Shell Canada Energy, an affiliate of Shell, has announced a final investment decision on LNG Canada Phase 2, which will double production capacity at the facility in Kitimat, British Columbia.
'LNG Canada is a core part of our Integrated Gas portfolio, helping to supply LNG to customers in Asia at a time when diversity of energy supplies and energy security are increasingly important,' said Cederic Cremers, Shell’s Integrated Gas President. 'Phase 2 supports Shell’s strategic objective to be the world’s leading integrated gas and LNG business by connecting Canadian resources with Shell’s global LNG portfolio, trading capability and customer reach.'
Phase 2 will add two LNG processing units, known as trains, increasing LNG Canada’s total production capacity from 14 million tonnes per annum (mtpa) to 28 mtpa. Shell has a 40% interest in LNG Canada and will receive nearly 6 mtpa of additional LNG from the expansion. Commercial operations are expected to begin in the early 2030s.
The investment is consistent with Shell's disciplined capital allocation framework and is expected to generate double-digit returns while supporting long-term cash flow growth.
The facility in Kitimat is positioned to supply cost-competitive gas to Asian markets, where demand for LNG is expected to increase significantly. According to Shell's LNG Outlook 2026, global LNG demand is expected to rise by around 60% by 2040 and around 65% by 2050, driven by growing energy demand and the need for secure, flexible and reliable energy supplies.
Background
- LNG Canada is a joint venture comprised of Shell (40%); PETRONAS (25%); PetroChina Company Limited (15%); Mitsubishi Corporation (15%); and Korea Gas Corporation (5%). The facility is operated by LNG Canada Development Inc.
- LNG Canada will continue to operate under an equity lifting structure, whereby each joint venture participant is responsible for the offtake of its proportionate share of LNG production and for bringing its share of gas supply.
- At Capital Markets Day 2025, Shell reaffirmed its goal to remain a leading integrated gas and LNG player through to the 2040s.
- The investment in LNG Canada Phase 2 is expected to generate an internal rate of return higher than the hurdle rate for Shell’s Integrated Gas business.
- The Phase 2 expansion will add two LNG processing units, known as trains, within LNG Canada's existing Kitimat facility, as well as an additional LNG storage tank, condensate tank, loading berth, and expanded utility and process systems. Coastal GasLink will expand the capacity of the existing 670-kilometre pipeline through the construction of five new compressor stations.
Liquefied natural gas (LNG)
- Global demand for LNG is expected to increase from 422 mtpa in 2025 to nearly 700 mtpa by 2050, an increase of around 65%. To meet the growing demand, significant additional investment will be needed in new LNG liquefaction plants – such as LNG Canada Phase 2 – through the 2030s and 2040s.
- Globally, on average, the life-cycle greenhouse gas (GHG) emissions intensity of electricity produced from LNG is around 40% lower than for electricity produced from coal, according to the International Energy Agency (IEA).
Shell in Canada
- Shell Canada is an integrated energy company with all of Shell’s global businesses represented, including Upstream, Integrated Gas, Downstream, and Renewables and Energy Solutions. That means we do everything from exploration, gas production, refining and manufacturing, to providing fuels and developing energy solutions for our customers.
- In the third quarter of 2026, Shell completed its acquisition of ARC Resources Ltd., an energy company based in British Columbia and Alberta, Canada, following all required shareholder, court and regulatory approvals.
Source: Shell Canada Energy
