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Pembina (PBA) Discloses New Developments on Cedar LNG Project
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Pembina Pipeline Corporation (PBA - Free Report) , responsible for the development of the Cedar LNG project, has reported a significant cost increase for the project. The floating liquefied natural gas (FLNG) facility’s cost is now estimated to be $3.4 billion or C$4.61 billion.
The detailed Class III capital cost of the project includes US$2.3 billion for the FLNG production unit and US$1.1 billion for onshore infrastructure, owner’s costs, commissioning and start-up costs, financial assurances during construction and other costs.
The Cedar LNG project is located within Haisla Nation's traditional territory, in Kitimat, British Columbia. Previously, the estimated cost for the project came in at $2.4 billion. The project was initially expected to have a capacity of 3.0 million tons per annum (mtpa). However, the facility was later upgraded to have its nameplate capacity of 3.3 mtpa for enhanced project economics and efficient capital execution.
Pembina expects Asian markets to be a crucial source of long-term global LNG demand growth, with North American projects well-positioned to capitalize on this excess demand.
The company is looking to secure a final investment decision (FID) for the project by mid-2024 and it is expected to come in-service in late 2028. The project's total cost is expected to increase up to $4 billion after accounting for interest expenses incurred during construction and transaction costs.
Cedar LNG has entered into a take-or-pay agreement with ARC Resources (AETUF - Free Report) for 1.5 mtpa of LNG, for 20 years. Per the terms of the deal, ARC Resources will supply approximately 200 million cubic feet per day of natural gas through the Coastal GasLink from its production base in Montney.
Pembina Pipeline has also entered into an identical bridging agreement for 1.5 mtpa capacity with Cedar LNG. The company is actively undertaking commercial negotiations with multiple other customers as PBA plans to assign some of its capacity to third parties following a positive FID.
A Notice to Proceed has been issued by Cedar LNG to its Engineering, Procurement, and Construction (EPC) contractors — Samsung Heavy Industries and Black & Veatch. Following this, the EPC contractors can now start the construction of Cedar LNG’s FLNG. After the construction is completed, the FLNG will be transported from the construction site in Korea to the Cedar LNG site in the Haisla traditional territory, situated in the Douglas Channel, contingent upon the FID.
Baker Hughes (BKR - Free Report) has received an order to supply Cedar LNG with electric-driven liquefaction technologies from EPC contractor Black and Veatch. Per the terms of the deal, the U.S. energy technology giant is responsible for supplying a range of turbomachinery equipment, including four electric-driven main refrigeration compressors, two electric-driven boil-off gas compressors and six centrifugal pumps. Any financial details regarding the deal have not been disclosed yet.
Once the project becomes operational, Cedar LNG is expected to generate an annual run-rate adjusted EBITDA of US$200-US$260 million, net to Pembina. The lower end of the range reflects the take-or-pay commitments, while the high end is inclusive of potential contributions from incremental cargo and marketing upside.
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Pembina (PBA) Discloses New Developments on Cedar LNG Project
Pembina Pipeline Corporation (PBA - Free Report) , responsible for the development of the Cedar LNG project, has reported a significant cost increase for the project. The floating liquefied natural gas (FLNG) facility’s cost is now estimated to be $3.4 billion or C$4.61 billion.
The detailed Class III capital cost of the project includes US$2.3 billion for the FLNG production unit and US$1.1 billion for onshore infrastructure, owner’s costs, commissioning and start-up costs, financial assurances during construction and other costs.
The Cedar LNG project is located within Haisla Nation's traditional territory, in Kitimat, British Columbia. Previously, the estimated cost for the project came in at $2.4 billion. The project was initially expected to have a capacity of 3.0 million tons per annum (mtpa). However, the facility was later upgraded to have its nameplate capacity of 3.3 mtpa for enhanced project economics and efficient capital execution.
Pembina expects Asian markets to be a crucial source of long-term global LNG demand growth, with North American projects well-positioned to capitalize on this excess demand.
The company is looking to secure a final investment decision (FID) for the project by mid-2024 and it is expected to come in-service in late 2028. The project's total cost is expected to increase up to $4 billion after accounting for interest expenses incurred during construction and transaction costs.
Cedar LNG has entered into a take-or-pay agreement with ARC Resources (AETUF - Free Report) for 1.5 mtpa of LNG, for 20 years. Per the terms of the deal, ARC Resources will supply approximately 200 million cubic feet per day of natural gas through the Coastal GasLink from its production base in Montney.
Pembina Pipeline has also entered into an identical bridging agreement for 1.5 mtpa capacity with Cedar LNG. The company is actively undertaking commercial negotiations with multiple other customers as PBA plans to assign some of its capacity to third parties following a positive FID.
A Notice to Proceed has been issued by Cedar LNG to its Engineering, Procurement, and Construction (EPC) contractors — Samsung Heavy Industries and Black & Veatch. Following this, the EPC contractors can now start the construction of Cedar LNG’s FLNG. After the construction is completed, the FLNG will be transported from the construction site in Korea to the Cedar LNG site in the Haisla traditional territory, situated in the Douglas Channel, contingent upon the FID.
Baker Hughes (BKR - Free Report) has received an order to supply Cedar LNG with electric-driven liquefaction technologies from EPC contractor Black and Veatch. Per the terms of the deal, the U.S. energy technology giant is responsible for supplying a range of turbomachinery equipment, including four electric-driven main refrigeration compressors, two electric-driven boil-off gas compressors and six centrifugal pumps. Any financial details regarding the deal have not been disclosed yet.
Once the project becomes operational, Cedar LNG is expected to generate an annual run-rate adjusted EBITDA of US$200-US$260 million, net to Pembina. The lower end of the range reflects the take-or-pay commitments, while the high end is inclusive of potential contributions from incremental cargo and marketing upside.