Shell Approves LNG Canada Phase 2 Expansion, Capacity to Increase to 28 Million Tonnes

en.Wedoany.com Reported - On September 29, Shell Canada Energy announced a final investment decision on the LNG Canada Phase 2 expansion project. The project is located in Kitimat, British Columbia, Canada. Phase 2 will add two LNG trains, increasing the project's total capacity from 14 million tonnes per annum to 28 million tonnes per annum. Shell holds a 40% interest in LNG Canada, and upon Phase 2 coming into operation, it will gain an additional nearly 6 million tonnes per annum of LNG equity production. The project is planned to enter commercial operation in the early 2030s.

The Phase 2 works will add two liquefaction trains within the existing Kitimat site, along with one LNG storage tank, one condensate storage tank, one additional loading berth, and expanded utilities and process systems. The associated Coastal GasLink pipeline will also be expanded, adding five compressor stations to the existing 670-kilometer pipeline.

LNG Canada is jointly invested by Shell, PETRONAS, PetroChina, Mitsubishi Corporation, and Korea Gas Corporation, with shareholdings of 40%, 25%, 15%, 15%, and 5%, respectively. The project is operated by LNG Canada Development Inc. The project continues to adopt an equity lifting model, under which each shareholder is responsible for lifting its corresponding share of LNG production and arranging its own natural gas supply.

Phase 2 had previously entered pre-EPC preparation. In June, the JGC Fluor BC LNG II consortium, comprising JGC and Fluor, received a Limited Notice to Proceed to begin advancing planning and key preparatory work ahead of FID. The consortium had previously been responsible for the engineering design, procurement, module fabrication management, construction, and commissioning of the two LNG Canada Phase 1 trains, and delivered supporting works including storage tanks, rail facilities, water treatment facilities, flare systems, and the marine terminal.

In July, LNG Canada signed an Indigenous equity option agreement with MNT Investments LP. MNT Investments LP is composed of the economic development organizations of five Indigenous nations surrounding the project and may invest up to CAD 1 billion to acquire a majority stake in a special purpose entity; the entity plans to purchase the new LNG storage tank added in Phase 2 and lease it to LNG Canada for use during the project's operating life. This arrangement was previously subject to Phase 2 reaching FID as one of its conditions.

Phase 1 comprises two LNG trains with a design capacity of approximately 14 million tonnes per annum and completed delivery of both trains in 2025. Following the Phase 2 FID, the project phase shifts from pre-preparation to formal investment implementation. Subsequent works include two additional trains, storage tanks, a loading berth, utility systems, and the Coastal GasLink expansion.