Canada’s $4 billion LNG project facing another legal challenge

Steelhead LNG, a Vancouver-based developer in the liquefied natural gas (LNG) arena, is mounting one more legal challenge against an LNG project on Canada’s West Coast. Legal proceedings are underway against Pembina Pipeline Corporation and ARC Resources in connection with a floating LNG (FLNG) solution for this development.

After Steelhead LNG accused Cedar LNG and Samsung Heavy Industries of infringing its Korean patents a few months ago 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, the company has now initiated new legal proceedings against Cedar LNG, Pembina Pipeline Corporation, and ARC Resources in British Columbia.

The new lawsuit filing alleges that each of the defendants “willfully and improperly exploited information” supplied by Steelhead LNG to ARC Resources regarding the development of liquefied natural gas facilities in British Columbia for the benefit of Cedar LNG.

Therefore, the lawsuit seeks to suspend ARC Resources’ participation in the Cedar LNG project, secure damages from the defendants for the reportedly unauthorized use and exploitation of Steelhead LNG’s information, and an injunction to prevent further wrongful acts.

Victor Ojeda, President of Steelhead LNG, commented: “It is evident to Steelhead that, without relying on ARC Resources’ capacity commitment—enabled by what Steelhead believes to be a pattern of wilful and wrongful conduct—Cedar LNG and Pembina would not have been able to secure the substantial financial commitments necessary to reach a positive final investment decision.”

Marty Proctor, former CEO of Seven Generations Energy and a current director of ARC Resources, is named as a defendant in the proceedings. Steelhead LNG is also continuing its patent infringement litigation in Korea against Cedar LNG and Samsung Heavy Industries in relation to its Korean patent.

The FLNG facility for the Cedar LNG project, which is a partnership between the Haisla Nation and Pembina Pipeline Corporation in Kitimat, Canada’s British Columbia, is being designed and constructed by Samsung Heavy Industries and Black & Veatch as the engineering, procurement, and construction contractors. 

After the final investment decision (FID), which was made in June 2024, the construction activities began earlier this year at the FLNG project, said to be the world’s first indigenous majority-owned such unit designed to run on hydropower, to start the process required to become a reality.

Multiple design decisions are expected to help curb the Cedar LNG project’s environmental footprint, such as the one to power the facility with renewable electricity from BC Hydro, with the site location allowing it to leverage existing LNG infrastructure, including the Coastal GasLink pipeline, a deepwater port, roads, and other infrastructure.

The transportation agreement with Coastal GasLink Pipeline Limited Partnership allows the Cedar LNG facility to receive 400 million cubic feet per day of Canadian natural gas via the Coastal GasLink pipeline. The project secured 20-year take-or-pay liquefaction tolling services agreements with ARC Resources and Pembina for 1.5 mtpa each.

With a total estimated cost of around $4 billion, this project and its FLNG, expected to be delivered in the first quarter of 2028, are perceived to be strategically positioned to enable a lower-carbon energy option for global markets.

Cedar LNG’s West Coast location is seen as one of the shortest shipping routes to key Asian markets, with the Douglas Channel leading to and from the site, offering an established shipping route and deepwater marine inlet with year-round ice-free conditions.

“While Steelhead remains open to pursuing an amicable resolution, ARC, Pembina, and Cedar have shown little interest in doing so. As a result, Steelhead has no choice but to seek judicial intervention,” added Ojeda.

Steelhead LNG pulled the plug on the Kwispaa LNG project on Vancouver Island in 2019, after the Canadian Environmental Assessment Agency began a federal environmental assessment, following the National Energy Board’s green light for the 25-year export of up to 24 million tons of LNG.

This Canadian player holds patents for its LNG export facility solution in Canada, the United States, Korea, Australia, and Mexico. Recently, the firm got three new patents in the United States, protecting what it has described as its “expanded versions of its innovative near shore LNG facility design.”

Steelhead LNG has also advanced a series of claims against Rockies LNG, including alleging that the firm’s proprietary facility design information was improperly used to initiate the Ksi Lisims LNG project on the West Coast of Canada. As a result, the company has also sought injunctive relief and significant damages against Rockies LNG and its partners in that case.

The Canadian player claims to be committed to protecting its intellectual property rights and proprietary information while focusing on advancing LNG technology solutions and delivering value to its stakeholders.

Moreover, Steelhead LNG underlines that the U.S. and South Korea are key strategic jurisdictions for the LNG industry since the United States reached the top of the LNG suppliers’ club and South Korea has become one of the leading locations for the construction of floating LNG facilities.