Shell Canada Energy, an affiliate of Shell plc, has taken final investment decision on LNG Canada Phase 2, a sanction that will double production capacity at the Kitimat, British Columbia, plant to 28 million tonnes/year (tpy) from the current 14 million tpy.

Expansion scope

Phase 2 will add two LNG processing trains at the coastal liquefaction complex. The expansion package also includes an additional LNG storage tank, a condensate tank, a loading berth, and expanded utility and process systems.

Shell, which holds a 40% interest in the LNG Canada joint venture, will receive nearly 6 million tpy of additional LNG from the expansion. Operations are expected to begin in the early 2030s.

Fluor Corp., together with joint venture partner JGC Corp., received notice to proceed following the FID. The partners will deliver engineering, procurement, fabrication, construction, and commissioning services for Phase 2. Work will be executed by JGC Fluor BC LNG II JV, a Canadian joint venture held equally by Fluor Canada Ltd. and JGC Constructors (No. 2) BC Ltd.

Feedgas pipeline to expand in parallel

Coastal GasLink (CGL) will expand pipeline capacity by constructing five compressor stations and upgrading infrastructure along the existing 670-km route from Dawson Creek to the Kitimat plant. Construction on CGL Phase 2 is expected to begin in early 2027, with the line entering service in the early 2030s, TC Energy Corp. said in a separate release. CGL Phase 2 is expected to nearly double pipeline capacity from the current 2.1 bcfd. TC Energy, a co-owner of CGL, will operate the Phase 2 infrastructure.

Under commercial agreements announced earlier this year, LNG Canada will serve as Phase 2 execution manager and lead project construction, while CGL remains owner, operator, and permit holder of the pipeline and associated infrastructure. CGL and TC Energy will provide technical advisory and procurement services, plus operational expertise, to support delivery.

The Coastal GasLink pipeline "established Canada's first direct path for natural gas to reach global LNG markets," and Phase 2 will maximize the value of the asset, which is "underpinned by the Western Canada Sedimentary Basin—one of the most prolific natural gas resource basins on the planet," said François Poirier, TC Energy president and chief executive officer.

Market backdrop

The Kitimat plant sits within roughly 10 days' sailing distance is not at issue here, but Shell notes the facility is positioned to supply cost-competitive gas to Asian markets, where the company expects LNG demand to grow. According to Shell's LNG Outlook 2026, global LNG demand is expected to rise by about 60% by 2040 and about 65% by 2050. Those projections are Shell's, and they frame the commercial case the operator is making for the sanction.

Ownership structure unchanged

LNG Canada is a joint venture of Shell (40%), Petronas (25%), PetroChina Co. Ltd. (15%), Mitsubishi Corp. (15%), and Korea Gas Corp. (5%). The plant is operated by LNG Canada Development Inc.

The venture will continue to operate under an equity-lifting structure, under which each participant is responsible for offtake of its proportionate share of LNG production and for supplying its share of natural gas feedstock.

The watch items: CGL Phase 2 construction start in early 2027, and first LNG from the Phase 2 trains in the early 2030s.