Shell Approves FID for LNG Canada Phase 2, Doubling Kitimat Output

Shell and its partners have taken the Final Investment Decision (FID) for LNG Canada Phase 2, approving a major expansion of the LNG export facility in Kitimat, British Columbia.

Announced on September 29, 2026, the decision will add two additional LNG processing units, or trains, to the existing facility. The expansion will double LNG Canada's production capacity from 14 million tonnes per annum (mtpa) to 28 mtpa.

Source: Shell — Shell takes final investment decision to double LNG Canada capacity

The project is being developed by a joint venture comprising Shell, PETRONAS, PetroChina, Mitsubishi Corporation and KOGAS, with Shell holding a 40% interest. Commercial operations for Phase 2 are expected to begin in the early 2030s.

Source: LNG Canada — LNG Canada Announces Phase 2 Final Investment Decision

LNG Canada Phase 2 Receives Final Investment Decision

The FID represents a major development for LNG Canada's Kitimat export project.

Phase 1 currently consists of two LNG processing trains with a combined production capacity of approximately 14 mtpa. Phase 2 will add two more trains, bringing the total to 28 mtpa.

The expansion will be developed within the existing LNG Canada footprint and will build on infrastructure that was designed and engineered from the outset to accommodate a four-train LNG export facility.

The project will also include additional storage and loading infrastructure, along with expanded utility and process systems.

Source: LNG Canada — Phase 2 Final Investment Decision

Shell Holds a 40% Interest in LNG Canada

Shell is the largest shareholder in the LNG Canada joint venture, with a 40% interest.

The other partners are PETRONAS with 25%, PetroChina with 15%, Mitsubishi Corporation with 15%, and KOGAS with 5%. LNG Canada Development Inc. operates the facility.

With Phase 2 approved, Shell expects to receive nearly 6 mtpa of additional LNG from the expansion based on its 40% equity share.

The additional volumes will expand Shell's integrated LNG portfolio and provide more Canadian LNG for customers, particularly in Asian markets.

Sources: Shell — LNG Canada Phase 2 FID; LNG Canada — Joint Venture Participants

Phase 2 Will Add Two LNG Trains

The central element of the expansion is the construction of two additional LNG processing trains.

An LNG train is a processing unit that cools natural gas to extremely low temperatures until it becomes liquid. Liquefaction reduces the volume of natural gas substantially, allowing it to be transported efficiently by LNG carriers.

With two additional trains, LNG Canada's total production capacity will increase from 14 mtpa to 28 mtpa.

The Phase 2 project will also include:

• An additional LNG storage tank

• A condensate tank

• A new loading berth

• Expanded utility systems

• Expanded process systems

• Additional supporting infrastructure

Source: LNG Canada — LNG Canada Announces Phase 2 Final Investment Decision

Coastal GasLink Pipeline Capacity Will Also Expand

The LNG Canada Phase 2 expansion requires additional natural gas supply and transportation capacity.

LNG Canada has entered into commercial agreements with Coastal GasLink to expand the existing 670-kilometre pipeline supplying the Kitimat facility.

The expansion will involve the construction of five new compressor stations to increase the pipeline's capacity.

This pipeline expansion is an important part of the Phase 2 development because the additional LNG trains will require additional natural gas feedstock.

The integrated development of the LNG plant and pipeline infrastructure is designed to support higher export volumes once Phase 2 becomes operational.

Source: Shell — Shell takes final investment decision to double LNG Canada capacity

LNG Canada Targets Asian Markets

One of the key strategic advantages of LNG Canada is its location on Canada's Pacific coast.

From Kitimat, LNG cargoes can be shipped directly across the Pacific to Asian markets. LNG Canada says shipments can reach Asian trading partners in approximately 10 days, around half the sailing time from the U.S. Gulf Coast through the Panama Canal.

Shell also identifies Asia as an important destination for LNG Canada's production.

The expansion therefore increases Canada's ability to supply LNG directly to major markets in the Asia-Pacific region.

Source: LNG Canada — LNG Canada Announces Phase 2 Final Investment Decision

Canadian LNG Production Expands

LNG Canada Phase 2 will significantly increase Canada's large-scale LNG export capacity.

Phase 1 began shipping LNG in June 2025 and has an initial capacity of approximately 14 mtpa. Phase 2 will bring total project capacity to 28 mtpa.

At full build-out, the facility will therefore have four LNG processing trains.

LNG Canada's expansion also contributes to Canada's broader objective of increasing its presence in the international LNG market.

Source: LNG Canada — LNG Canada Announces Phase 2 Final Investment Decision

Montney Gas Supplies LNG Canada

LNG Canada is connected to natural gas resources in Western Canada through the Coastal GasLink pipeline.

The facility receives natural gas from the Montney Formation, one of Canada's major natural gas-producing regions.

LNG Canada describes its access to natural gas resources and its Pacific Coast location as important factors supporting its position in international LNG markets.

The additional pipeline compression planned for Phase 2 will help provide the feed gas required for the increased liquefaction capacity.

Source: LNG Canada — LNG Canada Announces Phase 2 Final Investment Decision

Shell Expands Its Integrated LNG Portfolio

For Shell, the FID supports its strategy of maintaining a strong position across the global LNG value chain.

Shell said LNG Canada is a core part of its Integrated Gas portfolio, connecting Canadian natural gas resources with Shell's global LNG trading capabilities and customer network.

Shell expects Phase 2 to generate an internal rate of return above the hurdle rate for its Integrated Gas business.

The company also expects the additional production to contribute to long-term cash-flow growth.

These return and cash-flow expectations are Shell's own corporate projections, rather than guaranteed future results.

Source: Shell — Shell takes final investment decision to double LNG Canada capacity

LNG Canada Joint Venture Structure

The project operates under an equity-lifting structure.

Under this arrangement, each joint venture participant is responsible for the offtake of its proportionate share of LNG production and for bringing its share of natural gas supply to the project.

This structure means the additional Phase 2 production will be allocated among the five participating companies according to their respective ownership interests.

Shell's 40% share translates into nearly 6 mtpa of additional LNG from the expansion.

Source: Shell — Shell takes final investment decision to double LNG Canada capacity

Indigenous Participation and Economic Development

The Phase 2 project also includes an Indigenous participation component.

In July 2026, LNG Canada announced an equity option agreement with MNT Investments LP, representing the economic development organizations of five First Nations located near LNG Canada's operations.

The agreement provides for an investment of up to C$1 billion in a special-purpose entity that will purchase the future LNG storage tank being constructed as part of Phase 2.

LNG Canada estimates that Phase 2 could generate more than C$50 billion in government revenues over the life of the project, including taxes, royalties, direct spending and other economic activity.

These figures are LNG Canada's estimates and depend on future development, construction and operating conditions.

Source: LNG Canada — LNG Canada Announces Phase 2 Final Investment Decision

Phase 2 Expected to Create Thousands of Jobs

Construction of Phase 2 is expected to generate substantial employment across British Columbia and Canada.

LNG Canada estimates that construction activity could support up to 4,000 new construction jobs in Kitimat, while approximately 2,100 jobs are expected to be associated with the new compressor stations along the Coastal GasLink pipeline.

Once Phase 2 is complete, LNG Canada expects to add approximately 90 full-time positions and 150 contractor roles to its existing operating workforce.

The project will also generate activity for contractors, suppliers and businesses connected to the LNG and pipeline supply chains.

Source: LNG Canada — LNG Canada Announces Phase 2 Final Investment Decision

LNG Canada's Role in Global Energy Supply

The Phase 2 expansion comes as LNG demand continues to grow in several regions.

Shell's LNG Outlook 2026 estimates that global LNG demand could rise from approximately 422 mtpa in 2025 to nearly 700 mtpa by 2050, representing an increase of around 65%.

The expansion will therefore add Canadian LNG supply at a time when producers and consumers are planning for long-term changes in global gas demand.

LNG Canada's Pacific location also gives the project direct access to Asian markets without requiring the same shipping route used by LNG exports from the U.S. Gulf Coast.

Source: Shell — Shell takes final investment decision to double LNG Canada capacity

Phase 2 and Canada's LNG Export Position

The completion of Phase 2 will increase LNG Canada's production capacity to 28 mtpa, placing the facility among the world's larger LNG export operations.

LNG Canada says the expansion will help Canada move toward becoming one of the world's top five LNG-exporting nations.

The project also provides Canada with additional export infrastructure on the Pacific Coast, potentially allowing Canadian natural gas to reach Asian buyers directly.

Source: LNG Canada — LNG Canada Announces Phase 2 Final Investment Decision

What Comes Next?

With FID now secured, LNG Canada and its partners can proceed with the next stages of the Phase 2 development.

Construction will involve the additional LNG trains, storage and loading infrastructure, expanded utilities and process systems, as well as the Coastal GasLink compressor stations.

Commercial operations are currently expected to begin in the early 2030s.

Once completed, the project will increase LNG Canada's total production capacity from 14 mtpa to 28 mtpa and provide Shell and its partners with additional LNG volumes for global markets.

Shell's FID for LNG Canada Phase 2 marks a major expansion of Canada's LNG export infrastructure. By adding two new processing trains, the Kitimat facility will double its capacity to 28 million tonnes per year, while the associated Coastal GasLink expansion will provide additional natural gas transportation capacity.

For Shell, the project adds nearly 6 mtpa of additional LNG attributable to its 40% interest. For Canada, the expansion increases the country's ability to supply LNG directly to Asian markets, while the project's construction and associated infrastructure are expected to generate employment and economic activity across British Columbia and beyond.
https://www.shell.com/news-and-insights/newsroom/news-and-media-releases/2026/shell-takes-final-investment-decision-to-double-lng-canada-capacity.html?utm_source=chatgpt.com

https://www.lngcanada.ca/news/lng-canada-announces-phase-2-final-investment-decision/?utm_source=chatgpt.com

https://www.lngcanada.ca/who-we-are/joint-venture-participants/?utm_source=chatgpt.com