Canada is about to start producing its first liquefied natural gas (LNG) at the LNG Canada site in Kitimat. This new production gives Asian markets an alternative to LNG from the U.S., Australia, Qatar, and Russia. LNG Canada, located in British Columbia, is the largest LNG export project in Canada, with a $40 billion investment. Led by Shell, it has partners like PetroChina, Petronas, Mitsubishi, and KOGAS.

Facility Features

The facility will start with two liquefaction trains, producing 14 million tonnes of LNG annually, with plans for future growth. Its location on Canada’s west coast means shorter shipping routes to Asia compared to U.S. Gulf Coast terminals. LNG Canada also uses hydroelectric power, making it one of the lowest carbon-emission LNG facilities in the world. Construction began in 2019, and exports are expected to start by mid-2025. Natural gas will be transported via the Coastal GasLink pipeline from northeastern British Columbia. This project aims to strengthen the local economy and create jobs for both local and First Nations communities. Despite some environmental challenges, LNG Canada is a key part of Canada’s plan to become a trusted global LNG supplier, providing low-emission energy options amid energy security concerns.

Market Impacts

LNG from Canada is moving from a long-term vision to a real supply option, especially for Asian importers looking for a more balanced mix of sources. With construction nearing completion and production expected soon, this shift is influencing forward contracts and regional pricing dynamics. For traders, changes in supply locations affect pricing. The shorter shipping times from Kitimat to East Asia, compared to Gulf Coast terminals, lower shipping costs and decrease the arbitrage opportunities that benefited certain routes. This also prompts Asian buyers to rethink how much they value shipping distance during times of fluctuating freight rates. Those involved in Pacific shipping may want to reassess their reliance on Panama Canal constraints now that this new route avoids those challenges. Importantly, LNG Canada’s use of hydroelectric power places pressure on other LNG projects with higher emissions. As buyers become more cautious about sustainability, hydroelectric power can improve public perception and affect contract terms, especially in regions with strict carbon accounting regulations. Earlier, Bentley mentioned environmental challenges, but we are also seeing a trend in preferred project structures. Investors and traders may need to adjust the risk premiums for projects that rely on fossil-fuel-based liquefaction, as the Kitimat model offers clear comparisons. From a logistical perspective, the Coastal GasLink pipeline strengthens gas demand in a province conscious of production permits and environmental impacts. Cho’s involvement stabilizes this supply corridor, but it may also lead to different pricing between Canadian AECO and other delivery points like PG&E or Sumas. Price spreads are already reacting to weather patterns. Even minor disruptions in this new infrastructure will attract attention, especially if early exports coincide with winter demand in Northeast Asia. The first shipments will not just be symbolic; they will reveal how resilient the infrastructure is. Initial volatility around these loadings tends to be high, and the current low liquidity in Kitimat-related indices could lead to discomfort. This situation should be used to hedge against unexpected price changes. Readers should note that pricing trends for JKM and West Coast North American hubs are quietly shifting. These changes are subtle but steady. We are adjusting our forward positions with this in mind. Clear information from infrastructure completion and new long-term demand from Asia makes speculative short-term strategies riskier without quick exit options. Though this transition isn’t sudden, the timeline toward mid-2025 is close enough that strategies need to be dynamic. If volumes arrive on schedule and the carbon footprint remains low, we could see adjustments in some companies’ valuations. Not all of this is already factored into the prices. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now