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Shell approves LNG Canada Phase 2, doubling capacity to 28 million tonnes a year
Shell has taken a final investment decision on LNG Canada Phase 2, doubling capacity at the Kitimat, BC facility from 14 to 28 million tonnes per year. Commercial operations are expected in the early 2030s.
Why it matters
Shell Canada Energy, an affiliate of Shell plc, has taken a final investment decision (FID) on LNG Canada Phase 2, greenlighting the second phase of Canada's largest liquefied natural gas export project. The decision doubles capacity at the Kitimat, British Columbia facility and locks in Canada's position as a major LNG supplier to Asia for decades.
Key numbers
Phase 2 adds two LNG processing trains, raising total capacity from 14 million to 28 million tonnes per annum (mtpa). Shell holds a 40% interest and expects to receive nearly 6 mtpa of additional LNG. The expansion also adds an LNG storage tank, a condensate tank, a loading berth and expanded utilities, while Coastal GasLink will add five compressor stations to its 670-km pipeline. Commercial operations are expected to begin in the early 2030s.
What Shell says
Shell expects the investment to generate double-digit returns with an internal rate of return above its hurdle rate for Integrated Gas, supporting long-term cash flow growth. "LNG Canada is a core part of our Integrated Gas portfolio, helping to supply LNG to customers in Asia at a time when diversity of energy supplies and energy security are increasingly important," said Cederic Cremers, Shell's Integrated Gas President.
Background
LNG Canada is a joint venture of Shell (40%), PETRONAS (25%), PetroChina (15%), Mitsubishi Corporation (15%) and Korea Gas Corporation (5%), operated by LNG Canada Development Inc. Citing its LNG Outlook 2026, Shell says global LNG demand was 422 mtpa in 2025 and is expected to rise about 60% by 2040 and to nearly 700 mtpa by 2050. The Kitimat facility is positioned to ship cost-competitive gas to Asian markets, where demand is expected to grow strongly.
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