LNG Canada Partners Approve Phase 2 Expansion to 28 Mtpa

LNG Canada announced on September 28, 2026 that its five joint venture participants, Shell, PETRONAS, PetroChina, Mitsubishi Corporation and KOGAS, have taken a final investment decision on the Phase 2 expansion of the liquefied natural gas export facility in Kitimat, British Columbia, doubling production capacity from 14 million tonnes per annum (mtpa) to 28 mtpa. Shell Canada Energy, the Shell plc affiliate holding a 40% interest in the venture, said in a release dated September 29, 2026 that it will receive nearly 6 mtpa of additional LNG from the expansion, with commercial operations expected to begin in the early 2030s.

Shell stated that the investment is consistent with its disciplined capital allocation framework and is expected to generate double-digit returns, with an internal rate of return above the hurdle rate for its Integrated Gas business. “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, adding that Phase 2 supports Shell’s strategic objective to be the world’s leading integrated gas and LNG business.

Phase 2 will add two LNG processing units, known as trains, within the existing Kitimat facility, along with an additional LNG storage tank, a condensate tank, a loading berth and expanded utility and process systems. Coastal GasLink will expand the capacity of the existing 670-kilometre pipeline through the construction of five new compressor stations. LNG Canada stated that the Phase 1 footprint and infrastructure were designed and engineered from the outset to support the first large-scale, four-train LNG export facility in Canada.

Pipeline Agreements and Ownership Structure

LNG Canada has entered into commercial agreements to act as execution manager for the pipeline expansion, with Coastal GasLink providing technical advisory services. TC Energy (TRP ) said in a March 25, 2026 statement that those agreements advanced Coastal GasLink Phase 2, which at the time remained subject to LNG Canada’s final investment decision and approvals by Coastal GasLink, and that the commercial structure includes limits on Coastal GasLink’s capital commitments and overall liability for construction cost and schedule risks. Coastal GasLink remains the 100% owner, operator and permit holder for the pipeline and all associated future facilities. TC Energy President and Chief Executive Officer François Poirier said when the agreements were announced that doubling the transmission of natural gas through the existing pipeline would strengthen Canada’s role as a reliable supplier to global LNG markets.

LNG Canada is a joint venture of Shell, through Shell Canada Energy, at 40%; PETRONAS, through North Montney LNG Limited Partnership, at 25%; PetroChina, through PetroChina Kitimat LNG Partnership, at 15%; Mitsubishi Corporation, through Diamond LNG Canada Partnership, at 15%; and Korea Gas Corporation, through Kogas Canada LNG Partnership, at 5%. The facility is operated through LNG Canada Development Inc. The venture will continue to operate under an equity lifting structure, under which each participant is responsible for the offtake of its proportionate share of LNG production and for bringing its share of gas supply.

On July 14, 2026, LNG Canada and the joint venture participants announced an equity option agreement with MNT Investments LP, a limited partnership of the economic development organizations of the Gitga’at, Gitxaała, Haisla, Kitselas and Kitsumkalum First Nations. The agreement allows MNT Investments LP to invest up to CAD $1 billion to acquire a majority equity interest in a special purpose entity that will purchase the planned Phase 2 LNG storage tank, which will then be leased back to LNG Canada; LNG Canada will continue to operate and maintain the facility, tank and associated infrastructure. The option was conditional on the Phase 2 decision, and LNG Canada stated that the final investment decision enables its implementation, describing the transaction as one of the largest Indigenous ownership positions in major Canadian infrastructure. The company’s existing 225,000-cubic-metre storage tank, which LNG Canada describes as the largest in Canada, stands 56 metres high with a 92-metre diameter and a 9% nickel alloy steel inner tank.

Government Framework and Market Context

LNG Canada Phase 2 was referred to the new federal Major Projects Office on September 11, 2025, and the office’s project page states the expansion is expected to attract $33 billion in private-sector capital and to become the second-largest LNG facility worldwide. Bill C-15, which amended the Canadian Energy Regulator Act to extend the maximum length of LNG export licences from 40 to 50 years, received royal assent on March 26, 2026. On March 27, 2026, LNG Canada and the owners of the Coastal GasLink pipeline announced a joint agreement to cooperate on an expansion of the pipeline’s capacity. The joint venture participants approved hundreds of millions of dollars in incremental funding toward a potential decision on May 1, 2026, and the governments of Canada and British Columbia reached an enhanced investment co-operation agreement with LNG Canada on May 14, 2026. Canada and British Columbia signed the Canada-British Columbia Cooperative Prosperity Agreement on July 2, 2026, and ahead of Phase 2 the Canada Energy Regulator granted LNG Canada an annual volume limit increase to its LNG export licence.

LNG Canada Phase 1 entered production in the summer of 2025, exporting its first LNG shipment in June 2025 to Asian markets, and the company stated in July 2026 that it had shipped over 100 LNG cargoes since operations began on June 30, 2025. LNG Canada estimates that Phase 2 has the potential to generate more than $50 billion in government revenues over the life of the project. At peak construction, the company expects Phase 2 to host up to 4,000 new construction jobs in Kitimat, alongside approximately 2,100 jobs building the new compressor stations; once complete, it will add approximately 90 full-time roles and 150 contractor positions to an existing operational workforce of more than 400 permanent full-time jobs. According to LNG Canada, more than 50,000 Canadians contributed to the delivery of Phase 1 and the Coastal GasLink pipeline employed more than 25,000 Canadians. Federal Energy and Natural Resources Minister Tim Hodgson called the decision “a massive vote of confidence in Canada.”

According to Shell’s LNG Outlook 2026, global LNG demand is expected to rise by around 60% by 2040 and around 65% by 2050, increasing from 422 mtpa in 2025 to nearly 700 mtpa by 2050. Shell’s release also cites an International Energy Agency finding that, on average globally, the life-cycle greenhouse gas emissions intensity of electricity produced from LNG is around 40% lower than for electricity produced from coal. At its Capital Markets Day 2025, Shell reaffirmed its goal to remain a leading integrated gas and LNG player through to the 2040s. Shell completed its acquisition of ARC Resources (ARX.TO ) on September 2, 2026, at an equity value of approximately US$13.9 billion and an enterprise value of approximately US$16.5 billion including approximately US$2.5 billion in net debt and leases, adding approximately 370 kboe/d; ARC is focused in British Columbia and Alberta, including Canada’s Montney basin, and Shell stated the acquisition complements its existing LNG footprint in Canada.