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LNG Canada confirms Chinese steel for its Phase 2 expansion in Kitimat, B.C., citing a lack of Canadian fabrication yards for specialized modules.
LNG Canada has confirmed that it will use Chinese steel for its Phase 2 expansion project in Kitimat, British Columbia. The decision, announced following the company's Tuesday go-ahead for the expansion, is driven by a lack of domestic fabrication capacity, according to an LNG Canada spokesperson. The expansion aims to double the facility's capacity by the early 2030s.
No Canadian Fabrication Yards Available
In a statement to CTV News, an LNG Canada spokesperson said the choice is not a preference but a necessity. The spokesperson explained that the challenge is not a preference for offshore steel, but the specialized fabrication capability required for modules of this scale and complexity. They added that there are no fabrication yards in Canada that can manufacture and deliver the additional modules required for Phase 2.
The company also emphasized that marine access is essential. Modules of this scale cannot be transported to Kitimat by road; they must be fabricated at a facility with direct access to tidewater and shipped by sea. Once in Kitimat, they can be received through LNG Canada's existing module offloading facility, moved into position, and integrated into the plant.
Canadian Steel for Pipeline Compressor
Despite the reliance on Chinese steel for modules, LNG Canada noted that the majority of steel used in construction of a pipeline compressor for Phase 2 will be Canadian-sourced. Coastal GasLink is targeting almost 15,000 tonnes of steel from Canadian suppliers or mills, representing approximately 70 per cent of the steel required for that work, according to a spokesperson.
The Phase 2 expansion, announced on Tuesday, will double the facility's capacity by the early 2030s when the project is expected to be completed. Over $30 billion in LNG Canada Phase 2 will make LNG Canada the second-largest facility of its kind in the world, said Prime Minister Mark Carney during Tuesday's news conference. Carney also said the expansion will create thousands of new jobs while connecting Canadian energy with global markets.
Project Details and Joint Venture
Phase 2 will create two new processing units, also referred to as trains, at the Kitimat facility, increasing production from 14 million tonnes to 28 million tonnes. The expansion will also include the addition of a new LNG storage tank, condensation tank, loading berth, and expanded processing systems.
LNG Canada exports natural gas that is piped from northwestern Alberta and northeastern B.C. to the plant in Kitimat, where it is turned into a liquid state and then loaded onto specialized tankers bound for Asian markets. LNG Canada is a joint venture between Shell, PetroChina, Malaysia's Petronas, Japan's Mitsubishi Corp., and South Korea's KOGAS.
The decision to import Chinese steel for the modules highlights the challenges of building large-scale energy infrastructure in Canada, where specialized fabrication capabilities for such massive components are limited. The company's reliance on overseas steel for the modules contrasts with its efforts to source steel domestically for other parts of the project, such as the pipeline compressor.
The expansion is expected to bring significant economic benefits to the region, including job creation and increased energy exports to Asian markets. However, it also raises questions about the balance between domestic sourcing and the practical constraints of manufacturing and transporting oversized modules. LNG Canada's existing module offloading facility in Kitimat is designed to handle these large components, enabling the integration of the new trains into the plant.
As the project moves forward, LNG Canada will continue to work with suppliers and stakeholders to ensure the timely delivery of the modules and other components. The company has not provided a specific timeline for when the Chinese steel will be delivered or when the modules will be fabricated, but the expansion is expected to be completed by the early 2030s.
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