LNG Canada will proceed with a $32-billion Phase 2 expansion at its Kitimat, B.C. facility after partners took a final investment decision that lifts nameplate capacity to 28 million tonnes per year.

The expansion, announced Sept. 29, will roughly double output from Canada's first liquefied natural gas export terminal, which began commercial shipments in 2025. Phase 2 will be built on the existing footprint and is positioned to put Canada among the world's top five LNG exporting nations.

"This will make LNG Canada one of the largest LNG facilities in the world and it will help move Canada towards becoming one of the world's Top 5 LNG exporting nations," LNG Canada chief executive Chris Cooper told reporters in Vancouver.

"But Phase 2 is much more than just tonnes. It means thousands more jobs and even more opportunities for local businesses, First Nations and communities."

The project is a joint venture of Shell, PetroChina, Malaysia's Petronas, Japan's Mitsubishi Corp. and South Korea's KOGAS. Feedgas travels by pipeline from northwestern Alberta and northeastern British Columbia to the Kitimat plant, where it is chilled and loaded onto specialized tankers bound for Asian markets.

What does the FID actually sanction?

The green-light covers a second processing train of roughly 14 mtpa, mirroring Phase 1's design. In a separate announcement, TC Energy said it will nearly double capacity on the 670-kilometre Coastal GasLink pipeline, which feeds LNG Canada, by adding compressor stations and upgrading facilities. LNG Canada will lead expansion construction; Coastal GasLink retains ownership, operation and the pipeline permit.

Prime Minister Mark Carney framed the 12-month referral-to-FID timeline as evidence of a streamlined approval posture.

"Twelve months from referral to final investment decision is the pace that this pivotal moment in Canada's history demands," Carney told the news conference. "We're a country of high standards, but high standards don't require slow decisions."

The project was one of five initial proposals referred to Ottawa's major projects office last year.

Why now?

Federal Natural Resources Minister Tim Hodgson said the office cut through regulatory friction and provided one accountable counterparty to the sponsors.

"We gave them one point of contact ... and we provided the solutions they needed to make that investment," Hodgson said in an interview.

The timing coincides with supply disruption from two of the world's largest LNG producers. Ongoing fighting in the Middle East has interrupted shipments from Qatar, while Russia has faced intensifying bombardment from Ukraine. Canada has separately been working to diversify away from its largest trading customer.

Shell CEO Wael Sawan linked the FID to security-of-supply arguments Asian buyers have raised in recent contracts.

"Recent global events have shown that reliable, diverse sources of energy cannot be taken for granted. LNG Canada has already demonstrated its strategic value by supporting customers in Asia when supplies from the Middle East were disrupted," Sawan said. "Phase 2 will create further opportunities to meet rising demand for global LNG, which is expected to grow by around 65 per cent by 2050."

What conditions had to clear?

Lance Mortlock, managing partner at EY Canada, identified three gating factors the partners had to weigh before sanctioning the project:

• Sufficient Asian customer demand — Mortlock called the answer "yes"
• A multi-decade gas resource base in Western Canada — ditto, he said
• Comfort with Canadian public policy — Mortlock pointed to the Carney government's major-projects push and expanded investment tax credits

"That has got to play a role in the corporate boardrooms of Europe where they're making decisions around whether to allocate capital to something as big as Phase 2 for LNG Canada. They've got government support, there is the policy support, so 'Let's go for it,'" Mortlock said.

B.C. Premier David Eby echoed that view.

"There was a step change in the approach of the federal government to this project when this prime minister came on board. There was a marked departure, an understanding of the importance of this project for British Columbia and Canada," Eby told the conference.

What are the open issues?

Phase 1 has run into equipment problems that have produced flaring above permit levels, which the partners describe as a normal startup phenomenon. Community and environmental groups have raised health and safety objections.

"Expanding malfunctioning LNG Canada is like betting on a concrete canoe at a sailing regatta. As the rest of the world rapidly scales up clean energy infrastructure, global gas demand destruction is underway. It's happening regardless of the desires of the Carney government or foreign gas giants," said Richard Brooks, climate finance director at Stand.earth.

Nichole Dusyk, who leads the Canada energy transition team at the International Institute for Sustainable Development, questioned Ottawa's support for the project.

"LNG Canada Phase 2 is putting Canada's climate goals on the back burner for little public benefit and substantial taxpayer risk," Dusyk said.

Watch items

• Coastal GasLink expansion scope, compressor station placement and in-service timing
• Phase 2 construction schedule and first LNG target
• Phase 1 flaring compliance against permit limits
• LNG Canada progress against the 28 mtpa nameplate once Phase 2 trains commission