Shell approves LNG Canada Phase 2, doubling Kitimat export capacity

CALGARY, Canada, (XOL Africa) — Shell Canada Energy has taken a final investment decision on the second phase of LNG Canada, approving an expansion that will double the British Columbia facility’s production capacity and strengthen the company’s position in the growing Asian liquefied natural gas market.

The expansion will add two LNG processing units, known as trains, lifting LNG Canada’s total production capacity from 14 million tonnes per annum to 28 million tonnes. Shell, which holds a 40% stake in the project, expects to receive nearly 6 million tonnes of additional LNG annually from the expansion, with commercial operations scheduled to begin in the early 2030s.

“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 president of Integrated Gas.

“Phase 2 supports Shell’s strategic objective to be the world’s leading integrated gas and LNG business by connecting Canadian resources with Shell’s global LNG portfolio, trading capability and customer reach,” he said.

Shell said the investment is consistent with its capital-allocation framework and is expected to generate a double-digit return while contributing to long-term cash-flow growth. The company said the project’s expected internal rate of return will exceed the hurdle rate for its Integrated Gas business.

The expansion will be built within the existing LNG Canada facility in Kitimat and will also include an additional LNG storage tank, condensate tank and loading berth, alongside expanded utility and process systems.

Coastal GasLink, the pipeline supplying the facility, will expand the capacity of its existing 670-kilometre system through the construction of five additional compressor stations.

LNG Canada is a joint venture comprising Shell with a 40% interest, PETRONAS with 25%, PetroChina with 15%, Mitsubishi Corp. with 15% and Korea Gas Corp. with 5%. LNG Canada Development Inc. operates the facility.

The project uses an equity-lifting structure under which each partner is responsible for securing gas supplies and marketing its proportional share of LNG production.

Focus on Asian demand

Shell’s decision comes as energy companies anticipate continued growth in global LNG demand, particularly in Asia, where LNG is used to meet electricity and industrial energy needs.

Shell’s 2026 LNG outlook forecasts global LNG demand rising from 422 million tonnes in 2025 to nearly 700 million tonnes by 2050, an increase of about 65%. The company expects demand to be supported by rising energy consumption and the need for flexible and reliable energy supplies.

The Kitimat facility gives LNG Canada access to Pacific markets without requiring shipments to pass through the Panama Canal or other major maritime chokepoints, potentially supporting deliveries to Asian buyers.

Shell said the expansion would connect Canadian natural-gas resources with its global LNG portfolio, trading operations and customer base.

The company also said LNG-generated electricity has, on average, a life-cycle greenhouse-gas emissions intensity about 40% lower than coal-generated electricity, citing the International Energy Agency.

Shell expands Canadian footprint

The investment comes as Shell continues to expand its presence in Canada’s energy sector.

In the third quarter of 2026, Shell completed its acquisition of ARC Resources, a Canadian energy company with operations in British Columbia and Alberta, after receiving shareholder, court and regulatory approvals.

Shell said its Canadian business spans upstream oil and gas production, integrated gas, downstream operations and renewable and energy solutions.

The company cautioned that the Phase 2 investment and its expected returns are subject to risks including oil and gas price movements, changes in LNG demand, currency fluctuations, regulatory developments, project execution, geopolitical conflicts and the pace of the global energy transition.

Shell said the forward-looking statements in its announcement reflect management’s expectations as of Sept. 29, 2026, and that actual results could differ materially from those projections.