Shell expects to make a final investment decision (FID) by year-end 2026 on Phase 2 of the $29-billion LNG Canada liquefaction and export facility, company executives told analysts.
Phase 2 would add two trains and double capacity to 28 million tonnes per annum (mtpa) for the facility in Kitimat, British Columbia. Shell leads the joint venture with a 40% stake. Other partners are Petronas (25%), PetroChina (15%), Mitsubishi (15%) and Korean Gas (5%).
TD Cowen analysts speculated that the timing of the anticipated FID was connected to project economics, rather than near-term market expectations.
“We wonder if [Shell] could be interested in acquiring a larger stake in [LNG Canada] should it become available,” the analysts wrote in a Sept. 5 research note.
They also pointed out that Shell’s integrated gas unit was a high performer compared to the supermajor’s chemicals, power and low-carbon divisions, which constitute 20% of its business. Shell is looking at areas to cut costs in those areas, the analysts said.
LNG Canada shipped its first cargo in June and reported this week that it had shipped its 10th cargo from its first train on Sept. 2. Train 2 is expected to be completed by the end of the year. Its first train experienced technical issues with its turbine and refrigeration early in August, cutting its output by 50%, S&P Global reported at the time.
In August, LNG Canada asked the Canada Energy Regulator to increase its export limit by 6.4% to compensate for construction delays in its Phase 2 expansion. The previously approved limit was based on full capacity of a fully operational facility, but delays have upended plans to complete Trains 3 and 4 within 18 months of initial startup, as originally planned.
Also in August, the company announced that it had picked a joint venture (JV) of Fluor and JGC for its FEED contract for Phase 2. The JV is the contractor for Phase 1 of LNG Canada.