Shell, TC Energy Agree on Expansions for Canada's LNG Sector

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Written by Daniel Graeber for IIR News Intelligence (Sugar Land, Texas)

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Summary

The first North American facility out of the gate with LNG exports from the Pacific Coast, LNG Canada is ready for expansion. The facility delivered its inaugural cargo only in late 2025.

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LNG Targeting Asian Economies, Shell Says

The first North American facility to delivery liquefied natural gas from the Pacific Coast, Shell said it made a final investment decision on the second phase of the LNG Canada facility in British Columbia, doubling its capacity.

"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, the president of Shell's integrated gas business. "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."

Canada became the first country in North America to ship the super-cooled gas from the Pacific Coast when LNG Canada made its inaugural delivery late last year. According to Industrial Info Resources data, LNG Canada has a peak design capacity of 14 million metric tons per annum.

Readers can learn more from a detailed project report on the expansion.

Shell said the second phase would include two additional liquefaction units, or trains, that will double the plant's production capacity. It would also include additional storage and a loading berth at the port of Kitimat.

The overall plant was included in Canadian Prime Minister Mark Carney's broad-based trade initiative that aims to cut the dependency on the United States, its largest trading partner and destination for much of Canada's natural resources.

Largely landlocked in terms of midstream infrastructure, most of the Canadian natural gas exports go to the United States. Based on the NATGAS Today report for Tuesday from Industrial Info, Canada delivered around 5.5 billion cubic feet of natural gas per day to the US economy on average over the five-day period ending Tuesday.

But in the Canadian midstream sector, TC Energy, formerly TransCanada, said the expansion of the LNG Canada facility warrants expansion to the Coastal GasLink pipeline that feeds the facility.

As of now, the pipeline carries about 2.1 billion cubic feet of natural gas per day to the plant in Kitimat. The second phase will double that capacity.

"Coastal GasLink pipeline was a nation-building project that established Canada's first direct path for natural gas to reach global LNG markets and Phase 2 is building on that legacy," said Francois Poirier, the president and chief executive officer at TC Energy.

LNG Dynamics are Changing

Shipping its inaugural cargo last year, LNG Canada already secured offtake agreements with the likes of Japanese energy company JERA, Tokyo Gas and Korea Gas given the short shipping routes across the Atlantic.

Globally, Asian importers may be competing for supplies in an LNG market tightened by the simmering conflict in the Middle East, where major supplier Qatar told its European clients that shipments would be delayed until at least December.

Asian markets could be shifting, however. A recent report from the Institute for Energy and Financial Analysis finds Chinese demand for LNG has diminished because the world's second-largest economy behind the United States has managed to accumulate a surplus.

That, in turn, could position China as a future reseller of the super-cooled gas. China has been reselling LNG cargoes for several years now. LNG from the U.S. does not have destination clauses in the contracts, therefore many shipments have been rerouted mid-voyage to higher paying destinations rather than making the trip all the way to China, explained Jesus Davis, a vice president for energy services at Industrial Info.

By the Numbers

• 28 million metric tons per annum total now expected from LNG Canada
• 4.2 billion cubic feet of natural gas per day in feed gas from Coastal GasLink expansion

Key Takeaways

• Shell reaches FID on Phase 2 of LNG Canada
• TC Energy followed suit by announcing plans to expand a gas line feeding LNG exports

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About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 trillion (USD).