Canada's Kitimat Terminal Expansion Set to Double LNG Capacity

The Shell-led LNG Canada consortium has approved the Phase 2 expansion of its Kitimat terminal in British Columbia, which will double export capacity to approximately 28 million tonnes per year.

The project, valued at $32 billion in private investment, is expected to rank the Kitimat plant among the largest liquefied natural gas (LNG) facilities globally and push Canada towards becoming one of the top five LNG exporting nations.

According to analysts, the cost of building LNG plants in Canada is higher compared to those on the US Gulf Coast. However, Shell executives argue that this disadvantage is outweighed by the benefits of lower construction costs in Canada due to shorter shipping routes to Asia and access to low-cost gas from the Montney formation.

Energy economist Peter Tertzakian has pointed out that Canada's current LNG capacity is still limited, and the country will only gain real leverage in negotiating contract terms and redirecting cargoes once it reaches a threshold of 50 million tonnes per year, which requires both LNG Canada Phase 2 and the proposed Ksi Lisims facility.