LNG Canada Phase 2 decision could come as early as October

LNG Canada Phase 2 decision could come as early as October

Published 12:00 pm Thursday, September 24, 2026

LNG Canada could reach a final investment decision on its proposed Phase 2 expansion as early as October, Reuters reported Sept. 17, citing three people familiar with the matter.

The expansion would add two processing trains and another 14 million tonnes of annual liquefied natural gas capacity at the Kitimat terminal, roughly doubling total production to 28 million tonnes a year.

The report follows several steps this year toward a potential investment decision. LNG Canada’s partners approved hundreds of millions of dollars in additional pre-FID spending in May, while Ottawa, B.C. and LNG Canada signed an agreement aimed at resolving remaining issues needed for a potential 2026 decision.

JGC and Fluor were also authorized in June to begin early Phase 2 work, while LNG Canada and the owners of the Coastal GasLink pipeline agreed in March to advance the pipeline expansion needed to supply the larger plant.

Phase 1 consists of two processing trains with combined capacity of about 14 million tonnes a year. The terminal loaded its first export cargo in June 2025.

Reuters reported that Asian buyers are placing greater emphasis on supply security amid conflict in the Middle East, Red Sea shipping disruptions and uncertainty surrounding the Strait of Hormuz, while also seeking LNG as they move away from coal.

Coal-to-gas switching is often cited as a way for LNG to reduce global emissions. However, in June, Ian Sanderson, a senior analyst at the Pembina Institute, said International Energy Agency modelling indicates significant switching would require LNG prices to remain below US$5 per million British thermal units — less than half the global price average before the current Middle East conflict and only marginally above average production costs for Canadian terminals.

In his analysis, Sanderson also said new production coming online in the U.S. and Qatar, combined with growing investment in lower-cost renewable energy, could weaken demand for new LNG projects. While current disruptions have tightened global supplies and pushed prices higher, he argued prolonged instability could accelerate a shift by importing countries toward domestic renewable energy.

“The biggest risk now facing LNG sellers is that importing countries will realize there are much more secure and much cheaper options available,” Sanderson said.