LNG Canada's Phase Two expansion is moving closer to becoming a reality, with key developments suggesting a final investment decision (FID) could come later this year. The project, referred to Ottawa's Major Projects Office as a "project of national interest" by federal Minister of Energy and Natural Resources Tim Hodgson, would significantly boost Canada's liquefied natural gas (LNG) export capacity.
The expansion would double the plant's output to 28 million tonnes of LNG a year from the current 14 million. This requires expanded pipeline and marine infrastructure, with construction potentially beginning in 2027 or 2028 and exports in the early 2030s. A crucial step forward is TC Energy's agreement with LNG Canada to double the capacity of the Coastal GasLink pipeline, which supplies natural gas to the Kitimat facility. This expansion involves building six more compressor stations along the pipeline.
British Columbia's Energy Minister, Adrian Dix, has hailed these agreements as "one more necessary step" towards realizing LNG Canada's second phase. The federal government anticipates the project will attract substantial private-sector investment, contribute to Canada's GDP growth, and create jobs in local communities. Budget 2025 also proposes measures to enhance the competitiveness of Canadian LNG projects, including LNG Canada Phase 2, such as extending LNG export licenses and reinstating accelerated capital cost allowances for low-carbon LNG facilities.
Amidst global supply concerns heightened by the war in Iran, LNG Canada is already nearing full capacity. CEO François Poirier noted Canada's "generational opportunity" in global natural gas and LNG exports. The Phase 2 expansion, along with other LNG projects in development, could position Canada as a key player in meeting increasing global demand for secure and lower-carbon energy.
