LNG Canada is witnessing a significant uptick in liquefied natural gas (LNG) exports to Asia this month, coinciding with a major disruption in global supplies following the near-total shutdown of the strategic Strait of Hormuz. The Shell PLC-led project in Kitimat, British Columbia, has seen a remarkable increase in shipping activity, with eight vessels waiting to dock within the first 17 days of March alone. The departure of the Puteri Mahsuri marks a notable milestone, being the 60th cargo sent to Asia since the terminal began operations in mid-2025.
An Unexpected Surge in Exports
After a slow start to operations, LNG Canada’s export capacity is now being fully realised. In December, only four ships left the Kitimat terminal, but that number has increased dramatically, with ten vessels departing in January and eleven in February, according to analytics firm Kpler. This surge is a response to reduced LNG supplies globally, notably after conflicts initiated by the United States and Israel against Iran on February 28 led to the closure of the Strait of Hormuz, through which about 20% of the world’s oil and LNG usually flows.
Before the conflict escalated, Qatar, the world’s second-largest LNG exporter, halted production after Iranian attacks on its facilities, further tightening global supplies. The closure has also affected shipments from the United Arab Emirates.
Overcoming Initial Challenges
LNG Canada faced challenges during its initial six-month ramp-up period, where operations were hindered by various factors, including BC Hydro-related power outages. The terminal’s first vessel, the GasLog Glasgow, departed for Asia on June 30, 2025, but production has since been gradually increasing. As of March, LNG Canada has exported 550,280 tonnes, putting it on track to achieve nearly 85% of its maximum capacity by early spring. JP Lacouture, a principal insight analyst at Kpler, noted that six vessels are currently waiting to load LNG for export.
Despite the increase in shipping, LNG Canada has had to inform local residents about unscheduled flaring related to natural gas combustion, which has raised environmental concerns among climate activists. They argue that the focus on fossil fuels like LNG hampers the transition to renewable energy sources.
A New Era for Canadian LNG
As LNG Canada ramps up production, it is poised to surpass its export volume from the first six months of operation last year within just the first quarter of this year. Paul Hagel, a spokesperson for LNG Canada, emphasised that the facility is progressing safely and effectively, highlighting the complexities of bringing an LNG facility into full operation.
Analysts are closely watching the trends. Clark Williams-Derry from the Institute for Energy Economics and Financial Analysis reported that the United States exported a record 108.6 million tonnes of LNG in 2025, securing its position as the leading exporter. Canada, however, currently ranks 19th among 24 LNG exporting nations, with 2.2 million tonnes shipped last year.
Future Prospects and Expansion Plans
The ongoing geopolitical crisis is reshaping energy market assumptions, according to Rystad Energy, with lasting implications for supply stability. The journey from Kitimat to North Asia takes approximately ten days, significantly shorter than the twenty days required from the U.S. Gulf Coast. This geographical advantage may enhance Canada’s competitive edge in the LNG market.
In an effort to bolster Canada’s status as an energy powerhouse, Prime Minister Mark Carney has identified LNG Canada’s Phase 2 expansion as a key project for national interest, aimed at fast-tracking development. If realised, this expansion could double the terminal’s capacity by the early 2030s. RBC Capital Markets estimates that LNG Canada has exported approximately 4.6 million tonnes of LNG to Asia since operations began.
The Kitimat facility, located on Haisla Nation territory, is part of a broader trend in British Columbia, with other projects, such as Woodfibre LNG and Cedar LNG, also under construction. The Coastal GasLink pipeline is integral to supplying natural gas to LNG Canada, further solidifying its role in the region’s energy landscape.
Why it Matters
The rapid expansion of LNG Canada amidst global supply challenges highlights the shifting dynamics of the energy market, particularly in light of geopolitical tensions. As Canada seeks to enhance its position in the global LNG arena, the country’s ability to leverage its resources will be pivotal in shaping future energy landscapes. Moreover, the ongoing reliance on fossil fuels raises critical questions about environmental sustainability and the urgent need for a transition to renewable energy sources, underscoring the delicate balance between economic interests and climate responsibilities.
