Pembina Pipeline Corporation PBA recently inked a partnership deal with The Haisla Nation for developing the planned Cedar LNG Project. The project is well-positioned to utilize Canada's enormous natural gas supply and British Columbia's expanding liquefied natural gas (LNG) infrastructure to churn out industry-driving carbon neutral, affordable Canadian LNG for sale beyond borders. The project located on The Haisla Nation-owned land in the Douglas Channel will be Canada's largest First Nations infrastructure project with one of the cleanest environmentally-friendly profiles in the world.
With a liquefaction capacity of about three million tonnes of LNG per year, the project obtains natural gas from the vast Montney resource play in northeast British Columbia. Further, it has a long-term transportation agreement in place for the Coastal GasLink pipeline.
Cedar LNG's anticipated overall project cost is $2.4 billion or around $3 billion in Canadian dollars. Pembina's current LNG offtaker contacts will be used by Cedar LNG to establish long-term, tolling-based offtake agreements with LNG customers.
The project will primarily target the Asia-Pacific market to capitalize on the project's geographical shipping advantage over the US Gulf Coast LNG projects, which are susceptible to the high-priced and risks related to transiting the Panama Canal.
To the uninitiated, Cedar LNG is a potential floating LNG project near Kitimat, British Columbia, Canada. Jobs, contracts and other economic possibilities will be created from the project. During the peak phase of construction, up to 500 workers will be on site while around 100 employees are expected to work full time once the facility comes on line.
Deal in Detail
Per the terms of the deal, Pembina will purchase the equity interests in Cedar LNG, currently held by PTE Cedar LP and Delfin Midstream Inc. This will give The Haisla Nation and Pembina a 50% ownership share in the project. The company will also take over as operator of the project in the future and to that end, put together a world-class floating LNG team.
Prior to a final investment decision (FID), Pembina aims to invest about $90 million in Cedar LNG over the next 24 months, which covers funds to purchase its partnership interest as well as include pre-FID development costs. In 2023, Cedar LNG plans to make a final investment decision. The project's estimated in-service date is scheduled for 2027, subject to certain considerations, such as regulatory and environmental permits.
Founded in 1954, Pembina is a Canada-based vertically integrated operator of energy infrastructure assets. Headquartered in Calgary, Alberta, the company is active throughout the hydrocarbon value chain, offering a complete range of midstream and marketing solutions. Pembina Pipeline’s extensive network of conduits covers some of North America’s most prolific basins.
Zacks Rank & Other Key Picks
Pembina currently carries a Zacks Rank #2 (Buy). Other top-ranked players in the energy space include Sprague Resources LP SRLP, SilverBow Resources Inc. SBOW and Oasis Petroleum Inc. OAS, each presently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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