LNG Canada on Track to Expand Capacity Amid Global Market Tightness

The Shell-led LNG Canada export project is on track to greenlight its Phase 2 expansion as early as next month, according to three people familiar with the matter. This would add a further 14 million tonnes 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 expansion comes as LNG buyers, particularly in Asia, are placing a growing emphasis on supply security amid conflict in the Middle East, Red Sea shipping disruptions and uncertainty over future flows through the Strait of Hormuz. Tight global markets, outages among major producers 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 Corporation and Korea Gas Corporation (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 stated that any decision on the Phase 2 expansion will consider factors such as competitiveness and affordability, government support and stakeholder needs. LNG Canada has also secured support from Indigenous communities in the region, including an agreement signed earlier this year by MNT Investments that gives a coalition of five neighbouring First Nations the option to invest up to CA$1 billion in the Phase 2 expansion.