Shell Canada Energy, an affiliate of Shell, has taken a final investment decision (FID) on phase two of the LNG Canada project in Kitimat, British Columbia (BC).
Phase two aims to double the facility’s liquefied natural gas (LNG) production capacity to 28 million tonnes per annum (mtpa).
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The expansion will add two LNG processing units, or trains, to the existing facility.
Shell holds a 40% interest in the project and expects to receive nearly 6mtpa of additional LNG from the development.
Commercial operations at the project are expected to begin in the early 2030s.
Shell integrated gas president Cederic Cremers said: “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.
“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.”
The project will also include an LNG storage tank, a condensate tank, a loading berth, and expanded utility and process systems within the existing Kitimat site.
Coastal GasLink is due to expand the capacity of its existing 670km pipeline by building five new compressor stations. The pipeline supplies gas to the LNG Canada facility.
LNG Canada operates under an equity lifting structure. Each joint venture participant is responsible for taking its proportionate share of LNG output and securing gas supply for that share.
Shell said the investment fits its capital allocation framework and is expected to generate double-digit returns. It also said the project’s internal rate of return is expected to exceed the hurdle rate for its Integrated Gas business.
The company cited its LNG Outlook 2026, which forecasts global LNG demand will rise by more than 60% by 2040 and approximately 65% by 2050.
Shell attributed the projected increase to energy demand and the need for secure, flexible and reliable energy supplies.
LNG Canada is owned by Shell with 40%; Petronas with 25%; PetroChina Company and Mitsubishi, each with 15%; and Korea Gas with 5%. LNG Canada Development operates the facility.
Shell recently completed its acquisition of ARC Resources, a BC and Alberta-based energy company, after receiving shareholder, court and regulatory approvals.
