Shell Just Doubled Down on Canada's LNG Export Ambitions
Shell Expands Its Bet on Canada’s LNG Future
Shell has taken a major step toward expanding Canada’s role in the global liquefied natural gas (LNG) market.
On September 29, 2026, Shell Canada Energy announced its final investment decision (FID) on LNG Canada Phase 2, an expansion that will double the facility’s production capacity from 14 million tonnes per annum (mtpa) to 28 mtpa. The project is located in Kitimat, British Columbia.
LNG Canada Phase 2 Will Double Production Capacity
The Phase 2 expansion will add two additional LNG processing units, known as trains, to the existing LNG Canada facility.
Once the expansion is complete, total production capacity is expected to reach 28 million tonnes of LNG per year, compared with the current 14 mtpa. Commercial operations are expected to begin in the early 2030s.
The expansion will also include:
An additional LNG storage tank
A condensate tank
A new loading berth
Expanded utility and processing systems
Additional infrastructure connected to the LNG facility
The Coastal GasLink pipeline will also be expanded to support the increased supply of natural gas required by the facility. The expansion is expected to involve the construction of five new compressor stations along the existing 670-kilometre pipeline.
Shell Holds the Largest Share in LNG Canada
Shell is the largest shareholder in the LNG Canada joint venture, holding a 40% interest.
The other partners are:
PETRONAS — 25%
PetroChina — 15%
Mitsubishi Corporation — 15%
Korea Gas Corporation (KOGAS) — 5%
Under the project's equity-lifting structure, each partner is responsible for the offtake of its share of LNG production and for supplying the natural gas needed for its portion.
For Shell, Phase 2 is expected to provide nearly 6 million tonnes per year of additional LNG based on its 40% ownership interest.
Why Canada’s West Coast Matters
LNG Canada’s location in Kitimat gives Canadian natural gas producers direct access to Pacific shipping routes.
The facility is positioned to supply Asian markets, where LNG demand is expected to continue growing. Its west-coast location can also provide a shorter shipping route to Asia than LNG exported from Canada or the United States through the Gulf Coast.
This geographic advantage is particularly important as Canada looks to diversify its energy export markets beyond its traditional dependence on the United States.
The first LNG cargo from LNG Canada left the facility in June 2025, marking Canada's entry into large-scale LNG exports.
Shell’s Bigger LNG Strategy
The LNG Canada expansion fits into Shell’s broader strategy to remain a major player in the global LNG industry.
Shell says global LNG demand is expected to increase substantially in the coming decades. According to the company's 2026 LNG outlook, global demand is expected to rise from around 422 million tonnes per year in 2025 to nearly 700 million tonnes per year by 2050.
For Shell, LNG Canada provides access to Canadian natural gas while connecting the company's Canadian resources with its international LNG trading and customer network.
Shell described LNG Canada as a core part of its Integrated Gas portfolio and said the Phase 2 investment supports its objective of remaining a leading integrated gas and LNG business.
Canada Wants a Larger Role in the Global LNG Market
The expansion also aligns with Canada's ambition to become a larger LNG exporter.
LNG Canada says Phase 2 could put the country on a path toward becoming one of the world's top five LNG-exporting nations. The expansion represents one of the largest private-sector investments in Canada's energy sector and builds on the infrastructure developed for Phase 1.
The project could also strengthen Canada's ability to reach international customers, particularly in Asian markets looking for reliable energy supplies.
For Canada, the project is therefore about more than simply increasing LNG production. It is also connected to broader efforts to diversify exports and strengthen the country's position in international energy markets.
First Nations and Local Economic Participation
The Phase 2 project also includes opportunities for Indigenous and local economic participation.
In July 2026, LNG Canada announced an equity option agreement involving MNT Investments LP, representing economic development organizations connected with five First Nations near the LNG Canada operations.
Following the Phase 2 investment decision, the agreement could allow an investment of up to C$1 billion in a special-purpose entity that would purchase the future LNG storage tank included in the expansion.
LNG Canada says the expansion is expected to create additional employment, contracting and business opportunities across Northern British Columbia and related supply chains.
Shell’s Canadian Gas Position Is Also Growing
Shell's commitment to Canadian LNG comes as the company has been expanding its broader Canadian gas position.
In April 2026, Shell announced an agreement to acquire ARC Resources, a Canadian energy company with operations in British Columbia and Alberta. Shell said the transaction would increase its exposure to long-duration, low-cost natural gas and liquids production in Canada's Montney basin.
The acquisition is strategically relevant to Shell's Canadian LNG ambitions because ARC's gas reserves have the potential to support Shell's growth in LNG in Canada.
Shell subsequently completed the acquisition in September 2026 after receiving the required shareholder, court and regulatory approvals.
What the Expansion Means for Canada’s LNG Industry
The approval of LNG Canada Phase 2 represents a major expansion of Canada's LNG infrastructure.
Increasing LNG Canada’s capacity from 14 mtpa to 28 mtpa would substantially increase the volume of Canadian natural gas reaching international markets. The additional infrastructure at Kitimat and the planned Coastal GasLink expansion are designed to support this larger export operation.
The project also comes at a time when global energy companies are assessing how LNG can contribute to energy security and meet demand from markets seeking flexible natural gas supplies.
For Shell, the investment strengthens its position in Canada and adds more LNG volumes to its global portfolio. For Canada, it represents another step toward becoming a more significant LNG supplier to international markets.
Environmental and Infrastructure Considerations
The expansion is also expected to increase the scale of LNG-related infrastructure and activity in British Columbia.
LNG Canada says the Phase 2 project is designed with emissions performance in mind, while Shell has highlighted the role of LNG in providing energy supplies to markets that are transitioning from coal.
At the same time, the expansion will involve additional construction, natural gas production, pipeline infrastructure and LNG processing capacity. These factors make environmental performance, emissions management and relationships with Indigenous and local communities important aspects of the project's development.
What Comes Next for LNG Canada?
With the final investment decision now made, attention will shift toward executing the Phase 2 expansion.
The project will require construction of the additional LNG trains, storage and marine infrastructure, while Coastal GasLink will undertake its planned pipeline capacity expansion.
When Phase 2 becomes operational in the early 2030s, LNG Canada is expected to have 28 mtpa of total production capacity, positioning the facility among the world's largest LNG export projects.
Shell's decision therefore represents a significant long-term commitment to Canada's natural gas resources and to the country's ambition of becoming a more important supplier in the global LNG market.
Sources:
Chlorine Gas
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