ARC Resources (TSX:ARX) has inked an LNG offtake agreement with ExxonMobil LNG Asia Pacific (EMLAP), with the LNG to be supplied through the Cedar LNG terminal in Kitimat.
ARC today announced EMLAP will take 1.5 million tonnes per annum (mtpa) of LNG for the duration of ARC’s 20-year tolling agreement with Cedar LNG, which is expected to be in operation in 2028.
ARC Resources, a natural gas producer with operations in the Montney formation in B.C. and Alberta, has previously signed gas supply agreements with LNG operators in the U.S., which gives ARC access to international pricing for its gas.
Between 2002 and 2023, ARC inked agreements with Cheniere to supply Cheniere's Corpus Christi LNG plant expansions with 280,000 million British thermal units (MMBtu) of natural gas from Western Canada.
The latest agreement with EMLAP means 25 per cent of the natural gas ARC produces will be purchased at international prices, which are much higher than North American gas prices.
"Today, we have reached a significant milestone in our strategy to diversify and expand margins through participation in the global LNG market,” ARC CEO Terry Anderson said in a press release.
“Through this agreement, we have achieved our target of linking approximately 25 per cent of our future natural gas production to international pricing.”
The latest offtake of 1.5 mtpa through Cedar LNG accounts for roughly half of Cedar LNG’s production capacity of 3 mtpa.
"This agreement provides ExxonMobil with advantaged access to Asian LNG markets by establishing ExxonMobil's first long-term offtake position on Canada's Pacific Coast," said Andrew Barry, vice president of global LNG marketing for ExxonMobil Asia Pacific.
"We look forward to working with ARC Resources, one of Canada's largest and most experienced natural gas producers, as we continue to expand and diversify ExxonMobil's LNG portfolio and provide the lower-emissions energy the world needs."
Cedar LNG is being developed as a joint partnership with the Haisla First Nation and Pembina Pipeline Corporation (TSX:PPL,NYSE:PBA).
