Pembina joins
the Haisla Nation in advancing Indigenous participation of Canadian
energy development to pursue an LNG project that will extend global
market access and drive economic growth
CALGARY, AB, June 8, 2021
/PRNewswire/ - The Haisla Nation and Pembina Pipeline Corporation
("Pembina") (TSX: PPL) (NYSE: PBA) are pleased to announce a
partnership agreement whereby Pembina will become the Haisla Nation's
partner in the development of the proposed Cedar LNG Project
("Cedar LNG" or the "Project"). The Project is strategically
positioned to leverage Canada's
abundant natural gas supply and British
Columbia's growing liquefied natural gas ("LNG")
infrastructure to produce industry-leading low–carbon, low-cost
Canadian LNG for overseas markets. Cedar LNG will be the largest
First Nation-owned infrastructure project in Canada and will have one of the cleanest
environmental profiles in the world.
"It was important for us to find a partner with the same values
of environmental protection and community-centered development,"
said Crystal Smith, Haisla Nation,
Chief Councillor. "Pembina's long
history of safe, reliable operations, and engagement with local
communities made them the distinct choice for Cedar LNG. With a
strong partnership, Cedar LNG will bring tremendous economic
opportunities and benefits ensuring the Haisla people have control
of our own future."
"This partnership is the result of meaningful collaboration with
the Haisla Nation to deliver responsibly-developed, world-class
energy," said Stu Taylor,
Pembina's Senior Vice President,
Marketing and New Ventures & Corporate Development Officer. "We
believe that environmental stewardship, Indigenous prosperity and
inclusion, and mutual economic benefit are the cornerstones of
future energy infrastructure development in Canada, and we are honoured to have the
opportunity to work with the Haisla Nation to produce Canadian
LNG."
Pembina's President and Chief
Executive Officer, Mick Dilger,
added, "We have worked with the Haisla Nation on and off for over a
decade with three different Haisla Nation leaders, maintaining a
positive relationship throughout that time. I am simply delighted
that this long-term relationship has led us to this tremendous
opportunity to finally partner with the Haisla Nation. At
Pembina, our goal is to leave
communities in a better situation than we find them, which is what
we have recently done in Prince
Rupert, and what we will do here. This Project will bring a
second product to global markets, consistent with our stated
strategy, with more to come."
Cedar LNG Project Overview
Cedar LNG is a proposed floating LNG facility in Kitimat, British Columbia, Canada, within the
traditional territory of the Haisla Nation. The Project is located
on Haisla Nation-owned land in the Douglas Channel, one of the
principal shipping routes on the British
Columbia coast. The Project will create jobs, contracting
and other economic opportunities for the Haisla people, the local
community and Indigenous Nations, and the region. Up to 500 people
will be working at the Cedar LNG site at the peak of construction
and approximately 100 people will be working at the facility
full-time once operational.
The Project will have one of the cleanest environmental profiles
in the world. Cedar LNG's floating design offers significantly less
environmental impact on the Douglas Channel coastline and the
facility will be interconnected to the existing BC Hydro
transmission system, utilizing renewable electricity to make Cedar
LNG one of the lowest emissions intensity LNG facilities
globally.
The Project will have a liquefaction capacity of approximately
three million tonnes per annum of LNG and will source natural gas
from the prolific Montney resource
play in northeast British
Columbia. Cedar LNG has secured a long-term transportation
agreement on the Coastal GasLink pipeline for 400 million cubic
feet per day of firm capacity. Natural gas will be delivered to the
Project site through an approximately eight-kilometre-long pipeline
that connects to the Coastal GasLink pipeline.
Liquefaction of natural gas will occur on a floating LNG
facility, which will be moored in the Douglas Channel. One of the
many advantages of Cedar LNG is that the floating facility will be
modularized and constructed at an existing shipyard in Asia, which will lower the capital cost and
construction risk of the liquefaction facility, reduce the
Project's footprint, and minimize the disruption to the local
community during the construction period. The technical concept for
Cedar LNG is based on a proven, simplified design utilized in other
floating liquefaction projects, enabling lump-sum turnkey
contracting for the majority of the Project's costs. As a result,
Cedar LNG represents among the lowest cost LNG value chains for
delivery into the Asian market.
Cedar LNG will largely target the Asia-Pacific market to maximize the Project's
geographic shipping advantage compared to U.S. Gulf Coast LNG
projects, which are subject to the high costs and risks of
transiting the Panama Canal. Cedar LNG's low-cost value chain,
combined with its low emissions intensity, positions the Project
favorably to deliver to Asian countries with large energy needs and
aggressive emissions reduction targets. The Project provides a
connection for Western Canadian Sedimentary Basin natural gas to
international markets and will contribute to the displacement of
coal as an energy source in Asia.
The estimated gross project cost of Cedar LNG is US$2.4 billion, or approximately $3.0 billion in Canadian dollars based on an
exchange rate of 1.25 Canadian
dollars per U.S. dollar. Cedar LNG will leverage
Pembina's existing LNG off-taker
relationships to secure long-term, tolling-based offtake
arrangements with LNG buyers. Returns are expected to be similar to
other large-scale capital projects undertaken by Pembina.
Cedar LNG has completed initial work that has allowed regulatory
and engineering work streams to be well advanced for a project at
this stage. The Project has secured its LNG export license from the
Canada Energy Regulator and is undergoing environmental assessments
by the provincial and federal governments.
Cedar LNG expects to make a final investment decision ("FID") in
2023. Subject to additional factors, including regulatory and
environmental approvals, the expected in-service date for the
Project is planned for 2027.
More information on Cedar LNG can be found at
www.cedarlng.com.
Partnership Agreement
Under the agreement, Pembina
will acquire the equity interests in Cedar LNG currently owned by
PTE Cedar LP and Delfin Midstream Inc., with a resulting
approximate ownership of 50 percent each between the Haisla Nation
and Pembina. Further, Pembina will assume operatorship of the
Project going forward and has assembled accordingly a world-class
floating LNG team.
Pembina expects to invest
approximately US$90 million in Cedar
LNG over the next 24 months, prior to an FID, which includes costs
to acquire its interest in the partnership as well as pre-FID
development costs.
About Haisla First Nation
The Xa'is'la or Haisla meaning "dwellers downriver" have
occupied their traditional territories in Northwestern British Columbia for more than
9,000 years. The Cedar LNG Project is a key element of the Haisla
Nation's economic and social development strategy and will further
advance reconciliation by allowing the Haisla Nation to—for the
first time ever—directly own and participate in a major industrial
development in its territory. As a project led by the Haisla Nation
and its partners, the Cedar LNG Project represents a new era of
Canadian LNG: one where Indigenous and industry partnership—and
world-leading social and environmental accountability—combine with
market demand to create long-term prosperity for the Haisla Nation,
the region and Canada.
About Pembina
Pembina is a leading
transportation and midstream service provider that has been serving
North America's energy industry
for more than 65 years. Pembina
owns an integrated system of pipelines that transport various
hydrocarbon liquids and natural gas products produced primarily in
western Canada. Pembina also owns gas gathering and processing
facilities; an oil and natural gas liquids infrastructure and
logistics business; and is growing an export terminals business.
Pembina's integrated assets and
commercial operations along the majority of the hydrocarbon value
chain allow it to offer a full spectrum of midstream and marketing
services to the energy sector. Pembina is committed to identifying additional
opportunities to connect hydrocarbon production to new demand
locations through the development of infrastructure that would
extend Pembina's service offering
even further along the hydrocarbon value chain. These new
developments will contribute to ensuring that hydrocarbons produced
in the Western Canadian Sedimentary Basin and the other basins
where Pembina operates can reach
the highest value markets throughout the world.
Purpose of Pembina:
To be the leader in delivering integrated infrastructure
solutions connecting global markets:
- Customers choose us first for reliable and value-added
services;
- Investors receive sustainable industry-leading total
returns;
- Employees say we are the 'employer of choice' and value
our safe, respectful, collaborative and fair work culture; and
- Communities welcome us and recognize the net positive
impact of our social and environmental commitment.
Pembina is structured into
three Divisions: Pipelines Division, Facilities Division and
Marketing & New Ventures Division.
Pembina's common shares trade
on the Toronto and New York stock exchanges under PPL and PBA,
respectively. For more information, visit www.pembina.com.
Forward Looking Statements and Information
This document contains certain forward-looking statements and
forward looking information (collectively, "forward-looking
statements"), including forward-looking statements within the
meaning of the "safe harbor" provisions of applicable securities
legislation, that are based on Pembina's current expectations, estimates,
projections and assumptions in light of its experience and its
perception of historical trends. In some cases, forward-looking
statements can be identified by terminology such as "will",
"strategy", "create", "proposed", "planned", "represent", "expect",
"commit" and similar expressions suggesting future events or future
performance.
In particular, this document contains forward-looking
statements, pertaining to, without limitation, the following: Cedar
LNG, including its expected economic and community benefits, the
number of people excepted to be employed as part of Cedar LNG, its
environmental profile and benefits, interconnection points and
pipeline access, liquefication capacity, sources of natural gas,
targeted markets, expected in-service date, budget projections, the
timing of investments decisions, and expected capital expenditures
and the timing thereof.
The forward-looking statements are based on certain
assumptions that Pembina has made
in respect thereof as at the date of this news release regarding,
among other things: oil and gas industry exploration and
development activity levels and the geographic region of such
activity; prevailing commodity prices, interest rates, carbon
prices, tax rates and exchange rates; the availability of capital
to fund future capital requirements relating to Cedar LNG;
geotechnical and integrity costs; that the Project will be
sanctioned and completed as expected; that any required commercial
agreements can be reached; that all required regulatory and
environmental approvals can be obtained on the necessary terms in a
timely manner; that counterparties will comply with contracts in a
timely manner; that there are no unforeseen events preventing the
performance of contracts or the completion of the relevant
facilities; that there are no unforeseen material costs relating to
the facilities which are not recoverable from customers; and
prevailing regulatory, tax and environmental laws and
regulations.
Although Pembina believes
the expectations and material factors and assumptions reflected in
these forward-looking statements are reasonable as of the date
hereof, there can be no assurance that these expectations, factors
and assumptions will prove to be correct. These forward-looking
statements are not guarantees of future performance and are subject
to a number of known and unknown risks and uncertainties including,
but not limited to: the regulatory environment and decisions and
Indigenous and landowner consultation requirements; the impact of
competitive entities and pricing; labour and material shortages;
reliance on key relationships and agreements; the strength and
operations of the oil and natural gas production industry and
related commodity prices; non-performance or default by
counterparties to agreements which Pembina or one or more of its affiliates has
or may enter into in respect of its business, including Cedar LNG;
actions by governmental or regulatory authorities, including
changes in tax laws and treatment, climate change initiatives or
policies or increased environmental regulation; adverse general
economic and market conditions in Canada, North
America and worldwide, including changes, or prolonged
weaknesses, as applicable, in interest rates, foreign currency
exchange rates, commodity prices, supply/demand trends and overall
industry activity levels; constraints on the, or the unavailability
of, adequate infrastructure; the political environment in North
American and elsewhere, and public opinion; ability to access
various sources of debt and equity capital; changes in credit
ratings; technology and cyber security risks; natural catastrophes;
and certain other risks detailed from time to time in Pembina's public disclosure documents
available at www.sedar.com, www.sec.gov and through
Pembina's website at
www.pembina.com.
This list of risk factors should not be construed as
exhaustive. Readers are cautioned that events or circumstances
could cause results to differ materially from those predicted,
forecasted or projected. The forward-looking statements contained
in this document speak only as of the date of this document.
Pembina does not undertake any
obligation to publicly update or revise any forward-looking
statements or information contained herein, except as required by
applicable laws. Readers are cautioned that management of
Pembina approved the financial
outlook contained herein as of the date of this press release. The
forward-looking statements contained in this document are expressly
qualified by this cautionary statement.
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SOURCE Pembina Pipeline Corporation