Shell takes investment decision to double LNG Canada capacity

Shell PLC on Tuesday said it has taken a final investment decision to double production capacity at the LNG Canada facility in British Columbia.

The London-based oil and gas major said the second phase of the project will add two liquefied natural gas processing units, or trains, increasing total production capacity at the Kitimat facility to 28 million tonnes per annum from 14 million.

Shell owns a 40% stake in LNG Canada and expects to receive nearly 6 million tonnes per annum of additional LNG from the expansion. Commercial operations are expected to begin in the early 2030s.

The company said the investment is expected to generate double-digit returns and support long-term cash flow growth.

"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 Shell Integrated Gas President Cederic Cremers.

"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 expansion will also include an additional LNG storage tank, condensate tank and loading berth, as well as expanded utility and process systems.

Coastal GasLink will expand the capacity of its existing 670-kilometre pipeline through the construction of five new compressor stations.

Shell said the Kitimat facility is positioned to supply cost-competitive gas to Asian markets, where it expects demand for LNG to grow significantly.

According to Shell's LNG Outlook 2026, global LNG demand is expected to increase by around 60% by 2040 and around 65% by 2050. Demand is forecast to reach nearly 700 million tonnes per annum by 2050 from 422 million tonnes in 2025.

LNG Canada is a joint venture between Shell, with a 40% stake, Petronas with 25%, PetroChina Co Ltd and Mitsubishi Corp with 15% each, and Korea Gas Corp with 5%.

Shares in Shell were 0.4% lower at 3,638.50 pence in London on Tuesday morning.

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