Last month, Shell, alongside Malaysia’s PETRONAS, China’s PetroChina, Mitsubishi Corporation and KOGAS, approved the final investment decision for the LNG Canada Phase 2 expansion, doubling the Kitimat, British Columbia facility’s capacity to 28 million tonnes per annum, OilPrice.com reported in an assessment published on Friday. Together with Cedar LNG and Woodfibre, both currently under construction, Canada is expected to export 33 million tonnes a year by the end of the current decade.
Wood Mackenzie’s case for Canada is geographic. For Asian buyers, Canada offers a combination of resource scale, Pacific Basin access and short shipping routes, said Joshua Ngu, the firm’s vice chairman for Asia Pacific. Cargoes from British Columbia can reach North Asian buyers without transiting the Panama Canal or the Strait of Hormuz, a routing advantage whose value has risen as Gulf LNG flows have been disrupted.
The warning is on cost and timing. In 2026, CP2 LNG, Commonwealth LNG and Delfin FLNG 1 reached final investment decisions in the United States, while projects in Africa, Australia and Latin America continue to progress, Wood Mackenzie noted, and contracting and investment decisions over the next three to five years will shape Asia’s LNG supply landscape for decades. Canada’s high labour costs and substantial infrastructure requirements weigh on delivered-cost competitiveness, and the firm identified improved cost competitiveness as the first of four priorities to de-risk Canadian projects.
Shell said in September that it would build two additional liquefaction trains to double capacity to 28 million tonnes a year, in a multibillion-dollar investment aimed at growing gas demand in Asia, and that it projects global LNG demand to increase to nearly 700 million tonnes a year by 2050. The expansion is slated to start commercial operations in the early 2030s, according to reporting of the September decision, so it does nothing for this winter’s tightness; its significance is that a Gulf-disrupted market is locking in non-Gulf supply for the next decade.