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Shell and partners approve LNG Canada Phase 2 expansion

Shell and partners approve LNG Canada Phase 2 expansion

Built World

The C$33-billion package doubles the Kitimat plant to 28 million tonnes a year and has already started work on a storage tank and pipeline contracts.

October 19th, 2026: Técnicas Reunidas wins Coastal GasLink contract

Overview

Updated Oct 20

Shell and its partners approved a C$33 billion package for LNG Canada and Coastal GasLink on Sept. 29. The decision doubles the Kitimat terminal to 28 million tonnes a year, and crews began work two days later on a storage tank.

Five First Nations closed an investment stake in Coastal GasLink. LNG Canada awarded Técnicas Reunidas a €200 million contract for pipeline work, and TC Energy named three new compressor sites in northwest British Columbia. Most steel for the LNG modules will come from China because only five fabrication yards worldwide can build and ship them, LNG Canada says.

Why it matters

The expansion doubles Canada's only large LNG export terminal, betting Asian demand will justify billions in new pipelines and trains.

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Key Indicators

28 million tonnes a year
Capacity after Phase 2
Doubled from 14 million tonnes once the two new trains come online in the early 2030s.
C$33 billion
Combined Phase 2 investment
Combined commitment for LNG Canada's expansion and Coastal GasLink Phase 2, per the companies and the Prime Minister.
4,000
Peak construction jobs in Kitimat
Up to 4,000 new jobs in Kitimat alone during peak construction, according to the Prime Minister.
$15 billion
EPC contract value
Fluor and JGC split the engineering, procurement and construction contract evenly.
C$1 billion
First Nations equity option
Five Nations can buy a majority stake in the new storage tank, among the largest Indigenous ownership positions in Canadian infrastructure.
C$50 billion+
Projected government revenue
Estimated direct spend, taxes, royalties and related revenue over the life of Phase 2, per LNG Canada.
5 billion cubic feet a day
Coastal GasLink capacity target
Planned capacity after five new compressor stations, up from about 2.1 billion cubic feet a day.
€200 million
Técnicas Reunidas contract
LNG Canada awarded the Spanish firm the Coastal GasLink Phase 2 work on Oct. 19.

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People Involved

CC
Chris Cooper
Chief Executive Officer, LNG Canada
Announced the Phase 2 final investment decision
 Mark Carney
Mark Carney
Prime Minister of Canada
Welcomed the Phase 2 decision at a Vancouver event
MK
Mark Kalegha
Energy finance analyst, IEEFA
Warned about Phase 2 economic risks in a report

Organizations Involved

LNG Canada
LNG Canada
Joint venture / LNG export terminal
Building Phase 2; early site work began in October 2026

Five-company joint venture operating Canada's first large-scale LNG export facility.
Coastal GasLink (TC Energy)
Coastal GasLink (TC Energy)
Natural gas pipeline
Building Phase 2; compressor station construction starts in early 2027

670-kilometre pipeline moving Western Canadian gas from Dawson Creek to the Kitimat terminal.
MNT Investments LP
MNT Investments LP
First Nations investment partnership
Holds option to invest up to C$1 billion in Phase 2 storage tank

Limited partnership of economic development arms of five First Nations near the Kitimat facility.
Major Projects Office (MPO)
Major Projects Office (MPO)
Federal government office
Fast-tracked Phase 2 federal review

Single point of contact for federal review of major Canadian projects.
PL
FN CGL Pipeline Limited Partnership
First Nations investment entity
Closed the first of two planned Indigenous investment deals in Coastal GasLink

Indigenous-led partnership of five First Nations along the Coastal GasLink corridor.

Timeline

October 2018 October 2026

11 events Latest: October 19th, 2026 · 3 weeks ago Showing 8 of 11
Tap a bar to jump to that date

  1. Técnicas Reunidas wins Coastal GasLink contract

    Latest Contract

    LNG Canada awards the Spanish engineering firm a €200 million contract for Phase 2 of the pipeline, covering modifications to existing and planned facilities.

  2. Coastal GasLink names compressor station sites

    Infrastructure

    TC Energy plans five additional compressor stations, including three in the Bulkley-Nechako region at Segundo Lake, Parrot Lakes and Clear Creek. The work is meant to nearly double pipeline capacity to 5 billion cubic feet a day.

  3. First Nations close Coastal GasLink investment

    Deal

    FN CGL Pipeline Limited Partnership, representing five First Nations along the pipeline corridor, closes an economic interest in the entity holding TC Energy's limited-partner stake. TC Energy expects a second transaction in the fourth quarter.

  4. Fluor and JGC get go-ahead for EPC contract

    Contract

    Engineering News-Record reports Fluor and JGC split a $15-billion engineering, procurement and construction contract for the Phase 2 expansion. They built Phase 1 too.

  5. Early construction starts at Kitimat

    Milestone

    Crews begin clearing ground for a 225,000-cubic-metre storage tank, marine facilities and a water treatment system, two days after the final investment decision. LNG Canada says Phase 2 will take up to seven years to build.

  6. Phase 2 final investment decision

    Investment

    Shell and four partners approve the C$33 billion expansion, doubling capacity to 28 million tonnes a year.

  7. Coastal GasLink Phase 2 construction start confirmed for early 2027

    Milestone

    TC Energy confirms CGL Phase 2 will add five compressor stations to nearly double pipeline capacity. Construction starts in early 2027, with service expected in the early 2030s.

  8. First Nations equity option signed

    Deal

    Five First Nations sign an option to invest up to C$1 billion for a majority stake in the new storage tank.

  9. Federal referral to Major Projects Office

    Policy

    Government refers Phase 2 to the MPO for a fast-tracked federal review process.

  10. Phase 1 comes online

    Milestone

    Kitimat begins LNG production and exports during 2025, Canada's first large-scale shipments to Asian and European buyers.

  11. Phase 1 final investment decision

    Investment

    Five partners commit roughly C$40 billion to build the first two liquefaction trains in Kitimat.

Scenarios

1

Coastal GasLink Phase 2 breaks ground on schedule

Likely Resolves by Q2 2027

Discussed by: LNG Canada, Prime Minister's office, TC Energy

With FID secured, engineering and procurement move forward. TC Energy begins adding five compressor stations in early 2027, and both projects target service in the early 2030s. Prime Minister Carney's Major Projects Office has already set a precedent of a fast approval, and the equity deal with First Nations removes a major source of friction that stalled the pipeline in 2020.

2

Shell takes impairment as LNG glut hits Phase 2

Possible Resolves by End of 2030

Discussed by: Mark Kalegha, IEEFA

Kalegha warned that 254 million tonnes of competing LNG capacity enters service globally between 2026 and 2030, and that volatile prices for steel, labor and debt could push costs up. If spot prices fall below Phase 2 breakeven, Shell or its partners could write down the value of their stakes.

3

Compliance orders and opposition slow the Phase 2 build

Possible Resolves by End of 2028

Discussed by: The Narwhal, sustainability advocacy groups

The Kitimat facility has operated under permits it has been out of compliance with since commissioning, tied to flare-stack issues that produced excessive noise, black smoke and a tower of flame. If the BC Energy Regulator issues new orders or local opposition resurges, construction could slip past the early-2030s startup target.

Historical Context

3 moments from history that rhyme with this story — and how they unfolded.

October 2018

LNG Canada Phase 1 FID (2018)

The same five-company joint venture approved a roughly C$40 billion first phase, then Canada's largest private investment, committing to two 7-million-tonne trains on a site designed for four.

Then

Construction ran well over the original budget and slipped past its initial 2023 startup target.

Now

Phase 1 began exports in 2025, proving Canadian LNG could reach Asian markets through Kitimat's ice-free harbour.

Why this matters now

Phase 2 repeats the Phase 1 structure on the same footprint, betting the first build's hard lessons translate into a faster, cheaper second one.

2000-2011

Mackenzie Valley Pipeline cancellation (2011)

A proposed 1,200-kilometre natural gas pipeline from the Arctic to Alberta spent more than a decade in regulatory review, with environmental and Indigenous opposition mounting and costs climbing.

Then

The consortium pulled the project in December 2011, citing rising costs and policy uncertainty.

Now

It became the standard cautionary tale for Canadian energy mega-projects stalled by permitting delays.

Why this matters now

On the same Western Canadian gas resource, LNG Canada reached FID in a year under the Major Projects Office, a direct contrast with Mackenzie's fate.

February 2020

Coastal GasLink blockades (2020)

Hereditary chiefs of the Wet'suwet'en Nation opposed a pipeline crossing their territory, and blockades nationwide halted rail and construction for weeks on the pipeline that now feeds LNG Canada.

Then

Negotiations and an agreement framework let construction resume after the dispute.

Now

The conflict pushed energy companies toward formal equity agreements with First Nations, the model behind the C$1-billion tank deal in Phase 2.

Why this matters now

Phase 2's Indigenous ownership stake is a direct response to the 2020 conflict that nearly stopped the pipeline it depends on.

Sources

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CNW Group Construction Review CNBC CBC News Prime Minister of Canada Oil & Gas Journal The Narwhal Canada's National Observer Vancouver Sun Engineering News-Record TC Energy CFNR Network The Interior News LNG Journal Midstream Calendar Newsbase CNW Group CBC News