Pembina Pipeline Corporation (NYSE:PBA) Q1 2023 Earnings Call Transcript

Jeremy Tonet: That’s very helpful. And just one last one if I could, as it relates to Cedar on the LNG side, are there, is it fair to say there’s not really any meaningful hurdles left to a positive FID at this point? Kind of crossing eyes crossing Ts and dotting Is, and just as you think about construction here, the modular build seems like it would kind of de-risk construction and inflationary concerns that we’ve seen elsewhere. Is that still a fair way to think about things or any other updates you want to share there?

Jaret Sprott: Yeah, I’ll jump in and Stu can round it out, but I would say, there are some — there’s still some pretty big hurdles to get over. We only have half of the capacity under MOU, but we’re feeling pretty confident in our ability to fill the facility now, until we have agreements signed. Obviously we don’t have that, but we’re feeling pretty optimistic about that. And then as it relates to the engineering, the teams are still working through all that and we don’t have a final cost estimate yet. We expect that in the next couple months here, and so we’ll see how that comes in. Obviously, capital cost is a large driver of the project now that — but to round out your question, there is about 80% of the cost that we expect to be under some form of lump sum agreement, which really would protect Pembina from a capital cost perspective.

Stuart Taylor: Jeremy, it’s Stu, yeah, we continue to progress our four major work streams of regulatory, commercial, engineering and finance and good progress has been made across the board. A lot of work still to undertake and push to get to the finish line here. We remain — we’ve made good progress on the regulatory side. We’ve made good progress on the commercial side with the first MOU and are working hard on another and others to follow. You’re right, the plan is to have this built in a shipyard in Asia. We’re working with the EPC contractors and those shipyards to finalize that and come forward in middle of the year here, we should have some insight and clarity on where that will be and what that cost as should end up, but as Scott said, it’ll be a lump sum contract for 80%-plus of our capital cost.

Jeremy Tonet: That’s very helpful. I’ll leave it there. Thank you.

Operator: Thank you. The next question comes from Linda Ezergailis at TD Securities. Please go ahead.

Linda Ezergailis: Thank you. Just following up on Cedar LNG, is there a reason why you’re targeting FID by the end of the third quarter? Such as, are there any sort of expiring supply or component procurement agreements or commercial discussions that dictate that timing? Or is it okay if the FID slips into Q4 or next year? And can you please indicate the minimum level of capacity that needs to be firmly contracted at FID?

Stuart Taylor: Linda, it’s Stu again. We always had it as the third quarter of 2023. As I mentioned already, we have four work streams trying to coordinate all four to sometime and, as we sit here and look and making some progress and we did kick off an additional feed study to be done and the timing of that pushed it a little bit further back. So it’s just coordinating all of that work stream, trying to align on a date and we’re currently sitting with working hard to have that FID by the end of the third quarter as mentioned in the press release. It could possibly slip, but at this point in time, everything is full speed and targeting that the end of September for that. As far as the contracting, we’ve gone forward. We’re looking to contract a 100% of the capacity at this point in time.