Pembina Pipeline has announced a significant cost increase for the Cedar LNG project, a proposed floating liquefied natural gas (FLNG) facility in Kitimat, British Columbia, Canada, which is now estimated at approximately $3.4bn (C$4.61bn).

Located within the traditional territory of the Haisla Nation, the Cedar LNG project cost has risen from an earlier estimate of around $2.4bn, reported Bloomberg News.

The company is progressing towards an FID by mid-2024, with the project's total cost, including interest during construction and transaction costs, expected to reach around $4bn.

The detailed Class III capital cost estimate includes $2.3bn for the FLNG production unit under a fixed-price agreement and $1.1bn for onshore infrastructure and other associated costs.

A joint venture (JV) between Pembina Pipeline and Haisla Nation, the Cedar LNG project aims to secure asset-level debt financing for around 60% of the total project cost.

Furthermore, Pembina Pipeline has secured a natural gas supply agreement with ARC Resources, which will deliver approximately 200 million cubic feet per day for liquefaction at Cedar LNG.

Effective from 2028, the 20-year agreement will utilise the Coastal GasLink pipeline from ARC's Montney operations in British Columbia.

ARC Resources president and CEO Terry Anderson said: "The Cedar LNG project will play a critical role in bringing low-cost, low-emissions Canadian natural gas to the world, while delivering economic benefits to communities and Canadians here at home.”

Additionally, Pembina has entered a bridging agreement with Cedar LNG for 1.5 million tonnes per annum of LNG capacity.

Cedar LNG has also issued a notice to proceed to EPC contractors, Samsung Heavy Industries and Black & Veatch, for the engineering, procurement and construction of the FLNG production unit.

The two companies were selected earlier this year by the partners in Canada’s Cedar LNG project for the EPC of the project’s FLNG production unit.