Executive Summary 

LNG Canada Phase 2 represents a $33 billion CAD expansion of Canada's first large-scale LNG export facility, positioned to double production capacity and establish Canada as a major global LNG supplier. The Major Projects Office priority designation provides a streamlined two-year approval pathway. Haisla Nation partnership from Phase 1 provides an Indigenous engagement foundation, though expansion requires updated consultation and environmental assessment. 

Project Overview 

Location: Kitimat, British Columbia (Haisla Nation traditional territory) 

Proponent: LNG Canada Development Inc. 

Ownership: Shell Canada (40% operator), Petronas (25%), PetroChina (15%), Mitsubishi (15%), Korea Gas (5%) 

Project Type: LNG export terminal expansion 

Status: Major Projects Office priority designation (September 2025), FEED contract awarded 

Project Description 

Phase 2 adds two LNG processing trains to the existing infrastructure, doubling facility capacity from 14 million tonnes per annum (mtpa) to 28 mtpa. Would create the world's second-largest LNG facility. Phase 1 achieved its first cargo export in June 2025 after $40 billion CAD investment and construction employing 35,000+ Canadians over the project lifecycle. 

Expansion leverages existing site infrastructure, including the marine terminal, administration facilities, and utilities. Phase 2 equipment would be fabricated as modules (similar to the Phase 1 approach) and transported to the site for assembly, reducing on-site construction complexity. 

Investment Value 

Phase 2 Capital: $33 billion CAD (private investment) 

Phase 1 Context: $40 billion CAD (commissioned 2025) 

Total Programme: $73 billion CAD across both phases 

Economic Impact: Expected to attract $33 billion in private-sector capital to Canada (federal government estimate) 

Cost Structure: 

• Engineering and design 

• Module fabrication (international and Canadian) 

• Marine transport and installation 

• On-site assembly and commissioning 

• Grid connection and utilities 

• Contingencies 

Timeline & Milestones 

• June 2025: Phase 1 first LNG cargo shipped 

• 2024: FEED contract awarded to engineering consortium 

• Late 2026/Early 2027: Final investment decision (FID) target 

• 2025-2026: Engineering work, regulatory preparation, Indigenous consultation 

• Post-FID: 5-7 year construction timeline 

• Early 2030s: Commercial operations target 

Critical Path Dependencies: 

• Global LNG market conditions and long-term offtake agreements 

• BC Hydro electricity availability for low-carbon operations 

• Environmental assessment approval 

• Indigenous consultation completion 

• Partner consortium FID alignment 

Indigenous Partnerships & Consultation 

Primary Partnership: Haisla Nation 

Status: Site host, Phase 1 benefit agreements in place 

Traditional Territory: Kitimat located in Haisla Nation traditional territory 

 Phase 1 Results: 

• $4.1 billion CAD to Indigenous and local businesses (Phase 1) 

• HaiSea Marine joint venture: $500 million tugboat services contract (Haisla-Seaspan partnership) 

• Employment and training programmes 

• Community investment initiatives 

Phase 2 Requirements: 

• Updated benefit agreements reflecting expanded scope 

• Additional employment and procurement commitments 

• Environmental monitoring participation 

• Community infrastructure investments 

Coastal GasLink Pipeline Context 

Supply Infrastructure: 670 km pipeline delivers natural gas from northeastern BC 

Indigenous Engagement: 10% equity participation offered to First Nations along route 

Construction Experience: Faced delays due to Indigenous opposition in certain territories; completed through benefit agreements and extended consultation 

 Learning Applied: Phase 2 consultation informed by Phase 1 and Coastal GasLink experiences 

Treaty & Rights Framework 

Legal Context: Operating on Crown lands within Haisla traditional territory 

Consultation Standard: Section 35 Constitution Act obligations; UNDRIP principles 

Marine Access: Douglas Channel vessel traffic consultation with coastal First Nations 

Precedent: LNG Canada established consultation model for BC LNG sector 

Regulatory & Approval Status 

Major Projects Office Designation 

Announcement: September 2025 (first tranche of Major Projects Office priorities) 

Significance: Two-year maximum approval timeline; coordinated federal review 

Process: Single-window federal coordination; "one project, one review" with BC government 

Environmental Assessment 

Phase 1 Certificate: Received June 2015 (three years of community consultation and studies) 

Phase 2 Requirement: Updated environmental assessment reflecting expanded scope 

 Key Issues: 

• Greenhouse gas emissions (incremental from expansion) 

• Marine vessel traffic impacts 

• Air quality in Kitimat area 

• Water use from Kitimat River 

• Cumulative effects with Phase 1 

Monitoring Obligations: Required to monitor and report local effects over project life 

Federal Approvals Required 

• Impact assessment under the Impact Assessment Act 

• Fisheries Act authorizations 

• Navigation Protection Act approvals 

• Species at Risk Act considerations 

• Federal lands and waters permits 

Provincial Approvals Required 

• BC Environmental Assessment Certificate update 

• Provincial permits (air, water, waste) 

• Municipal development permits (District of Kitimat) 

Technical Specifications 

Capacity & Production 

Phase 2 Addition: 14 mtpa (two trains × 7 mtpa each) 

Total Facility: 28 mtpa (four trains total) 

Processing: Natural gas liquefaction to -162°C 

Storage: Existing tanks plus potential additional capacity 

Loading: Dual LNG carrier berths (existing infrastructure) 

Emissions Profile 

Competitive Advantage: 35% lower emissions than world's best-performing LNG facilities; 60% lower than global average 

Low-Carbon Pathway: 

• BC Hydro renewable electricity (when available) 

• Energy-efficient natural gas turbines 

• Best-in-class liquefaction technology 

• 0.15 tonnes CO2e per tonne LNG target (versus 0.26-0.35 global average) 

Electrification Dependency: Phase 2 economics and emissions performance depend on BC Hydro electricity availability; constraints force reliance on natural gas turbines, reducing competitive advantage 

Infrastructure 

Site: 400 hectares Kitimat Industrial Site 

Marine Terminal: Deep-water access, ice-free harbour 

Rail: Condensate loading via existing rail infrastructure 

Workers: Accommodation and facilities from Phase 1 

Utilities: Water treatment, flare systems, administration buildings (expandable) 

Market Positioning & Export Strategy 

Target Markets 

Primary: Asian LNG importers (Japan, South Korea, China, Taiwan) 

Secondary: European markets seeking supply diversification post-Russia-Ukraine 

Advantage: Pacific coast location provides shorter shipping distances to Asia versus US Gulf Coast LNG 

Competitive Positioning 

Low-Carbon Intensity: Marketing advantage in emissions-conscious markets; European buyers prioritizing lower-carbon LNG 

Supply Security: Canadian political stability and rule of law; North American gas reserves reliability 

Price Competitiveness: Montney Formation gas costs; operational efficiency from Phase 1 learnings 

Long-Term Offtake 

FID Requirement: Phase 2 partners require long-term sales agreements before committing capital 

Market Dynamics: Global LNG demand growth; Asian energy security priorities; European supply diversification 

Competition: US Gulf Coast LNG expansions; Qatar mega-projects; Australian LNG 

Employment & Economic Impact 

Construction Phase 

Peak Employment: 10,000+ jobs during major construction 

Duration: 5-7 years construction phase 

Canadian Content: 80%+ of workforce expected to be Canadian 

Trades: Heavy emphasis on skilled trades (pipefitters, electricians, millwrights, ironworkers) 

Operations Phase 

Permanent Jobs: Hundreds of permanent positions (operations, maintenance, administration) 

Indirect Employment: Supply chain, services, contractors 

Skills: Highly skilled technical roles; competitive salaries 

Indigenous Employment 

Commitments: Minimum Indigenous employment percentages in agreements 

 Training: Workforce development programs (Phase 1 invested $5+ million) 

 Businesses: Continued procurement from Indigenous-owned businesses 

 Career Pathways: Trades training programs for local and Indigenous residents 

Fiscal Benefits 

Government Revenue: $23 billion CAD direct benefits to BC government over project life (provincial estimate) 

Property Taxes: Significant contributions to the District of Kitimat 

Procurement: Local and Canadian businesses; Phase 1 exceeded $5 billion to BC businesses 

Key Investment Risks 

Material Risks 

• Electrification Constraints

• Issue: Phase 2 low-carbon advantage depends on BC Hydro electricity availability 

• Current Status: BC facing electricity capacity constraints; drought impacts on hydroelectric generation 

• Impact: Without sufficient renewable power, the facility relies on natural gas turbines, reducingthe  emissions advantage 

• Mitigation: Provincial government aware of benefits; discussions are ongoing about power allocation 

Global LNG Market

• Issue: FID contingent on long-term offtake agreements; LNG prices volatile 

• Competition: US Gulf Coast expansions; Qatar North Field projects; Australian capacity 

• Asian Demand: Economic growth uncertainties; renewable energy transition pace 

• Mitigation: Canadian LNG's low-carbon profile; Asian energy security priorities 

• Indigenous Consultation

• Issue: Phase 2 requires updated consultation beyond Phase 1 agreements 

• Coastal Nations: Vessel traffic concerns from marine-focused First Nations 

• Cumulative Effects: Douglas Channel traffic increasing with multiple LNG proposals 

• Mitigation: Established Haisla relationship; Phase 1 consultation experience; HaiSea Marine partnership demonstrates Indigenous economic participation 

Environmental Assessment

• Issue: Updated assessment for Phase 2 expansion; cumulative effects scrutiny 

• Timeline: Could extend if issues arise during review 

• Public Opposition: Environmental groups challenging LNG sector expansion 

• Mitigation: Major Projects Office two-year timeline commitment; Phase 1 certificate precedent 

• Capital Cost Escalation

• Issue: Global inflation; supply chain constraints; labour costs 

• Phase 1 Experience: Project completed but faced cost pressures 

• Impact: Could affect FID if returns insufficient 

• Mitigation: Module fabrication approach; established supply chains; Phase 1 learnings 

Moderate Risks 

• Regulatory Coordination

• Federal-provincial-municipal coordination requirements 

• Multiple permit streams requiring alignment 

• Major Projects Office coordination intended to mitigate 

• Construction Labour

• Skilled trades availability in tight labour market 

• Remote location challenges for workforce 

• Accommodation and logistics 

Partner Alignment

• Five international companies must align on FID 

• Each partner's corporate priorities and market perspectives 

• Consensus decision-making requirements 

Investment Opportunities & Strengths 

Regulatory Advantages 

Major Projects Office: Streamlined two-year approval pathway; federal priority support 

Precedent: Phase 1 successful completion demonstrates Canadian ability to deliver large-scale LNG 

Provincial Support: BC government LNG-friendly policies; tax frameworks 

Commercial Strengths 

Established Infrastructure: Phase 2 leverages Phase 1 investment reducing capital intensity 

Operator Expertise: Shell's global LNG leadership; experienced partner consortium 

Market Access: Deep-water ice-free harbour; Douglas Channel shipping route established 

Cost Learning: Phase 1 construction experience applied to Phase 2 reducing execution risk 

Strategic Value 

Supply Diversification: Reduces global reliance on specific LNG suppliers 

Canadian Economy: Tens of billions in private investment; thousands of jobs; government revenues 

Indigenous Reconciliation: Economic participation model for Indigenous communities 

Energy Security: Reliable North American supply for energy-importing nations 

Financial Structure Options 

Private Financing: Partners expected to fund through corporate resources and project finance 

Federal Support: Canada Infrastructure Bank potential involvement; federal loan guarantees 

Indigenous Participation: Future tranches could include Indigenous equity; Indigenous Loan Guarantee Program access 

Investment Intelligence Summary 

Risk Profile: Moderate (established Phase 1 foundation, but market and electrification uncertainties) 

Timeline: FID 2026-2027; operations early 2030s (realistic scenario) 

Probability: High (60-70%) given Major Projects Office support, established infrastructure, partner commitment 

Investment Thesis: Best-positioned LNG expansion in Canada; Phase 1 demonstrated execution capability; low-carbon advantage in evolving market 

UK/European Investor Considerations: 

• European LNG demand increasing post-Russia; Canadian supply attractive 

• Low-carbon intensity aligns with European emissions standards 

• Political stability and rule of law reduce sovereign risk versus other LNG suppliers 

• Indigenous partnership model demonstrates social license strength 

• Major Projects Office support signals federal commitment 

Due Diligence Priorities: 

• Monitor FID decision timing and partner alignment 
• Track BC Hydro electricity allocation decisions 
• Assess the long-term offtake agreement progress 
• Review Phase 2 environmental assessment process 
• Evaluate global LNG market supply-demand dynamics