Key Takeaways
- LNG Canada’s Phase 1 terminal in Kitimat, B.C., began exporting liquefied natural gas (LNG) to Asia in June 2025, with a current capacity of 14–15 million tonnes per annum (Mtpa).
- Fluor Corp. (U.S.) and JGC Corp. (Japan) are preparing the site for a possible Phase 2 expansion that could double export capacity to ~30 Mtpa.
- A final investment decision (FID) on Phase 2 is expected by the end of 2026, contingent on commercial, fiscal, regulatory and governance approvals by the joint‑venture owners.
- Ownership is led by Shell (40 %), followed by Petronas (25 %), Mitsubishi (15 %), PetroChina (15 %) and Kogas (5 %). MidOcean Energy holds an indirect stake via its acquisition of Petronas assets.
- The Phase 1 project’s final cost is estimated at $48.3 billion, including the Kitimat terminal, the Coastal GasLink pipeline and related infrastructure; Phase 2 would require additional billions, notably for pipeline upgrades.
- Export Development Canada is exploring financing for investors interested in indirect equity stakes in Phase 1 and/or Phase 2.
- Critics highlight significant flaring at the Kitimat site and broader climate/health concerns, estimating two‑to‑three years to remediate the issue.
- In March 2025, LNG Canada agreed to lead development plans for expanding the Coastal GasLink pipeline, and British Columbia and the federal government have pledged support for the terminal’s potential expansion.
Project Overview and Current Status
LNG Canada’s Phase 1 export terminal, located in Kitimat, northwest British Columbia, commenced commercial operations in late June 2025, marking Canada’s first LNG export facility. The terminal currently has a design capacity of 14 million tonnes of liquefied natural gas per year, though operational efficiencies have allowed it to reach up to 15 Mtpa. The plant supplies Asian markets with Canadian natural gas, positioning the country as a emerging player in the global LNG trade. The successful start‑up of Phase 1 has provided the joint‑venture partners with a proven platform to evaluate a second phase that would substantially increase throughput.
Contractors and Phase 2 Preparations
The engineering, procurement and construction (EPC) contractor for both phases is the joint venture JGC Fluor BC LNG, comprising Fluor Corp. of Irving, Texas, and JGC Corp. of Yokohama, Japan. Following a “limited notice to proceed” from LNG Canada, Fluor and JGC have initiated a series of on‑site and off‑site work programs aimed at early engineering, procurement planning and site readiness for a potential Phase 2 build‑out. These preparatory activities are intended to compress the schedule should the owners sanction a final investment decision, allowing construction to begin promptly once approvals are secured.
Ownership Structure and Investment Decision
The LNG Canada joint venture is owned by five major energy companies: Shell PLC holds the largest share at 40 %, Petronas (Malaysia) 25 %, Mitsubishi Corp. (Japan) 15 %, PetroChina (China) 15 %, and Kogas (South Korea) 5 %. In September 2024, MidOcean Energy acquired a 20 % interest in key Petronas assets in northeastern British Columbia, which includes an indirect stake in LNG Canada’s Phase 1. The joint‑venture partners have stated that any prospective FID for Phase 2 will only proceed after each participant independently satisfies all commercial, fiscal, regulatory and governance requirements. Shell and the other co‑owners are targeting a decision by the close of 2026.
Financial Scale and Cost Estimates
The final capital cost for LNG Canada’s Phase 1 is projected to be $48.3 billion. This figure encompasses the Kitimat terminal ($18 billion), the Coastal GasLink pipeline, associated facilities, and annual drilling budgets in the North Montney region of northeast B.C. Initial estimates for Coastal GasLink in 2018 were $6.2 billion, but subsequent revisions pushed the cost to $14.5 billion due to scope changes, inflation and regulatory considerations. Should Phase 2 be approved, the terminal’s export capacity could rise to roughly 30 Mtpa, effectively doubling output. While exact Phase 2 capital requirements have not been disclosed, industry analysts anticipate additional multi‑billion‑dollar investments, particularly for pipeline compression and ancillary infrastructure.
Infrastructure Link: Coastal GasLink Pipeline
Coastal GasLink, a 670‑kilometre pipeline operated by TC Energy Corp., transports natural gas from the Montney fields in northeastern B.C. to the Kitimat terminal. TC Energy retains a 35 % ownership stake, with the remaining 65 % held by Alberta Investment Management Corp. and KKR & Co. Inc. In March 2025, LNG Canada agreed to lead the development of expansion plans for Coastal GasLink to support a potential Phase 2 increase in feed‑gas supply. Experts estimate that adding five compressor stations along the route could cost approximately $6 billion, enabling the pipeline to double its capacity and deliver the higher volumes required for an expanded LNG plant.
Financing and Interest from External Parties
Export Development Canada (EDC) has signaled willingness to finance investors seeking indirect equity interests in LNG Canada’s Phase 1 and/or Phase 2. EDC reported that it is working with an entity that has expressed interest in acquiring such a stake, though details remain confidential. Additionally, MidOcean Energy’s 2024 acquisition of Petronas‑related assets gives it an indirect exposure to the project, highlighting growing financial interest from both domestic and international parties. These financing movements suggest that the market views LNG Canada as a strategic asset capable of delivering long‑term returns amid rising global LNG demand.
Environmental and Community Concerns
Despite the economic promise, the project faces criticism over its environmental footprint. Observers have pointed to extensive flaring of natural gas at the Kitimat industrial site, describing the practice as “extremely substantial.” Alex Walker, energy analytics program manager at Environmental Defence, warned that resolving the flaring issue could take two to three years. Critics argue that such emissions undermine climate goals and pose health risks to nearby communities, urging stronger mitigation measures and greater transparency from the joint‑venture partners.
Government Agreements and Policy Support
In March 2025, LNG Canada took the lead role in developing expansion plans for the Coastal GasLink pipeline, aligning its interests with those of the pipeline operator. Furthermore, the provincial government of British Columbia and the federal government of Ottawa have reached a pact to support LNG Canada’s potential expansion, underscoring policy backing for the project as a contributor to national energy security and export revenues. Earlier, in a joint statement issued last month, LNG Canada and the federal government announced that co‑owners had approved “hundreds of millions of dollars in incremental funding” to finalize critical work scopes aimed at achieving a possible FID by the end of 2026.
Outlook and Implications
If the joint‑venture owners sanction Phase 2, LNG Canada could become one of the world’s largest LNG export facilities, significantly boosting Canada’s ability to monetize its abundant natural‑gas reserves. The expansion would not only increase revenues for the project’s stakeholders but also reinforce British Columbia’s position as a key energy‑export hub. However, realizing this potential hinges on navigating fiscal discipline, regulatory approvals, and addressing the environmental concerns raised by flaring and broader climate impacts. The interplay of private‑sector readiness, government support, and financing interest will determine whether LNG Canada progresses from a successful Phase 1 to a transformative Phase 2 that shapes North America’s LNG landscape for the next decade.