TC Energy Awards Coastal GasLink Phase 2 FEED to Tecnicas Reunidas as LNG Canada Eyes 5 Bcf per Day Capacity

TC Energy and its Coastal GasLink subsidiary have taken a decisive step toward doubling the capacity of the 670-kilometer natural gas pipeline that runs from the Dawson Creek area of northeastern British Columbia to the LNG Canada export terminal in Kitimat. The award of a front-end engineering and design (FEED) contract to Tecnicas Reunidas Canada E&C signals that detailed planning is now underway for five new compressor stations that would push pipeline throughput from approximately 2.1 billion cubic feet per day (Bcf/d) to more than 5 Bcf/d.

Scope of the Phase 2 Expansion

The proposed Phase 2 scope centers on compression infrastructure. Each of the five new compressor stations would be equipped with 30-megawatt compression turbines, alongside modifications to existing and planned facilities along the pipeline corridor. Unlike the original pipeline construction, which required clearing a new right-of-way through mountainous terrain and hundreds of watercourse crossings, the expansion leverages the existing 48-inch diameter pipeline and its established route.

The FEED study will evaluate detailed engineering parameters, confirm cost estimates, and establish the construction schedule. These outputs are essential inputs for the final investment decision (FID) that LNG Canada and its joint venture partners are expected to make by the end of 2026.

New Commercial Framework

In March 2026, TC Energy and Coastal GasLink entered into comprehensive commercial agreements with LNG Canada that formalize the business terms under which Phase 2 would proceed. The agreements cover capacity commitments, toll structures, and the division of responsibilities between the pipeline operator and the LNG facility owner.

A notable feature of the proposed expansion is the execution model. If the project proceeds, both LNG Canada and Coastal GasLink would share responsibility for construction management, a departure from the original project where TC Energy served as the sole builder. The original Coastal GasLink project, which entered commercial service in 2023, was completed at a final cost of approximately $14.5 billion, well above its initial $6.6 billion budget. The shared execution model for Phase 2 reflects lessons learned and a mutual desire to improve cost certainty.

LNG Canada Phase 2 Context

The pipeline expansion is inextricably linked to Shell-led LNG Canada’s plans for a second processing train at its Kitimat facility. LNG Canada’s Phase 1, which comprises two liquefaction trains with a combined capacity of 14 million tonnes per annum (MTPA), shipped its first cargo in June 2025 and brought its second train online in November 2025. The facility has since loaded more than 20 cargoes for export to Asia-Pacific markets.

Phase 2 would add two more trains, potentially doubling the facility’s output to approximately 28 MTPA and establishing Kitimat as one of the largest LNG export terminals in the world. The joint venture partners, which include Petronas, PetroChina, Mitsubishi Corporation, and Korea Gas Corporation (KOGAS), must each approve the FID.

Market Pricing and Demand Signals

The timing of the expansion coincides with strong LNG market fundamentals. Asian spot LNG prices have remained elevated, supported by ongoing demand growth from China, India, and Southeast Asian economies transitioning away from coal-fired power generation. Global LNG demand is expected to outpace supply additions through the late 2020s, providing a favorable contracting environment for new export projects. Benchmark commodity pricing, including Brent crude near $101 per barrel and WTI around $96 per barrel as of April 2026, underpins strong netback economics for LNG producers. Current crude and natural gas benchmarks are available on our price dashboard.

For Canadian natural gas producers in the Montney and Deep Basin formations who would supply the expanded pipeline, the project represents a transformational shift in market access. Historically constrained to low-priced domestic markets, these producers would gain a direct pathway to premium international buyers through the Kitimat terminal.

Regulatory and Timeline Considerations

The Phase 2 expansion still requires regulatory approvals and environmental assessments in British Columbia. However, the existing pipeline right-of-way and the in-place relationship with Indigenous communities along the corridor are expected to streamline the permitting process compared to the original project, which faced significant regulatory and social challenges.

If FID is achieved by late 2026 as targeted, construction of the compressor stations could begin in 2027, with commissioning aligned to LNG Canada’s Phase 2 startup timeline, tentatively projected for the early 2030s. For ongoing coverage of Canadian LNG developments and pipeline infrastructure, visit our news section.

The Coastal GasLink Phase 2 FEED award marks a clear signal that Canada’s LNG ambitions are expanding. With global demand for cleaner-burning natural gas on the rise and Canadian producers seeking access to international pricing, the project could reshape the economics of the western Canadian gas industry for decades to come.