Shell’s LNG Canada Faces Technical Setbacks During Ramp-Up at Kitimat Facility

Shell-led LNG Canada is encountering technical challenges as it ramps up production at its liquefied natural gas plant in Kitimat, British Columbia, the first major LNG export facility in Canada and on North America’s west coast. The project provides direct access to Asia, the largest LNG market globally.

The facility, expected to process about 2 billion cubic feet of gas per day (bcfd) when fully operational, has so far been operating below half capacity, according to industry sources. Technical problems have been reported with Train 1, including issues with a gas turbine and the Refrigerant Production Unit (RPU).

Despite its July 1 startup, Western Canadian natural gas prices remain depressed amid oversupply. The Alberta Energy Company (AECO) hub closed at $0.22 per mmBtu on Tuesday, significantly lower than the U.S. Henry Hub benchmark at $3.12.

Ship tracking data from LSEG revealed at least one LNG tanker, Ferrol Knutsen, diverted from Kitimat to Peru without loading cargo, while other tankers remain nearby. So far, four cargoes have been exported from the facility, with another shipment expected soon.

LNG Canada, a joint venture between Shell, Petronas, PetroChina, Mitsubishi Corp, and KOGAS, will eventually have the capacity to export 14 million metric tonnes per annum (mtpa). A company spokesperson acknowledged potential operational setbacks during the ramp-up phase but said export frequency will rise, aiming to load one cargo every two days in steady operations.

The $40 billion project, nearly seven years in the making, is seen as a potential boost for Canadian natural gas markets, offering a new outlet to Asia amid growing global LNG demand.