Pembina Pipeline Corporation’s PBA Cedar LNG project, developed in collaboration with the Haisla Nation, has received funding of up to CAD 200 million from the Canadian government. The funds have been provided through a contribution agreement drawn under the Strategic Innovation Fund (“SIF”).
Overview of Cedar LNG Project
The Cedar LNG project is expected to be the largest infrastructure development in Canada, majority-owned by the nation's indigenous communities. A positive final investment decision (FID) on the project was taken in June 2024.
The Cedar LNG project, valued at $4.17 billion, is expected to come online by late 2028. It is a four-year project featuring a floating liquefied natural gas (FLNG) processing facility that shall produce ultra-low carbon LNG and a marine export terminal in Kitimat, British Columbia. The project involves construction and commissioning activities for the FLNG unit and the marine export terminal, along with their operations.
The facility will use clean hydroelectricity from British Colombia’s grid for its operations. This is particularly favorable as the facility will be powered by renewable energy, reducing its overall carbon footprint. Additionally, the facility is expected to produce very low-carbon LNG, which could potentially replace other forms of energy with higher emissions.
The FLNG unit is anticipated to utilize air-cooled process technology for liquefying natural gas, thereby lowering its environmental footprint. Per PBA, this is the first FLNG project in the world to deploy this technology.
The government support for the project underscores its acknowledgment of various issues encountered in energy development, including regulatory and financial challenges. The Canadian government also notes that supporting such projects expands the scope of its LNG export markets and supports the economic development of indigenous communities. This ensures that the development of energy infrastructure supports the country’s climate goals while benefiting the local communities.
Economic and Environmental Contributions
A Pembina spokesperson mentioned that Cedar LNG is a notable development that highlights how a joint effort by the industry, community and government can enable Canada to deliver energy to the world, while supporting its environmental goals. Together with Haisla nation and the support of the Canadian government, Cedar LNG will be able to deliver low-carbon LNG to the world at a competitive cost, thereby contributing to global energy security.
Cedar LNG is also anticipated to contribute to the region’s economic growth. The project is estimated to create approximately 300 full-time construction and trades jobs in Canada. It should also create opportunities for 100 highly skilled workers. The project will prioritize the generation of long-term opportunities for the indigenous people in Canada. This is expected to substantially impact the nation’s economy, contributing more than $275 million in gross domestic product (GDP) during the project’s construction phase and nearly $85 million in annual GDP once the project is operational.
After commencing operations, the facility is expected to have the capability to process and liquefy approximately 400 million standard cubic feet of natural gas per day. It will also be capable of producing 3.3 million tons of liquefied natural gas per year, which will be delivered to international markets.
The construction of the marine terminal and the associated pipelines is expected to start in the second quarter of 2025. Construction activities are expected to reach its most intensive phase in 2026. The construction of the innovative FLNG unit has commenced in Korea.
PBA’s Zacks Rank and Key Picks
PBA currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the energy sector are Archrock Inc. AROC, Nine Energy Service NINE and NextDecade Corporation NEXT. While Archrock currently sports a Zacks Rank #1 (Strong Buy), Oceaneering International and NextDecade carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
Archrock is an energy infrastructure company based in the United States with a focus on midstream natural gas compression. It provides natural gas contract compression services and generates stable fee-based revenues.
Nine Energy Service provides onshore completion and production services for unconventional oil and gas resource development. The company operates across key prolific basins in the United States, including the Permian, Eagle Ford, MidCon, Barnett, Bakken, Rockies, Marcellus and Utica, as well as throughout Canada. With a sustained demand for oil and gas in the future, the need for NINE’s services is anticipated to increase, which should position the company for growth in the long run.
NextDecade is an emerging player in the LNG space with its Rio Grande LNG project in Texas. The demand for LNG as a clean-burning fuel continues to grow, and the commodity is expected to play a crucial role in the energy transition process. The company’s focus on expanding its liquefaction capacity is expected to enhance its position in the rapidly growing global LNG market, enabling it to meet the rising demand for natural gas.
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