Haisla-led Cedar LNG seeks to boost future capacity by 25% in B.C.

The Haisla Nation-led Cedar LNG project has applied to regulators for permission to boost the future production capacity of liquefied natural gas by 25 per cent, saying the higher output will provide much-needed economic benefits.

Cedar started construction last year and is slated to begin super cooling natural gas into liquid form in late 2028, with exports to be shipped to Asia from the Haisla’s traditional territory in Kitimat, B.C.

The Haisla own 50.1 per cent of Cedar, while Calgary-based Pembina Pipeline Corp. PPL-T holds 49.9 per cent.

“Advancement of engineering design has identified the opportunity to increase the project liquefaction capacity,” Cedar said in a filing to British Columbia’s Environmental Assessment Office.

B.C. and the federal government have described LNG exports to Asia as a crucial way for Canada to diversify its economy and reduce reliance on the United States.

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The B.C. regulator previously led a wide-ranging review of Cedar in collaboration with the Impact Assessment Agency of Canada. The project won approvals in 2023 from the provincial and federal environmental regulators.

“Benefits of increased liquefaction capacity and throughput are economic in nature and include the ability to achieve a higher rate of return on the investment in the project,” Cedar said.

Other benefits cited in the regulatory filing include “better utilization of underutilized pipeline infrastructure; an increased diversity of markets for Western Canada natural gas; additional economic benefits to Haisla Nation; additional tax revenue for provincial and federal governments.”

Under the revised proposal, liquefaction capacity would jump to 3.75 million tonnes a year of LNG, compared with the current approved amount of three million tonnes annually.

Along the pipeline for transporting natural gas, that works out to roughly 500 million cubic feet a day, compared with the current plans for 400 million cubic feet a day, said the filing by Cedar, which retained engineering expertise from Stantec Consulting Ltd.

The contentious Coastal GasLink pipeline, operated by TC Energy Corp. TRP-T, is currently supplying the LNG Canada megaproject in Kitimat and also will be used for Cedar.

Shell PLC-led SHEL-N LNG Canada became the country’s first export terminal for the fuel when it began shipments in June to Asia from Kitimat. LNG Canada is mulling a Phase 2 expansion that would double capacity to 28 million tonnes a year.

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Coastal GasLink is building the new Mount Bracey compressor station in northeastern B.C. to supply Cedar, expanding capacity of natural gas on the existing pipeline by 400 million cubic feet a day.

The pipeline route starts in the Montney region in the province’s northeast and runs 670 kilometres to Kitimat.

Last year, Haisla members voted overwhelmingly in favour of plans by the band council to borrow up to $1.4-billion from the First Nations Finance Authority to help support Cedar. In mid-2024, Export Development Canada provided a commercial loan facility of $400-million to $500-million to the project.

Climate activists and environmental think tanks say the world needs to focus on renewable energy, not on fossil fuels such as LNG.

“Rather than fostering economic growth in clean industries or helping communities adapt to climate change, limited public funds are being used to reinforce fossil-fuel extraction and consumption,” the International Institute for Sustainable Development said in a report last week that criticized governments’ funding for B.C.’s fledgling LNG sector.

A floating production unit is being built in South Korea for Cedar, which is constructing various other infrastructure in Kitimat. The project will use electricity from BC Hydro for powering electric motors that drive compressors for the liquefaction process.

“The project will deliver a substantive and long-term revenue source for Haisla Nation, surrounding Indigenous nations, and the provincial and national economies,” Cedar said in its regulatory submission. “It will have one of the lowest carbon footprints of any LNG facility when it begins operations in late 2028.”

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Cedar has estimated that its export facilities will require US$3.4-billion in capital spending and US$600-million in other expenses, including interest paid through financing arrangements during construction, as well as transaction costs.

The venture, co-owned by the Haisla and Pembina since 2021, also applied to house up to 80 workers on the floating production vessel. “It is important to note that more than 50 per cent of Cedar LNG’s permanent employees will not be living aboard the vessel,” Pembina said in an e-mailed statement.

It cost $14.5-billion to construct Coastal GasLink. Industry experts say that if LNG Canada decides to forge ahead with Phase 2, it could cost billions of dollars more to add six compressor stations to more than double capacity along the existing pipeline to five billion cubic feet a day.

Calgary-based ARC Resources Ltd. ARX-T has agreed to be a major supplier of natural gas for Cedar, with a 20-year commitment.

The other LNG project currently under construction in B.C. is Woodfibre LNG, located at an industrial site near Squamish.

Energy proposals in B.C. include Ksi Lisims LNG on Pearse Island, FortisBC’s expansion plans at its domestic Tilbury LNG site in Delta and Summit Lake PG LNG near Prince George.

Calgary-based Enbridge Inc. acquired a 30-per-cent stake in 2022 in Woodfibre, while the remaining 70 per cent is held by Pacific Energy Corp. Ltd.

Woodfibre, which anticipates that it will start exports by late 2027, recently announced total estimated costs of US$8.8-billion that include construction of FortisBC’s Eagle Mountain-Woodfibre Gas Pipeline.

In 2016, Woodfibre had cost estimates of $1.6-billion for its Squamish-area terminal and $520-million for the associated pipeline. In 2022, Enbridge said total estimated costs had soared to US$5.1-billion.