LNG Canada Phase 2 FID Doubles Kitimat Capacity to 28 MTPA

Partners in the LNG Canada joint venture have taken a final investment decision to proceed with the Phase 2 expansion of the export facility in Kitimat, British Columbia, doubling its nominal liquefaction capacity to 28 million tonnes per annum (mtpa), according to reporting by OilPrice.com.

The investment decision was approved by Shell alongside consortium partners PETRONAS of Malaysia, PetroChina, Japan's Mitsubishi Corporation and South Korea's KOGAS. The expansion solidifies Canada's emergence as an export player for Pacific basin natural gas buyers seeking alternatives to supplies exposed to geopolitical chokepoints.

Along with two other liquefaction developments currently under construction in British Columbia—Cedar LNG and Woodfibre LNG—the Phase 2 approval is expected to lift total Canadian liquefied natural gas export capacity to 33 mtpa by the end of the current decade.

Pacific Route Advantages for Asian Markets

Energy consultancy Wood Mackenzie highlighted that Canadian export projects are well positioned to capture rising Asian appetite for long-term, lower-carbon liquefied gas supplies. The primary commercial appeal rests on Canada's extensive upstream natural gas resource base, combined with favourable maritime logistics directly fronting the Pacific Ocean.

Shipping routes from British Columbia provide a material freight advantage over supply originating on the United States Gulf Coast. Cargoes dispatched from the Kitimat export facility can transit to import terminals in Tokyo within approximately eight to nine days without transiting the Panama Canal or traversing volatile Middle Eastern waterways, according to data from S&P Global. By comparison, laden LNG tankers originating from terminals along the US Gulf Coast require roughly 16 to 18 days to reach the Japanese capital.

Joshua Ngu, Vice Chairman, Asia Pacific at Wood Mackenzie, observed that Canadian projects offer Asian off-takers an increasingly rare balance of resource scale, Pacific Basin geographical access and shorter voyage durations. However, Ngu warned that converting this position into commercial reality will depend on cost competitiveness, disciplined project execution and timely delivery schedules.

Tightening Windows and Shifting Trade Flows

Long-term regional demand projections indicate that Asian LNG consumption is poised to nearly double, expanding from roughly 260 mtpa at present to approximately 500 mtpa by 2060, according to Wood Mackenzie forecasts. This structural growth is expected to create an enduring market outlet for Canadian terminal operators.

At the same time, analytical firms note that Canadian project sponsors face a narrowing window of opportunity. Competing liquefaction proposals across the United States and other global supply hubs are accelerating development timelines to capture long-term supply commitments.

Trade flows across the Pacific have already shifted markedly in response to logistical security concerns. In the first half of 2026, US LNG export volumes delivered into Asia surged by 108% compared with the same period in 2025, as regional importers actively sought alternative volumes outside the Middle East following maritime closures and disruption around the Strait of Hormuz. With infrastructure projects such as Cedar LNG, Woodfibre and LNG Canada progressing toward operations, Canadian terminals represent the next major wave of non-Middle Eastern export volumes competing for Asian term contracts.