Canada LNG, the first LNG export operation in the country, has announced that in collaboration with its investment partners, it has decided to advance Phase 2 of this operation. This decision comes about 15 months after the start of exports from this project and, according to the group, introduces a new project based on Phase 1, which is considered one of the largest private sector investments in Canada.
Details of Phase 2 and Capacity Increase
This project is located in Kitimat, British Columbia, and partners emphasize that this location is ideally suited to serve the growing Asian market for LNG. The project has access to a deep-water, ice-free port and is fed through a pipeline. In its first year of operation, this project has exported over 100 shipments.
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Shell holds 40% of this project, with other partners including Petronas (25%), PetroChina (15%), Mitsubishi (15%), and Korea Gas (5%). Exports from this project will begin in June 2025 with the first unit, and the second unit is expected to be operational in October, reaching an annual capacity of 14 million tons.
Forecast for Increased Demand for LNG
Chris Cooper, President and CEO of Canada LNG, stated: "Phase 2 of Canada's LNG is another national investment that shows Canada can complete large projects when governments, first nation partners, local communities, skilled workers, contractors, and investors collaborate with a common goal." With the financing of Phase 2, Canada's LNG capacity will double from 14 to 28 million tons per year, making this project one of the largest LNG facilities in the world and helping Canada become one of the top five LNG exporting countries.
Partners emphasize that global demand for LNG is expected to increase from 422 million tons in 2025 to nearly 700 million tons by 2050. According to Shell's LNG Outlook report in 2026, global LNG demand is projected to increase by about 60% by 2040 and about 65% by 2050, driven by rising energy demand and the need for secure, flexible, and reliable energy supply.
Tim Hudgson, Minister of Energy and Natural Resources of Canada, commented: "At a time when our country needs to build a stronger economy that will make us an energy power for a long time, this is exactly the type of investment Canada needs." Phase 2 includes adding two more LNG units at the existing Kitimat facility, increasing total production capacity from 14 to 28 million tons per year. This phase also includes an additional LNG storage tank, condensate tank, loading port, utility systems, and expanded processing.
Canada LNG has also signed commercial agreements to act as the executive manager and will collaborate with Coastal GasLink to increase the capacity of the existing 670-kilometer pipeline by constructing five new compressor stations. Similar to Phase 1, LNG will be distributed among partners based on their shares. Shell Canada reports that approximately 6 million tons will be added to the additional LNG capacity from this expansion, which is expected to come online in the early 2030s.
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