Canada exports LNG for first time as Kitimat terminal begins operations with Shell-led joint venture

Canada has officially entered the global liquefied natural gas (LNG) market, with the first export cargo from LNG Canada’s terminal in Kitimat, British Columbia, marking a pivotal moment for the country’s energy sector. Operated by LNG Canada Development Inc., the facility is a joint venture involving Shell plc (through Shell Canada Energy), PETRONAS (via North Montney LNG Limited Partnership), Mitsubishi Corporation, PetroChina Company Limited, and Korea Gas Corporation (KOGAS).

The first cargo departed aboard the Gaslog Glasgow, bound for an Asian customer, and signals the start of commercial operations for Canada’s first large-scale LNG export project. The facility’s two initial liquefaction trains have a combined capacity of 14 million tonnes per annum (mtpa), with Shell holding the largest stake at 40% and serving as the lead marketing and operations partner.

What is the historical significance of LNG Canada’s first export in North America’s LNG landscape?

The launch of LNG exports from Canada represents a breakthrough in North American energy infrastructure. Located in Kitimat on the Pacific Coast, the project offers significant logistical advantages over U.S. Gulf Coast LNG exporters, primarily by reducing shipping time and costs to Asia. This geographic positioning—paired with access to abundant Western Canadian natural gas via the Coastal GasLink pipeline—has long made Canada’s west coast an attractive, albeit complex, LNG export frontier.

The Final Investment Decision (FID) for the CAD 40 billion project was announced in October 2018, following years of environmental, regulatory, and community consultations. Institutional observers note that this milestone puts Canada on par with other LNG-exporting nations while diversifying the global supply base in an era of rising energy security concerns.

What financial and operational scale does the Kitimat terminal represent in its first phase?

The Kitimat facility is among the largest infrastructure investments in Canadian history. Train 1 began producing LNG in late June 2025, though it was initially operating at reduced capacity due to a mechanical line fault. Each of the two trains has a nameplate capacity of 7 mtpa. Feed gas is delivered via the 670-kilometer Coastal GasLink pipeline, which connects Kitimat with the prolific Montney shale formation in northeastern British Columbia.

Shell, as the lead operator and marketer, managed the first cargo shipment. Each joint venture partner is responsible for supplying its own natural gas and offtaking its share of LNG. This structure allows the project to operate without a central tolling model, giving participants more control over market pricing and delivery.

What economic impacts have materialized from the project during the construction phase?

LNG Canada’s development has generated considerable economic benefits across British Columbia and beyond. More than 50,000 Canadians were employed across the project and the Coastal GasLink pipeline during peak construction. Over CAD 5.8 billion in contracts and subcontracts have been awarded to Indigenous and local businesses in British Columbia, including CAD 4.9 billion to Indigenous-owned enterprises.

One of the most visible outcomes of these partnerships is HaiSea Marine—a joint venture between the Haisla Nation and Seaspan—tasked with providing harbor and escort tugboat services using battery-powered and low-emission vessels.

In workforce development, LNG Canada has invested more than CAD 10 million in trades training programs, with an emphasis on increasing Indigenous participation. An additional CAD 13 million has been allocated to housing and community programs in Kitimat, Terrace, and surrounding First Nations.

How are analysts and institutional investors interpreting Canada’s LNG launch in context of market supply and pricing?

Institutional sentiment around LNG Canada’s launch has been broadly optimistic. Analysts point to the structural cost advantage provided by the Western Canadian AECO natural gas benchmark, which has traded as low as USD 0.71/MMBtu—well below the U.S. Henry Hub price, which recently hovered around USD 3.75/MMBtu. This gives Canadian LNG exporters a potential pricing edge in cost-sensitive Asian markets.

In the medium term, the Kitimat terminal is expected to serve as a critical new node in global LNG supply chains, helping offset capacity constraints and geopolitical risk in other regions. However, some institutional caution remains, particularly regarding initial ramp-up performance and the unresolved technical issue on Train 1.

What is the stock market sentiment for Shell amid the LNG Canada milestone?

Shell plc (NYSE: SHEL) shares closed at USD 71.09 on July 1, 2025, modestly up for the day. Investors appear to be pricing in steady earnings contributions from the new facility, especially as Shell increases its focus on integrated gas and LNG as a transitional energy source. Analysts anticipate that once both trains reach full production, Shell could see notable EBITDA contribution from the project, adding to its already substantial LNG portfolio.

The muted stock response reflects broader macroeconomic caution and the market’s preference to wait for consistent operational performance before re-rating Shell’s valuation on LNG Canada’s full potential.

What do industry leaders say about the broader implications of this LNG export initiative?

Leadership from LNG Canada and its joint venture participants have framed the project as a blueprint for responsible energy development. LNG Canada CEO Chris Cooper emphasized the importance of Indigenous partnerships and community engagement as key factors in the project’s success.

Haisla Nation Chief Councillor Crystal Smith highlighted how the project’s relationship-first approach with Indigenous communities represented a major shift from legacy energy development models. She credited LNG Canada’s engagement for delivering long-term socio-economic benefits to the Haisla people.

Shell’s Integrated Gas President Cederic Cremers called the milestone “a testament to responsible development,” while executives from PETRONAS, Mitsubishi, PetroChina, and KOGAS all reaffirmed their support and confidence in the terminal’s long-term competitiveness and market relevance.

Prime Minister Mark Carney lauded the achievement as a “turning point for Canada’s global trade diversification,” while British Columbia Premier David Eby positioned it as proof that the province can lead a stronger, more independent energy economy.

What is the outlook for future expansion and Canadian LNG market dynamics?

LNG Canada’s joint venture is actively evaluating a Phase 2 expansion, which would double the facility’s capacity to 28 mtpa. While no timeline has been confirmed, Shell executives have indicated that the decision will depend on broader corporate capital allocation and global LNG demand forecasts.

In parallel, Canadian LNG projects such as Cedar LNG (majority Indigenous-owned) and Woodfibre LNG are moving toward construction and financial close, with estimated operational readiness by 2027 or later. Combined, these developments suggest a growing LNG export ecosystem on the West Coast.

Analysts believe Canada’s ability to offer competitively priced LNG to Asian buyers—coupled with Indigenous equity models—could reshape how future energy infrastructure is developed globally. However, near-term gas price oversupply and environmental scrutiny in British Columbia may temper expansion momentum in the immediate future.

What should stakeholders monitor as Canada scales its LNG capabilities?

Key milestones to watch include LNG Canada’s return to full capacity on Train 1, further shipment volumes from Train 2, and Shell’s decision on Phase 2. Progress on Cedar LNG and Woodfibre LNG will also influence how quickly Canada scales up as a global LNG supplier.

Market watchers are closely monitoring AECO-to-JKM price spreads, project economics for future expansions, and whether Canada’s LNG strategy can maintain its balance of economic viability, environmental performance, and Indigenous leadership.