Risks of delays in British Columbia (BC) have prompted the most advanced native Canadian liquefied natural gas (LNG) project, Cedar LNG, to request a four-year export license extension.

The Cedar LNG partnership of Haisla First Nation and Pembina Pipeline Corp. has asked the Canada Energy Regulator (CER) to reset the license deadline to May 2030 for starting shipments from the planned terminal on the northern BC coast at Kitimat.

“The anticipated in-service date remains subject to a number of risks and potential delays,” Cedar developers said in the application. The project sponsors cited a long list of potential pitfalls.

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“These include uncertainty within federal and provincial regulatory processes, global supply chain constraints, constantly evolving restrictions and impacts associated with the Covid-19 pandemic, ongoing commercial negotiations, and third-party impacts such as interruptions in gas or power supplies,” they said. “The requested extension of the license’s early expiry date is necessary to maintain the confidence of financial institutions, tolling customers and off-takers.”

The project sponsors reported that difficulties of building a BC LNG industry from scratch already set back the estimated date for completing their terminal until 2027. This is a year after the May 2026 project drop-dead date set by their current export license. The project also has not been sanctioned. A final investment decision is expected next year.

Relying On LNG Canada Sanctioning

The setback resulted from Cedar LNG’s reliance on the Coastal GasLink pipeline for its supply. The pipeline is now under construction to move gas from the Montney Shale for the Shell plc-led LNG Canada terminal, which is also on Haisla territory at Kitimat.

Access to gas, according to Cedar sponsors, was dependent upon sanctioning LNG Canada, but it was sanctioned in 2018.

As the CER export license review began, LNG topped national business and government agendas, an industry leader said during an investment symposium held by Scotiabank and the Canadian Association of Petroleum Producers (CAPP). “Therein lies the great opportunity for Canada,” said CAPP Vice Chair Jeff Tonken, who is president of Montney producer Birchcliff Energy Ltd.

A global roster of 189 coal-fired power stations under construction creates an immense environmental fuel substitution market for exporters, said Tonken. Switching to LNG would cut the plants’ greenhouse gas emissions in half, he pointed out.

The United States set a clean energy example for Canada, said Tonken. He cited U.S. overseas LNG sales growth into a range of 13 Bcf/d from near zero since 2015. Meanwhile, the first Canadian terminal and supply pipeline, LNG Canada and Coastal GasLink, still are only under construction.

After following the U.S. example by creating Cedar LNG, Haisla enlisted Pembina as a 50% ownership and expert operating partner. The deal included a C$90 million (US$72 million) commitment by the Calgary firm to cover planning and regulatory costs. Black & Veatch and Samsung Heavy Industries were hired to do front-end engineering and design.

Cedar LNG’s export license allows overseas sales volumes of up to 830 MMcf/d. The planned C$3 billion (US$2.4 billion) first phase of the project calls for tanker shipments of 400 MMcf/d from a floating terminal.