LNG Canada Expansion on Track for Early October Final Investment Decision

The Shell-led LNG Canada project may reach a final investment decision on its Phase 2 expansion by early October, according to three people familiar with the matter. The expansion would add 14 million metric tons per annum (mtpa) of liquefied natural gas export capacity to the facility in Kitimat, British Columbia, effectively doubling the project's total capacity to 28 mtpa.

The move comes as LNG buyers, particularly in Asia, are placing a growing emphasis on supply security amid conflict in the Middle East and Red Sea shipping disruptions. Tight global markets and strong long-term demand growth from countries seeking to replace coal with cleaner-burning natural gas are driving interest in new LNG projects.

LNG Canada is a joint venture led by Shell and backed by Malaysia's Petronas, PetroChina, Mitsubishi Corp, and Korea Gas Corp (KOGAS). The facility is strategically positioned on Canada's Pacific Coast, giving it shorter shipping routes to key Asian markets compared with US Gulf Coast exporters that must transit the Panama Canal.

Shell said in a statement that the project's first phase, which cost about C$40 billion, is designed to produce 14 mtpa of LNG from two processing trains. The facility shipped its first cargo earlier this year and is viewed as a cornerstone of Canada's effort to become a major global LNG exporter.

LNG Canada has also secured support from Indigenous communities in the region. MNT Investments LP, which represents a coalition of five neighboring First Nations, signed an agreement that gives the coalition the option to invest up to C$1 billion in the Phase 2 expansion.