through long-term agreements, and suggested its goal was to market 25% of its future natural gas production as LNG.

Work towards signing definitive commercial agreements pertaining to gas supply is ongoing, Pembina said in its Q2 2023 financial results.

In that report, Pembina said it had Q2 2023 earnings of C$363mn (US$271.4mn), down from Q2 2022 earnings of C$418mn. Adjusted EBITDA dropped to C$823mn from C$849mn, largely reflecting the impact on operations of wildfires in Alberta and an unplanned outage on its Northern Pipeline system in the first quarter.