Shell Canada Energy, an affiliate of the UK-headquartered energy giant Shell, has signed off on the next chapter of a liquefied natural gas (LNG) project on Canada's West Coast. This multibillion-dollar expansion will add two new processing trains and extra storage in British Columbia, keeping the firm well-supplied to ship Canadian gas to growing Asian markets.
Shell Canada Energy has taken a final investment decision (FID) on LNG Canada Phase 2, which will increase production capacity at its facility in Kitimat, British Columbia. Phase 2 will add two LNG processing units, known as trains, increasing the project’s total production capacity from 14 million tons a year to 28 mtpa. Coastal GasLink will expand the capacity of the existing 670-kilometer pipeline through the construction of five new compressor stations.
Cederic Cremers, Shell’s Integrated Gas President, commented: "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. 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.”
Shell has a 40% interest in LNG Canada and will receive nearly 6 mtpa of additional LNG from the expansion, once commercial operations begin in the early 2030s. The company emphasizes that this investment is expected to generate double-digit returns while supporting long-term cash flow growth.
The facility in Kitimat is positioned to supply cost-competitive gas to Asian markets, where demand for LNG is expected to increase significantly. According to the firm's ‘LNG Outlook 2026,’ global LNG demand is expected to rise by around 60% by 2040 and around 65% by 2050, driven by growing energy demand and the need for secure, flexible, and reliable energy supplies.
LNG Canada is a joint venture comprised of Shell (40%), Petronas (25%), PetroChina Company (15%), Mitsubishi Corporation (15%), and Korea Gas Corporation (5%). The facility is operated by LNG Canada Development under an equity lifting structure, whereby each joint venture participant is responsible for the offtake of its proportionate share of LNG production and for bringing its share of gas supply.
The estimated cost of the LNG Canada Phase 2 expansion of the estimated CAD$40 billion ($30 billion) LNG Canada project in Kitimat is approximately C$33 billion or $23.25 billion.
According to Shell, global demand for LNG is expected to increase from 422 mtpa in 2025 to nearly 700 mtpa by 2050, an increase of around 65%; thus, significant additional investment will be needed in new LNG liquefaction plants through the 2030s and 2040s.
The company underlines that the life-cycle greenhouse gas (GHG) emissions intensity of electricity produced from LNG on average is around 40% lower than for electricity produced from coal, based on the information from the International Energy Agency (IEA).