Pembina Pipeline Corp. is working to complete contracts this year for the remaining natural gas capacity for the Cedar LNG Partners LP export project in British Columbia, a top executive said last week.
The Calgary-based executive team discussed the marketing efforts for the liquefied natural gas export facility and other projects in the queue during the second quarter conference call.
In late June, Pembina and the Haisla Nation sanctioned the 3.3 million metric ton/year floating LNG project, which could begin exports by late 2028.
“We are ramping up our marketing efforts and looking at the remaining capacity of Cedar,” Senior Vice President Stuart Taylor told investors. Taylor oversees Marketing, New Ventures and Corporate Development.
“I will say that our project became more real” after it was sanctioned, Taylor said. “The interest is high. We've been working with a number of potential offtakers that we've had conversations with for a long period of time.
“But we do have some renewed and new interest coming in as well…We're excited and optimistic of progressing those conversations to completion, with a target to have much of that completed in 2024.”
Pembina also announced that it has secured the remaining 14.6% interest in the Aux Sable Liquid Products LP assets from Williams, CEO J. Scott Burrows said. Last year, Pembina purchased stakes in the Aux Sable from Enbridge Inc.
The natural gas liquids (NGL) processing facility in Illinois, which is able to process up to 2.1 Bcf/d, is the largest in the United States.
“The Aux Sable assets have been outperforming Pembina's expectations,” Burrows noted. “We now have fully consolidated ownership of all Aux Sable assets, thereby further simplifying corporate reporting and enhancing the ability to pursue long-term opportunities.”
Pembina reported growth across its Canadian territory, “leading to higher volumes in our pipelines, gas plants and fractionators,” the CEO said. “And while we would prefer to see higher natural gas prices for our producing customers, the current weakness, along with robust NGL pricing and strong oil prices, is leading to continued strength in Pembina's marketing business.”
Natural gas prices at Canadian benchmark NOVA/AECO C have remained below C$2.000/GJ since a brief spike in early January, NGI’s Daily Historical Data show. Trades at the hub averaged C76.0 cents on Monday (Aug. 12), according to NGI data.
The “low natural gas price and high NGL prices had a strong impact on that business,” he explained. “We'd obviously like a little higher gas price for all of our producing community and hopefully add to increased drilling.
“But in the short term here, that low gas price has really led to strong fractionation spreads across the business, especially at Aux Sable…And we think having full control of Aux Sable will allow us to continue to capture those and give us a leg up...It's a little too early to start talking about what exactly those are in terms of where we're headed, but we're actively working and planning on those today.”
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Meanwhile, Pembina Gas Infrastructure Inc. (PGI) during the quarter secured a half-stake in Whitecap Resources Inc.’s 15-07 Kaybob Complex, which serves the Montney and Duvernay formations.
Pembina is forecasting 6% annual growth in its conventional pipeline volumes, with a 4% gain annually in natural gas processing volumes. Oil, NGL and natural gas pipeline volumes during 2Q2024 increased 11% year/year to 2.72 million.
“Beyond 2024, Pembina’s core business, at the center of the Western Canadian energy industry, positions the company to benefit from multi-year volume growth expected through the balance of the decade driven by transformational developments,” Burrow said.
Pembina, which reports in Canadian currency (C$1.00/73 cents), reported net profits rose 32% year/year to $479 million (75 cents/share) from $363 million (60 cents). Revenue increased to $1.2 billion from $906 million. Cash flow jumped to $954 million from $653 million.
Pipeline earnings jumped 39% year/year to $485 million, with facilities profits rising 18% to $181 million.
