TC Energy Eyes Return to Ksi Lisims LNG Pipeline as Global Gas Supply Tightens

TC Energy Corp. CEO Francois Poirier told investors this week that the company could be open to returning to the Prince Rupert Gas Transmission (PRGT) pipeline project in British Columbia, a pipeline it sold to the Nisga'a Nation and Western LNG just two years ago. The renewed interest comes as the ongoing conflict in the Middle East, particularly the virtual shutdown of the Strait of Hormuz, has fundamentally altered the global supply picture for liquefied natural gas.

"We might be, but we have not had those conversations, and it would depend on what other opportunities we have at the time," Poirier said when asked whether TC Energy would consider re-engaging with the PRGT project. The pipeline, which carries an estimated capital cost of $10 billion, would transport natural gas from the Western Sedimentary Basin in northeast B.C. to the Ksi Lisims LNG export facility planned for Nisga'a treaty territory near Prince Rupert.

The Investment Case Has Changed

The Ksi Lisims LNG project, co-developed by the Nisga'a Nation, Western LNG, and Rockies LNG, is designed to produce up to 12 million tonnes of LNG per year from two floating production units built by Samsung Heavy Industries. Commercial operations are anticipated in late 2028 or 2029. The project received both a B.C. Environmental Assessment Certificate and a positive federal Decision Statement, and Prime Minister Mark Carney added both the terminal and the PRGT pipeline to his government's list of "nation-building projects" last November, calling them crucial to Canada's energy future and projecting $4 billion per year in GDP contribution.

What has changed since TC Energy divested the pipeline in March 2024 is the geopolitical landscape. Before the U.S. and Israeli strikes on Iran, approximately one-fifth of global oil and LNG supplies moved through the Strait of Hormuz. Qatar, the world's second-largest LNG exporter, halted production after Iranian attacks on Qatari facilities. The resulting supply squeeze has driven Asia-Pacific LNG spot prices up roughly 80% in March 2026 alone.

Canada's Shipping Advantage to Asia

The economics of Canadian LNG exports to Asia are compelling on a structural basis, independent of the current crisis. An LNG carrier departing Kitimat or Prince Rupert reaches major Asian buyers in approximately 11 days at a shipping cost below $1/MMBtu. By comparison, U.S. Gulf Coast LNG takes roughly 24 days via the Panama Canal at approximately $2/MMBtu, 35 days through the Suez Canal at $2.80/MMBtu, or 40 days around the Cape of Good Hope at $3/MMBtu.

LNG Canada's Phase 1 facility in Kitimat is already demonstrating the demand. After only four vessels departed in December 2025, the terminal ramped to 10 shipments in January and 11 in February 2026. In the first quarter of 2026 alone, LNG Canada is set to exceed the total export volume from its initial six months of operations. Phase 2, which would double capacity to roughly 28 million tonnes per year by the early 2030s, has been added to the federal fast-track list.

A second major export terminal at Ksi Lisims would add another 12 Mtpa, giving Canada combined capacity approaching 40 Mtpa and establishing the country as a top-five global LNG exporter. Japan, South Korea, and China, which collectively account for the majority of Asian LNG imports, are actively seeking supply diversification away from Middle Eastern sources. Canada offers not only shorter shipping routes but regulatory stability and a consistent government framework for long-term offtake agreements.

Western Canadian Select and the Oil Sands Factor

The pipeline conversation extends beyond natural gas. Alberta's oil sands hold the world's third- or fourth-largest proven crude oil reserves at approximately 167 billion barrels, according to the most recent assessment by McDaniel & Associates. At current production rates of roughly 3.5 million bpd from oil sands alone, those reserves represent over 140 years of supply, per BMO Capital Markets estimates.

Canada currently ships approximately 4.1 million bpd to the United States, accounting for 62% of total U.S. crude imports in 2024, valued at $124 billion. A significant portion of that crude is refined and re-exported through U.S. Gulf Coast ports. The completion of the Trans Mountain Expansion (TMX) in May 2024, which nearly tripled pipeline capacity to 890,000 bpd to Canada's Pacific Coast, has begun diverting volumes directly to Asian buyers. This more direct route eliminates the intermediary markup and reduces transit time considerably compared to shipments routed through the Panama Canal from Gulf Coast terminals.

Western Canadian Select, the benchmark for heavy oil sands crude, has traded in a range of $12 to $14.45/bbl below WTI so far in 2026. The discount narrowed by approximately $1.70 following the onset of the Middle East conflict, as the closure of the Strait of Hormuz created a global shortage of heavy and sour crude grades, precisely the type Alberta produces.

The Scale-Up Question

Industry analysts have noted that Alberta's oil sands and B.C.'s Montney natural gas formation represent one of the few global energy basins with the capacity to scale production meaningfully in response to long-term supply agreements. Unlike conventional fields that deplete rapidly, oil sands operations are designed for multi-decade production horizons, providing the kind of supply certainty that Asian buyers are increasingly willing to pay a premium for.

The question for TC Energy and the broader Canadian energy sector is whether the current geopolitical environment, combined with federal fast-tracking and strong Asian demand, creates sufficient investment certainty to commit to projects with 10-figure capital requirements. Poirier's comments suggest the calculus is shifting, even if formal negotiations have not begun.

The PRGT pipeline is expected to reach a final investment decision in the first half of 2026. Construction has already begun on portions of the route, with nine permanent bridges, 47 km of access roads, and 42 km of right-of-way clearing completed to date.