Canada throws its weight behind $4 billion hydro-powered floating LNG project

Given the importance of unlocking the domestic energy industry, especially in the wake of escalating trade wars, rising prices, and energy security concerns, the Canadian government has handpicked Cedar LNG, a partnership between the Haisla Nation and Canadian energy infrastructure player Pembina Pipeline Corporation, to be on the receiving end of millions in support for a floating liquefied natural gas (LNG) (FLNG) facility with a nameplate capacity of 3.3 million tonnes per annum (mtpa) in the traditional territory of the Haisla Nation, on Canada’s West Coast.

According to the Canadian Association of Petroleum Producers (CAPP), said to be a non-partisan, research-based industry association that advocates on behalf of its oil and gas exploration and production member companies, Canada’s economy is at a crossroads with the energy industry standing ready to play “a foundational role” in driving new investments, creating and supporting high-paying jobs, and providing a stable supply of affordable energy to Canadians and countries around the world, despite nearly a decade of ideological policy that has “stifled growth” in the sector.

Lisa Baiton, CAPP President & CEO, commented: “The global landscape is shifting rapidly. In recent weeks, it’s become clear our relationship with America has fundamentally changed—and we must act with urgency. Our focus should be on building a tariff-proof economy, not just for oil and natural gas, but for all Canadian products. This means building more pipelines, transportation corridors, LNG export facilities, expanding our ports – anything that provides Canadian businesses and Canadian products with direct access to global markets.” 

“Canada and our energy sector are at a crossroads. Regardless of the threat of tariffs, the United States is making a seismic shift in its policy approach, making rapid reforms to climate, energy and tax frameworks. Canada must act just as quickly. The choices we make today will determine whether we remain a global energy leader or fall behind. With decisive leadership, smart reforms, and a renewed commitment to investment, we can unlock our full energy potential, support our partners and make new ones, create jobs, and deliver a more prosperous future for all Canadians.”

While acknowledging that the world is becoming more unpredictable with continuously shifting trading patterns, the industry association emphasizes that this makes it essential for federal leaders to send a clear signal that the Great White North is ready to invite investment into its resource sector and grow its role as a secure supplier of energy to the world. 

CAPP is convinced that the oil and gas industry can help solve the country’s productivity and competitiveness challenges while enhancing its geopolitical influence with its trading partners, including the United States, with the right policy and investment environment. Therefore, CAPP’s Energy Platform outlines seven steps the next government of the Land of the Living Skies should take to unleash its energy advantage, encapsulating measures to:

1. Clear the roadblocks to building the infrastructure needed to connect Canadian energy to the world;
2. Immediately streamline approvals for major projects already in the federal review process;
3. Continue advancing emissions reduction technologies to enhance environmental leadership while keeping energy affordable and competitive;
4. Champion oil and natural gas as a critical part of Canada’s economic future;
5. Do not just build—build with speed;
6. Use the Maple Leaf Country’s abundance of natural resources to strengthen its energy security;
7. Tariff-proof the True North’s economy by growing and diversifying market access for Canadian oil and gas.

Baiton added: “Canada’s energy industry has long been a pillar of our economy, providing jobs, economic growth, and reliable energy. To help attract the next generation of investment and capture the opportunities ahead, the next federal government must actively promote oil and natural gas as a source of pride and a long-term cornerstone of our economy.”

The government of Canada seems to be listening to the energy industry, as it disclosed on March 21 support for Cedar LNG, which Innovation, Science and Economic Development Canada describes as an initiative set to be the largest Indigenous majority-owned infrastructure project in the country.

This support is interpreted to show the government’s understanding of the complexities at play, the importance of diversifying the Land of the Maple Leaf’s export market opportunities, supporting Indigenous economic reconciliation objectives, and ensuring development is aligned with the country’s climate and environmental goals.

Scott Burrows, President and Chief Executive Officer, Pembina Pipeline Corporation, pointed out: “Cedar LNG is a powerful example of how industry, Indigenous nations and governments can work together to deliver much-needed Canadian energy to the world.

“Together with our partner, the Haisla Nation—and with strong support from the Government of Canada—Cedar LNG will bring industry–leading, low-carbon, cost-competitive Canadian LNG to overseas markets, contributing to global energy security and creating jobs and economic growth, all while upholding the highest standards of social and environmental responsibility.”

To this end, Jonathan Wilkinson, Minister of Energy and Natural Resources, on behalf of Anita Anand, Minister of Innovation, Science and Industry, revealed a contribution agreement under the Strategic Innovation Fund (SIF) of up to CAD 200 million ($139.8 million) toward a CAD 5.963 billion ($4.17 billion) project with Cedar LNG Partners LP (Cedar LNG).

“Canadian companies like Cedar LNG are turning ideas into solutions that Canada and the world need as we move toward a low-carbon future. Today’s announcement shows how innovation can lead us toward sustainable economic growth as we work to achieve our climate objectives and support Indigenous communities,” highlighted Anand.

The LNG project is expected to create approximately 300 full-time construction and trades jobs and 100 highly skilled work opportunities in Canada, with a strong focus on providing long-term Indigenous employment opportunities. This undertaking is anticipated to generate $275 million in gross domestic product (GDP) contributions over the construction phase and $85 million in annual GDP contributions during the operations phase.

“Supporting large-scale innovative projects will position Canada for a cleaner and stronger economy—and when done thoughtfully and strategically, one that is competitive in a low-carbon world. The Cedar LNG Project will also connect Canada’s natural resources sector to more export markets while creating more economic opportunities for Indigenous peoples and Canadians,” underlined Canada’s Innovation, Science and Economic Development department.

Cedar LNG is a four–year project consisting of the construction, commissioning, and operation of a new Indigenous majority-owned FLNG processing facility and marine export terminal in Kitimat, British Columbia, which will be powered by clean hydroelectricity from B.C.’s grid and will produce ultra low-carbon LNG that has the potential to displace the use of higher-emitting forms of energy in Asia.

“The need to build a resilient economy with new export opportunities for Canadian energy suppliers has never been clearer. Our international partners are looking for a reliable supplier of low-carbon energy sources, and Canada will be there to enable communities—and in this case, Indigenous partners—to be the stable provider they are looking for, while creating good jobs and driving economic growth,” underscored Wilkinson.

After it comes into operation, the LNG facility is set to have the capacity to process and liquefy 400 million standard cubic feet of natural gas per day and produce 3.3 million tons of liquefied natural gas per year for international markets. The Cedar LNG project is forecast to establish jobs, drive economic growth, diversify export markets, and support global energy security and the transition away from higher-emitting energy sources. 

Crystal Smith, Chief Councilor of the Haisla Nation, noted: “Cedar LNG is a reality today in part because of the incredible support we have received from the Government of Canada through the Strategic Innovation Fund.

“Haisla values of sustainability and environmental protection are core to how Cedar LNG has been designed, and it will result in one of the most innovative LNG facilities in North America, with one of the lowest carbon footprints in the world. Together with our partner Pembina, we are proud to be changing the face of the Canadian energy sector, in a manner that elevates Indigenous values of environmental and cultural protection.”

Cedar LNG is designed to use clean hydroelectricity from the BC Hydro grid to liquefy and deliver low-emissions LNG to overseas markets, making use of engineering innovations, such as a spread mooring system to enable the near-shore FLNG facility to minimize negative impacts on the local community and environment. This facility is expected to further reduce its environmental impacts by implementing air-cooled process technology, portrayed as the first FLNG facility in the world to do so.

However, the project has not had smooth sailing so far, as it run into opposition and even experienced brushes with the law thanks to Steelhead LNG, which accused Cedar LNG and Samsung Heavy Industries of infringing its Korean patents and set the patent infringement litigation in motion in Korea to seek a halt to the construction of FLNG facilities, damages for the alleged unauthorized use of its patents, and an injunction prohibiting further infringement.

A few months later, the company followed this up by initiating new legal proceedings against Cedar LNG, Pembina Pipeline Corporation, and ARC Resources in British Columbia, with the lawsuit filing alleging that each of the defendants “willfully and improperly exploited information” supplied by Steelhead LNG to ARC Resources regarding the development of LNG facilities in British Columbia for the benefit of Cedar LNG.

Taking into account the current challenges, Mark Carney, Prime Minister of Canada, and the premiers agreed that Canada has the opportunity to more than offset the effects of U.S. tariffs if they work together to unlock economic projects and remove barriers to create higher-paying jobs, maximizing the country’s economic potential to strengthen its position at home and abroad.

With this in mind, Prime Minister Carney outlined a suite of measures to develop a national trade and economic corridor to drive investment, create jobs, and build economic growth, entailing:

• The creation of a First Mile Fund to build transportation networks to connect energy extraction sites to rail lines and roads, expediting project construction and creating a more integrated and accessible Canadian economy;
• A “one window” approval process to streamline approvals for large-scale, national-interest infrastructure projects, creating a review processes with the highest standards for safety, environmental protection, and Indigenous consultation, reducing uncertainty for investors;
• A contribution agreement of up to $200 million toward the construction, commissioning, and operation of a new Indigenous majority-owned Cedar LNG processing facility;
• A $175 million investment in the Hudson Bay Railway and at the Port of Churchill, in Manitoba to expand and open new transportation corridors, bolster economic growth and reconciliation in the Canadian Arctic and North, and help get Canadian products to global markets.

Moreover, Prime Minister Carney stressed the imperative of breaking down barriers to interprovincial trade and building a stronger and fairer economy. As a result, he committed to table legislation by July 1, 2025, to eliminate all federal barriers to interprovincial trade and labor mobility, removing all federal exemptions under the Canada Free Trade Agreement (FTA).

These moves are being made to enable the Land of the Maple Leaf to create a truly open Canadian market, one that reduces costs for its businesses and consumers alike by harmonizing regulations and enhancing labor mobility to help fortify supply chains, boost productivity, and unlock new opportunities for domestic companies.

“By working together, we can expand and build one more interconnected and resilient Canadian economy. Canadians are ready to show the world that we can cheer for different teams and still be one strong team when it counts,” concluded Prime Minister Carney.