LNG Canada greenlights $33 billion expansion despite ongoing flaring issues

KITIMAT — The consortium behind Canada's largest liquefied natural gas facility has approved a $33 billion expansion to double its production capacity.

Shell and its partners Petronas, PetroChina, Mitsubishi and Korea Gas announced the final investment decision for LNG Canada's second phase on Sept. 28. Prime Minister Mark Carney touted the project in Vancouver on Monday.

"Canada is building big again," Carney said. "Today's investment, as you know, over $30 billion in LNG Canada 2, will make LNG Canada the second-largest facility of its kind in the world."

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The expansion will add two processing units, increasing the Kitimat plant's capacity from 14 to 28 million tonnes of LNG per year. Construction will begin immediately, creating about 4,000 jobs at the plant and another 2,000 for pipeline work, the company said.

The decision comes as the first phase, which began operations last year, continues to grapple with equipment problems. An integrity issue with the facility's flare stack was identified during commissioning in late 2024.

For months, Kitimat residents reported excessive noise, black smoke, a towering flame and unidentified chemical smells as operators tried to control the flare. The facility has been in non-compliance with its permits since.

"There is an operational issue with the flare design where at very low flow rates, the gas being burned moves from the tip of the flare to within the flare tip itself, causing a hot spot in the metal there," Teresa Waddington, a senior executive at LNG Canada, previously told The Narwhal.

To prevent damage, the company must send extra "assist gas" through the system, amounting to about 10 per cent of all gas sent to the plant last year. LNG Canada flared 350 million cubic metres of gas in 2025, making it a top global source of LNG flaring emissions.

The company plans to redesign the faulty equipment in 2028. In the meantime, it is seeking an amendment to its air discharge permit to allow for continued higher levels of flaring.

LNG Canada and the BC Energy Regulator maintain emissions are not harmful to human health, but many residents worry the combined output from the LNG plant and Kitimat's aluminum smelter may impact respiratory conditions.

"I wish that they could acknowledge [emissions from the plant] could be a problem," one young resident, who asked not to be named, told The Narwhal. "We're gonna have to be around the flaring either way."

The BC Energy Regulator said the flaring instances "have not had a measurable impact on local air quality."

The expansion also requires the Coastal GasLink pipeline to double its capacity by building five new compressor stations. TC Energy confirmed it is moving forward with its Phase 2 of the pipeline.

"Thanks to LNG Canada's decision today, TC Energy is moving forward with its own multi-billion-dollar Phase 2 of the Coastal GasLink pipeline," Carney said. "That means doubling capacity, creating an additional 2,000 jobs."

The original pipeline construction, completed in 2024, faced widespread opposition and RCMP raids in support of Wet'suwet'en Hereditary Chiefs, who argued the project lacked their free, prior and informed consent.

LNG Canada's announcement highlighted an equity agreement with five First Nations neighbouring the operations: Gitga'at Nation, Gitxaała Nation, Haisla Nation, Kitselas First Nation and Kitsumkalum First Nation. The company called it "one of the largest Indigenous ownership positions in major Canadian infrastructure."

The company said the expansion could generate more than $50 billion in government revenues over the project's 40-year life.

"This is a very big deal indeed," BC NDP leader David Eby said at the announcement. "It will change lives, here and around the world."

With files from The Narwhal