Shell and its partners have approved a USD 23 billion expansion of LNG Canada in British Columbia, doubling the facility’s production capacity and giving Prime Minister Mark Carney’s plan to turn the country into an energy superpower an endorsement.
The consortium reached a final investment decision on Phase 2 on Tuesday, committing CUSD 33 billion to add two liquefaction trains at the Kitimat terminal. The expansion will lift annual production from 14 million tonnes to 28 million tonnes, with commercial operations expected in the early 2030s.
Shell, which operates LNG Canada and holds a 40% stake, said the project would strengthen its integrated gas portfolio and connect Canadian resources with its global LNG trading and customer network. The company expects to receive nearly 6 million tonnes of additional LNG from Phase 2.
The remaining partners are Malaysia’s Petronas, with a 25% stake; PetroChina and Mitsubishi Corporation, each with 15%; and Korea Gas Corporation, with 5%. The project will primarily target Asian markets, where buyers are seeking diversified supplies amid heightened geopolitical and shipping risks.
For Ottawa, the decision is central to a broader effort to reduce Canada’s reliance on the US market and expand trade with Asia and Europe. Carney has set a target for Canada to export nearly 50 million tonnes of LNG annually by 2030 and has described the country as an energy superpower.
LNG Canada Phase 2 is one of the first major projects to be advanced through the government’s Major Projects Office, which was created to accelerate nationally significant infrastructure.
The project was referred to the office in September 2025, and the government has said the process is intended to provide investors with greater certainty while maintaining regulatory standards.
Carney’s government estimates Phase 2 will generate more than 4,000 construction jobs. LNG Canada said nearly USD 5 billion in contracts and procurement had already gone to Indigenous-owned and local businesses across the region.
The Haisla Nation’s traditional territory hosts the project, which includes an Indigenous equity agreement with five First Nations.
The expansion also strengthens the case for upstream investment in western Canada.
The 670-kilometre Coastal GasLink pipeline transports natural gas from the Montney formation in British Columbia and Alberta to Kitimat, British Columbia.
TC Energy is now moving ahead with an expansion of the pipeline, including five new compressor stations, to support the additional LNG capacity.
Shell’s commitment follows its acquisition of ARC Resources, a major Canadian oil and gas producer with extensive Montney assets. The deal, announced in April and completed this year, increased Shell’s exposure to Canadian gas and gives the company resources that can support its LNG business.
LNG Canada’s economics closely align with its Pacific location. Canadian construction costs are higher than those of some US Gulf Coast projects, but the Kitimat terminal is closer to major Asian customers.
Shell has argued that cheap Montney gas and shorter shipping distances help offset higher construction costs.
The timing is also significant.
Shell expects global LNG demand to rise from 422 million tonnes a year in 2025 to nearly 700 million tonnes by 2050, an increase of about 65%.
Asian markets are expected to account for a substantial share of demand as economies expand and seek reliable supplies.
The project could also alter the economics for Canadian gas producers. Western Canada has faced periods of weak natural gas prices partly because production has grown faster than pipeline capacity.
A second LNG outlet on the Pacific coast could provide producers with greater access to international markets and potentially narrow the discount between Canadian gas and global prices, although the effect will depend on supply, demand and infrastructure constraints.
The expansion is controversial.
Environmental groups have raised concerns about the project’s greenhouse gas emissions and the longer-term role of fossil fuel infrastructure. Critics have also questioned whether rising LNG exports are compatible with Canada’s climate objectives.
Ottawa argues that Phase 2 will be among the lower-emissions LNG projects globally, while Shell says LNG can play a role in meeting energy demand and replacing higher-emissions fuels in some markets.
The company says Phase 2 is expected to generate returns above the hurdle rate for its integrated gas business.
For Canada, however, the investment represents more than an expansion of one terminal. It is a test of whether the country can translate its natural-resource base into a larger export platform while attracting private capital, Indigenous participation and infrastructure investment.
With Phase 2 now sanctioned, LNG Canada is set to become one of the world’s largest LNG facilities. The project, according to Carney, is concrete proof that Canada can expand its export capacity beyond its usual trade route with the US.
It provides Shell and its partners with a strategic Pacific gateway for Canadian gas and a long-term position in a growing LNG market.