The cost of the Woodfibre LNG project near Squamish has surged to $8.8 billion, up from an initial estimate of $5.1 billion. This increase is attributed to various factors, including site remediation, construction inflation, and logistical challenges. The company announced the cost overruns as it reached the halfway point of construction, marked by the delivery of four prefabricated production modules to its site on Howe Sound.

Woodfibre LNG is notable for being the first energy project in Canada to use electricity to power its turbines. The company cited several key drivers for the rising costs. These include the remediation of a nearly 100-year-old pulp mill site, geotechnical complexities, and the logistics involved in transporting materials and workers by sea. Additionally, the project has made significant investments in environmental monitoring, developed in collaboration with the Squamish Nation.

In a news release, Woodfibre stated that the cost increases reflect the challenges of delivering a complex energy project. Despite the 73 percent rise in costs, project spokesperson Sean Beardow assured that the revised budget would not impact financing. "In adjusting our total expected cost, we have made the necessary financial adjustments to ensure the successful delivery of the project," Beardow said.

Economist Werner Antweiler from the University of British Columbia noted that the increased price tag raises the project's risk. He explained that the higher costs must be amortized over a relatively small LNG project, which could lead to financial strain. Woodfibre LNG is scheduled to begin production in 2027, with a planned output of 2.1 million tonnes of liquefied gas per year. In comparison, the first phase of LNG Canada’s plant in Kitimat has a capacity of 14 million tonnes per year.

Antweiler emphasized that LNG plants have few variable costs, making them heavily reliant on fixed costs. "When you go from $5 billion to $8 billion, because of the interest you have to pay, it’s actually significantly more money," he said.

Enbridge Inc., a partner in the project with a 30 percent stake, first reported the cost overruns in its second quarter financial results. The company's share of the costs has risen from $1.5 billion to $2.9 billion. Enbridge CEO Greg Lorne Ebel mentioned that their contracts would allow for "low double-digit" returns on investment, with the majority owner bearing the capital cost risk.

Woodfibre has positioned itself as a supplier of low-carbon LNG since its inception. In 2023, the company secured sales agreements for 90 percent of its output with BP Gas Marketing Ltd., a subsidiary of the U.K. petroleum giant BP. Beardow confirmed that Woodfibre LNG’s production is "fully subscribed" under sales contracts for the first 15 years of operation.