LNG Canada Phase 2 Expansion and Energy Strategy

By the Editorial Team · Wednesday, September 30, 2026

LNG Canada is moving forward with the second phase of its Kitimat facility expansion to increase LNG production capacity to 28 million tonnes per year, including new processing trains and pipeline upgrades. This project aims to bolster Canada’s role as a major LNG exporter, supported by international buyers and Indigenous equity partners, despite criticism from environmental groups concerned about fossil fuel reliance.

LNG Canada has announced plans to proceed with the second phase of its liquefied natural gas (LNG) export facility expansion in Kitimat, British Columbia, aiming to increase production capacity to 28 million tonnes per year. The development is expected to make the facility one of the world’s largest LNG export hubs. Construction preparations for Phase 2 have already involved a $100-million investment, with the project focused on doubling existing equipment and infrastructure to reduce risks related to budget overruns and construction delays.

The expansion will add two new processing trains, additional storage and condensate tanks, an expanded loading berth, and upgraded utility and process systems. The 670-kilometre Coastal GasLink pipeline, which transports natural gas from Dawson Creek to Kitimat, will also be extended with five new compressor stations to nearly double its capacity from the current 2.1 billion cubic feet per day. TC Energy Corporation, the pipeline’s operator, said the project will support thousands of jobs, with construction peaking at about 4,000 workers on site and 2,100 positions for building the compressor stations.

Shell holds the largest equity share in LNG Canada at 40 percent, followed by Malaysia’s Petronas with 25 percent, Mitsubishi of Japan at 15 percent, PetroChina also at 15 percent, and South Korea’s Kogas at 5 percent. In addition, U.S.-based MidOcean Energy acquired a 20 percent indirect interest in Petronas’ Canadian assets, including its stake in LNG Canada. Some partners have indicated potential partial divestments amid interest from global private equity investors, but project leaders have emphasized that such transactions would not impact the overall timeline or scope of the expansion.

This project aligns with Canadian Prime Minister Mark Carney’s strategy to diversify energy export markets beyond the United States, particularly in response to ongoing trade tensions and geopolitical instability. Carney highlighted the importance of export diversification and supply security amid disruptions like Russia’s invasion of Ukraine and constraints in the Strait of Hormuz. He underlined the value of speed, reliability, and predictability as competitive advantages in global energy markets.

Several Indigenous nations in British Columbia, including the Gitga’at, Gitxaala, Haisla, Kitselas, and Kitsumkalum, have joined the initiative, agreeing to pay up to $1 billion for a majority equity stake in the new storage tank component, contingent on project approval.

Despite broad industry support, environmental groups have criticized the expansion, arguing it runs counter to global efforts to transition away from fossil fuels. Critics contend that increasing LNG production will contribute to rising greenhouse gas emissions and undermine climate goals amid a perceived global decline in gas demand.

In contrast, Canadian Energy Minister Tim Hodgson defended the project’s relevance, citing strong interest from countries such as Japan, South Korea, Germany, and Poland. Hodgson stated that long-term contracts from international buyers affirm the continued demand for Canadian LNG, suggesting that energy security concerns and diversified sourcing commitments drive the market for the fuel.

Construction on the expansion is projected to be completed in the early 2030s, although no specific completion date has been announced. The LNG Canada Phase 2 expansion is among several LNG projects advancing on Canada’s West Coast, including Cedar LNG, Woodfibre LNG, and Ksi Lisims LNG, as the country seeks to solidify its position as a key player in global energy exports.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.