Canada Approves $33B LNG Expansion as Carney Backs Energy Push

Canada’s LNG Canada consortium approved a $33 billion Phase 2 expansion at its Kitimat, B.C. terminal on September 29, doubling capacity to 28 million tonnes annually. Prime Minister Mark Carney announced the decision in Vancouver, calling it a nation-building investment that will create 4,000 jobs during peak construction and position Canada among the world’s top five LNG exporters. The project comes as Middle East conflict disrupts global energy supplies.

What the Phase 2 expansion includes

LNG Canada will add two processing units, known as trains, plus an LNG storage tank, condensate tank, loading berth, and expanded utility systems. The company is also working with Coastal GasLink to expand the 670-kilometre pipeline through five new compressor stations. The expansion builds on Phase 1, which began shipping liquefied natural gas to Asian markets in 2025.

Why the timing matters for global markets

The approval arrives as fighting in the Middle East disrupts shipments from Qatar, one of the world’s largest LNG producers. Russia, another major player, faces intensifying bombardment from Ukraine. Carney said the expansion will provide secure supply to Asia and Europe, helping Canada diversify its export customer base amid U.S. trade tensions.

Cost and competitiveness challenges

Construction costs in Canada run higher than on the U.S. Gulf Coast, but Shell executives argue this is offset by two advantages: low-cost gas from the Montney formation and shorter shipping distances to Asia. Shell’s Cederic Cremers called the project very competitive despite the cost gap. The consortium includes Shell, Petronas, PetroChina, Mitsubishi Corporation, and Korea Gas Corp.

Political backing and past opposition

The Major Projects Office accelerated the review process, moving from referral to final investment decision in 12 months. Carney stated this speed reflects that high standards do not require slow decisions. B.C. NDP leader David Eby called the announcement a big deal and emphasized workers’ rights, Indigenous partnerships, and environmental standards. Conservative MP Ellis Ross, a former Haisla Nation chief councillor, credited local Indigenous leaders rather than politicians for decades of groundwork.

Final Thoughts

The $33 billion expansion signals strong private sector confidence in Canadian energy exports during a period of global supply disruption. For investors, the project underscores Canada’s role in energy security and long-term infrastructure development.

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