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Pembina mulls selling 40%-50% stake in Jordan Cove LNG export project


More developers seeking partners to reduce risk

Final investment decision yet to be made on Oregon terminal

Houston — Canada's Pembina Pipeline continues to talk about selling a stake in its Jordan Cove LNG export project to help pay for the Oregon liquefaction terminal and affiliated feedgas pipeline, an executive said Friday.

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Amid challenges securing long-term offtake agreements and financing the billions of dollars needed to pay for construction, developers of the next wave of liquefaction facilities are increasingly looking for partners to help shoulder the burden and reduce risk.

In Pembina's case, it inherited the Jordan Cove project when it acquired Veresen in October 2017. The company is pursuing its second permit certificate application with the US Federal Energy Regulatory Commission, after the first one was rejected in March 2016, in part because of a failure to show sufficient demand for the project. With the recent decision by LNG Canada to advance its LNG export terminal in British Columbia, there is renewed interest in West Coast projects, which would benefit from a shorter shipping route to Asia compared with terminals on the US Gulf Coast.

"If we were successful in securing Jordan Cove, we have talked about monetizing potentially up to 40%, maybe 50%, of that project to help with the capital program," Chief Financial Officer Scott Burrows said during an investor conference call to discuss Pembina's third-quarter financial results.

The company contemplated in a May investor presentation the possibility of selling a stake in the project, when it said in a footnote that its value projections for the company were based on it maintaining 60% ownership of the terminal and 50% ownership of the pipeline.

In its latest earnings release, Pembina said it continues to progress development activities tied to the proposed Jordan Cove LNG project and Pacific Connector Pipeline, which would transport gas from the Malin Hub in southern Oregon to the terminal to be liquefied and then exported. The company expects a final FERC decision on its current Jordan Cove permit application in November 2019. Pembina is targeting first LNG in 2024.

Pembina sees LNG exports as a complementary business to its core pipeline operations.

On Thursday, the company said it has entered into long-term, take-or-pay agreements to backstop development of new pipeline and processing infrastructure in Canada. The agreements include related service for liquids transportation on Peace Pipeline, gas transmission service and fractionation services at Pembina's Redwater facility.

Like many of its peers, including TransCanada, Pembina is looking to provide more takeaway capacity for gas producers in Western Canada. Moving that gas east supports demand in high-population areas in the country as well as cross-border deliveries to the US Northeast. Moving the gas south and west would help support the expectation of growing LNG exports, both in Canada and the US.

"We are as rich in growth opportunities as we have ever been," CEO Michael Dilger said on the call.

-- Harry Weber,

-- Edited by Joe Fisher,