29 Sep 2025 5 min read

Gas Price Goes Negative; Road Work in the Skeena; Cedar LNG Financing Details

Highlights

Western Canada natural gas benchmark price goes negative for a week due to overproduction
Gitxsan Development Corporation, presumably alongside other contractors, appear to be reactivating a road near Kispiox off Salmon River Road that would be used for pipeline construction
New reporting outlines details of Haisla financing for Cedar LNG
Western LNG reports they are "months away" from an EPC contract and "halfway through the debt financing process"

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Details

Negative AECO Prices

AECO is a benchmark price for natural gas in Western Canada. It was negative for most of last week, which means exactly what it sounds like: producers were actually paying pipeline companies to take their gas. This happens because of overproduction and lack of storage capacity—there's too much gas coming out of the ground and nowhere to put it, so producers are trying to get rid of the excess gas any way they can (there's likely a lot of flaring happening as well—burning off surplus gas that was just pumped out of the ground because no one will take it).

While this is a problematic sign for BC's gas industry, it is not necessarily a sign of long-term problems for the growth of the LNG industry. The premise of the LNG industry is that it will give fracked gas producers in the northeast access to international markets with much higher pricing, drawing off large parts of BC's supply and pushing domestic prices upwards. The issue right now, according to most analysts, is that producers ramped up supply based on the expectation that LNG Canada would be operating at full capacity by now. As we have shown repeatedly in this newsletter, that's not the case: despite the persistent media coverage announcing LNG Canada's operating status, it continues to pull in less than 10% of capacity from Coastal GasLink.

LNG Canada operations continue to struggle with Coastal GasLink yet to break about 12% of capacity for any sustained period. We believe part of LNGC Train 1 was shut down because of an issue during the flat line period in mid-September and has just restarted again (based on "community announcements" about flaring).

Pre-Construction Roadwork in the Skeena

On the east side of the Skeena off Salmon River Road, logging operations have been cutting near the pipeline right-of-way all summer. These appeared to be independent—older licenses belonging to a local logging company. But one of the two access roads has had a Gitxsan Development Corporation security vehicle parked at its base all summer, and in the last few days, additional equipment and road-building supplies were seen headed that way.

Reviewing satellite imagery, we have found that contractors have re-opened an old road heading up the north side of the Shegunia River parallel with the pipeline right of way. It seems very likely that this work is pipeline related, and we think it is the first evidence of this kind of work (road reactivation, culvert upgrades, etc.) happening outside the Nass region, although some culvert upgrades may have occurred on the Mitten FSR earlier in the summer. It is our opinion that this does not weigh strongly on the question of whether the project is going to move forward or not, which depends on whether proponents can access the many billions of dollars of financing needed to actually build it (more on this below).

July 9th imagery: the road in question, which travels east from the logging on the west side of the frame, is faint and clearly grown over.

September 7th imagery: the logging on the west side of the frame has proceeded apace and you can see clearly that the old road heading upstream along the Shegunia River has been brushed and reactivated.

Haisla Financing for Cedar LNG

The new chief of the Haisla First Nation, Maureen Nyce, told Reuters details about the Haisla's financing for Cedar LNG earlier this month that had not been reported before:

The Haisla worked closely with Pembina's finance team to secure funding. Sixty percent of the project will be funded by a construction term loan with a syndicate of banks, while 40% will be financed through equity contributions from both partners.

The Haisla ultimately borrowed C$1.4 billion from the First Nations Finance Authority, a non-profit corporation owned and controlled by First Nation governments, to fund their share, Nyce said. It is the largest loan the FNFA has issued to date, and one of the largest ever issued to a First Nation in Canada

According to Reuters, Nyce also explained that "it will be at least a decade until significant revenues flow to the community rather than paying off debt."

Western LNG Updates

In an interview with Energy Intelligence, Western LNG CEO Davis Thames stated that they are "months away from completing an engineering, procurement and construction contract, and are about halfway through the debt financing process." These are both very vague claims, but they confirm the serious uncertainty that the project faces, particularly given rapidly shifting market outlooks in Asia. "Halfway" to debt financing a project like this is far from enough to move forward.

Their September 1st project update described their only operations as "pre-construction fieldwork in select areas along the right-of-way," which lines up with observed activity, although the aforementioned Shegunia roadwork seems to go beyond that.