BAKU, Azerbaijan, September 29. Shell Canada Energy, a subsidiary of Shell plc, has taken a final investment decision (FID) on the second phase of LNG Canada, a major expansion that will double the facility’s production capacity, Shell said on Sept.29.
The Phase 2 project will add two LNG processing units, or trains, at the existing facility in Kitimat, British Columbia, increasing LNG Canada’s total production capacity from 14 million metric tons per annum (mtpa) to 28 mtpa.
Shell holds a 40% stake in LNG Canada and is expected to receive nearly 6 mtpa of additional LNG from the expansion. Commercial operations are targeted to start in the early 2030s.
"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," he added.
Shell said the investment is in line with its capital allocation framework and is expected to generate double-digit returns while contributing to long-term cash flow growth. The expansion will include not only two additional LNG trains, but also a new LNG storage tank, condensate tank and loading berth, along with expanded utility and process systems.
The Coastal GasLink pipeline will also be expanded to support the additional production. The 670-kilometre pipeline is expected to undergo capacity expansion through the construction of five new compressor stations.
LNG Canada is currently a joint venture between Shell with a 40% interest, PETRONAS with 25%, PetroChina Company Limited with 15%, Mitsubishi Corporation with 15%, and Korea Gas Corporation with 5%. The facility is operated by LNG Canada Development Inc.
Shell said LNG Canada will continue operating under an equity-lifting model, under which each shareholder is responsible for marketing its proportionate share of LNG production and securing the corresponding gas supply. The project is designed to supply LNG to Asian markets, where Shell expects demand for the fuel to continue increasing.
According to Shell's 2026 LNG Outlook, global LNG demand is projected to rise by around 60% by 2040 and approximately 65% by 2050, driven by growing energy consumption and demand for secure, flexible and reliable energy supplies. Shell expects global LNG demand to increase from 422 mtpa in 2025 to nearly 700 mtpa by 2050. The company said the additional investment in LNG liquefaction capacity will be required through the 2030s and 2040s to meet this projected growth.
Shell also noted that, according to the International Energy Agency, electricity generated from LNG has, on average, lifecycle greenhouse gas emissions intensity around 40% lower than electricity generated from coal. Shell reaffirmed at its 2025 Capital Markets Day that it intends to remain a leading integrated gas and LNG company through the 2040s.
In Canada, Shell operates across its global business segments, including Upstream, Integrated Gas, Downstream, and Renewables and Energy Solutions.
In the third quarter of 2026, Shell also completed its acquisition of ARC Resources Ltd., a Canadian energy company operating in British Columbia and Alberta, after receiving the required shareholder, court and regulatory approvals.
