LNG Canada Produces First LNG; Export Shipment Due Later This Month

LNG Canada has officially produced its first liquefied natural gas for export, marking a historic milestone for Canada’s energy sector. The $40 billion project, located in Kitimat, British Columbia, is the country’s first large-scale LNG export terminal with direct access to the Pacific Ocean. Led by Shell and supported by Petronas, PetroChina, Mitsubishi, and Kogas, the facility represents a new chapter for Canadian natural gas — one focused on global markets, particularly Asia.

Traditionally, Canadian natural gas exports have flowed south to the United States via pipelines. But LNG Canada changes that dynamic. By shipping from the West Coast, the project reduces travel time to key Asian markets compared to U.S. Gulf Coast terminals. The first shipment is expected to leave aboard the Gaslog Glasgow on June 29, just days after the initial liquefaction at the plant.

The plant’s first processing unit, Train 1, has a nameplate capacity of 5.6 million tonnes per year. It began operations at reduced capacity due to commissioning issues, but full production is expected soon. Once both liquefaction trains are operational, the facility will be capable of exporting up to 14 million tonnes annually — a volume that could significantly reshape Canada’s role in the global LNG market.

A key competitive edge for LNG Canada is its pricing structure. Unlike many global LNG exporters that tie contracts to the U.S. Henry Hub price, LNG Canada uses the AECO index — Canada’s domestic benchmark — which tends to trade at a significant discount. This could translate into better margins and more attractive pricing for buyers in Asia.

Momentum is already building. Petronas, one of the project’s key backers, has secured its first buyer in Japan. The inaugural cargo will be delivered to Toho Gas in July, signaling that long-term demand from Asia remains strong.

The broader implications for the North American energy market are also significant. In 2024, Canada exported an average of 8.6 billion cubic feet of gas per day to the U.S. With LNG Canada now operational, some of that volume is expected to be redirected to overseas buyers, potentially reducing dependence on the U.S. market and improving pricing power for Canadian producers.

At the heart of this effort is Coastal GasLink, the pipeline that delivers natural gas from northeast British Columbia to the LNG terminal. Operated by TC Energy, the pipeline plays a vital role in enabling Canada’s pivot to global LNG exports. The federal and provincial governments view the project as a blueprint for future developments, with the Woodfibre and Cedar LNG projects also scheduled to begin operations in the next few years.

Environmental considerations remain part of the equation. LNG Canada has touted its low-carbon design, which includes hydro-powered refrigeration systems intended to minimize emissions. The facility is expected to emit about half the carbon dioxide per tonne of LNG compared to the global average. However, even with its cleaner profile, the project’s emissions are still significant, posing challenges to British Columbia’s climate goals.

Looking ahead, the focus will turn to optimizing Train 1 and completing Train 2. The next phase could see LNG Canada expand beyond its initial 14 mtpa capacity, potentially doubling output if demand remains strong. Such growth would cement Canada’s position as a key LNG supplier to Asia, offering shorter shipping routes and competitive pricing.

The launch of LNG Canada represents more than just the start of exports — it marks Canada’s arrival on the world LNG stage. Whether this becomes a one-off success or the foundation of a broader energy strategy will depend on market dynamics, environmental policy, and political will in the years ahead.