Developers took a key step this month to expand liquefied-natural-gas export infrastructure in Canada—issuing to Samsung Heavy Industries and Black & Veatch a notice to proceed to finalize engineering and design and begin construction of Cedar LNG, a floating LNG export facility in Kitimat, B.C., with a $4-billion estimated cost.
The facility, co-owned by Alberta-based Pembina Pipeline Corp. and the Haisla Nation, would be Canada’s second for LNG export, its first as a floating operation and the nation’s largest indigenous people-owned infrastructure project. Its developers also say it has some of the sector's most innovative emissions control technologies.
According to Pembina, Cedar LNG's $2.3-billion floating production unit will be designed and built in a Samsung shipyard in South Korea under a fixed-price, lump-sum agreement, with $1.7 billion for onshore infrastructure, owner’s costs, commissioning, interest and related financial expenses.
According to industry publication Upstream, Samsung and Black & Veatch are negotiating to involve a Chinese shipyard for potential EPC services, with “at least six yards approached to gauge their interest in participating in a bid process, set to close in October, involving modules for the development.” An award is expected in December, said the publication.
The owners also raised Cedar LNG's expected capacity. The project was originally described as a 3-million ton-per year facility, but the increase to 3.3 million tpy "reflects engineering optimization and a capital efficient option to enhance the project’s economics,” Pembina said in a statement. The facility "will provide a valuable outlet for western Canadian natural gas to access global markets." The company previously targeted Asian markets.
According to the oil firm, the floating facility's development "in the controlled conditions of a shipyard" also would provide "lower construction and execution risk."
The owners in January deferred a previously announced final investment decision and design and construction start by the second quarter over delays in negotiations for natural gas supply, resolution of third-party agreements and project financing, they said.
The owner this month signed a 20-year agreement with Alberta gas drilling firm Arc Industries to supply about 200 million cu ft of natural gas per day once the plant operates in the second half of 2028. "Today is the day we have been working toward in achieving our off-take agreement with ARC," said Crystal Smith, Haisla Nation Chief Councillor, pointing to the supplier's "commitments and values to responsible development."
Cedar LNG “will be the first floating hydroelectric, turbo-driven system globally, and air cooled using a single mixed-refrigerant cryogenic process.” Laszlo von Lazar, Black & Veatch's president of energy and process industries, told ENR. Air cooling will eliminate any water usage required to cool the liquefaction system, he said.
The firm’s PRICO technology also reduces refrigerant inventory and boosts efficiency by up to 2.5%, he said.
The LNG plant itself will be on the deck of the vessel, with electricity supplied at Kitimat by an onshore power network that Cedar LNG and utility B.C. Hydro are developing, said Brady Hays, Black & Veatch's senior vice president of energy resource and process industries. The firm will have about 350 staff supporting the project, with detailed engineering and procurement expected to continue through late 2025.
“Right now we’re designing the fabricated steel that will hold the modules, and writing the specs for sizing and procurement,” von Lazar explained. Black & Veatch and Samsung will acquire the steel and install the equipment as modules are built in sequence at Samsung’s yard, he said.
Cedar LNG has obtained all major regulatory approvals and is negotiating an agreement to connect the facility to Coastal GasLink, the TC Energy-owned pipeline completed last year to transport gas for the nearby but independent LNG Canada export terminal, led by Shell. The first 14-million-tpy phase of that onshore facility is being built under an EPC contract to JGC Corp. and Fluor Corp. Construction is nearly complete, with the estimated $14-billion project on track to ship its first LNG next year.
With the January pause in U.S. government authorization of new LNG exports to countries without a U.S. free trade agreement, Canada export facilities may benefit globally due to its free trade agreement with the U.S. and Mexico, said a March report by the Institution for Energy Economics and Financial Analysis.
But the report cautioned that Canadian projects face an uncertain future from shrinking global demand for LNG and potential oversupply. LNG will maintain its importance “when renewables aren’t producing power,” von Lazar said. “LNG is interlinked with what’s going on with renewables throughout the world and facilitates the progress of decarbonization.”
LNG opposition also is rising in Canada, with 88 advocacy groups recently asking British Columbia Premier David Eby, by letter, to halt expanded gas production, including five export terminals underway or planned in the province, the Vancouver Sun recently reported. They cite "megatonnes of greenhouse gas emissions every year" and insufficient BC Hydro transmission capacity to support expanded electrification of the terminals.