Shell Canada Energy, an affiliate of Shell plc, has taken final investment decision on LNG Canada Phase 2, which will double production capacity at the Kitimat, BC, plant.

Expansion scope

Phase 2 will add two LNG processing trains, increasing LNG Canada production capacity to 28 million tonnes/year (tpy) from 14 million tpy. The expansion also includes an additional LNG storage tank, condensate tank, loading berth, and expanded utility and process systems.

Shell, which holds a 40% interest in LNG Canada, will receive nearly 6 million tpy of additional LNG from the expansion.

Fluor Corp., along with joint venture partner JGC Corp., received notice to proceed following the FID. The partners will provide engineering, procurement, fabrication, construction, and commissioning services for LNG Canada Phase 2. Work will be executed by JGC Fluor BC LNG II JV, a Canadian joint venture of Fluor Canada Ltd. (50%) and JGC Constructors (No. 2) BC Ltd. (50%).

Natural gas pipeline expansion

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 LNG plant in Kitimat. Construction on CGL Phase 2 is expected to begin in early 2027, with the project expected to enter 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 will remain owner, operator, and permit holder of the pipeline and associated infrastructure. CGL and TC Energy will provide technical advisory and procurement services, as well as operational expertise, to support project 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.

The Kitimat plant is positioned to supply cost-competitive gas to Asian markets, where LNG demand is expected to increase, Shell said. According to Shell's LNG Outlook 2026, global LNG demand is expected to rise by about 60% by 2040 and about 65% by 2050.

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.

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