Shell completes acquisition of ARC Resources for $16.5bn

World’s largest LNG trader could be eyeing future LNG projects following ARC Resources acquisition.

What: Shell’s transaction to purchase Canadian oil and gas producer ARC Resources has closed significantly increasing its position in Canada.

Why: Shell is projecting a surge in LNG demand and has doubled down on Canada where it is operator of the country’s flagship project LNG Canada.

What Next: Shell could use ARC’s acreage to supply natural gas to new LNG projects as Canada looks to build an export terminal in the north or east of the country.

Shell has expanded its footprint in Canada completing the transaction to acquire Canadian oil and gas producer ARC Resources, the London-headquartered company announced on September 2.

The world’s largest trader of the super-chilled fuel announced in late April that it would buy the Canadian firm for $16.5bn. With the required shareholder, court and regulatory approvals, Shell has added 370,000 barrels of oil equivalent per day of combined natural-gas and liquids production.

Shell already had a position in the Montney basin, which spreads across northeastern British Columbia and northwestern Alberta, which it used to provide feedstock gas for LNG Canada, which Shell is operator of.

Shell forecasts that the acquisition will increase production growth by an annual rate of about 4% through 2030 compared with 2025.

“The acquisition increases Shell's exposure to long-duration, low-cost liquids production. Through disciplined integration, we will build on the strengths of both organizations to unlock the value that underpins this transaction,” Shell’s Chief Executive Officer, Wael Sawan said in a statement.

Shell’s position in Canada has wavered over the years. Shell was a pioneer in developing the country's flagship LNG project, LNG Canada, which it is operator of and holds a 40% stake. Malaysia’s Petronas possesses a 25% stake, Japan’s Mitsubishi holds 15%, and Korea’s KOGAS owns the remaining 15%.

The 14mn tonnes per year (tpy) project in Kitimat, British Columbia began producing super-cooled gas in June 2025. The facility shipped its 100th cargo in June. A final investment decision (FID) for Phase 2, which would double production capacity, is expected by the end of the year with first production expected in 2031. Canadian Prime Minister Mark Carney has the Phase Two expansion as a nation-building project to fast-track.

However, only a few days after agreeing to buy ARC Resources, reports emerged that Shell was looking to offload as much as 30% of its stake in LNG Canada. KKR, Apollo Global Management, and Blackstone have all been rumoured to be potential suitors to acquire part of Shell’s stake.

Meanwhile, over the past several months, the climate for investment in Canada’s LNG sector has improved. While Asian markets were always the ideal market for Canadian LNG, export to the European market are now planned.

Canada’s Ksi Lisims LNG project, which has not yet taken FID, inked 20-year LNG supply deals with Germany utility Uniper and Securing Energy for Europe (SEFE) with deliveries expected to begin in 2030 if the project gets the green light.

Canada’s rocky trade relationship with the US is pulling it closer to Europe. Momentum is building for an LNG export facility in the northern Manitoban community of Churchill, and there is an urge for the plant to be ready sooner rather than later. Any facility in Manitoba needs to be operating by 2030 if it is to get any federal support officials have indicated.

In August, studies were completed that found that ice class tankers can navigate Hudson Bay. The studies give the green light for shipping LNG through Hudson Bay’s icy waters year-round, significantly improving the project’s attractiveness to potential investors. Additionally, talks have been held on a pipeline to transport gas from western Canada to the Port of Churchill.

Moreover, also in August, First Nations group Kino Aski and Marinvest Energy Canada announced they are reviving plans to construct a major LNG project in Quebec. It would involve the development of an energy corridor to transport natural gas from western Canada to the Quebec port of Baie Comeau, where an LNG export terminal would be built.

Discussions have also been held on extending the energy corridor further east and developing an LNG export terminal on the Avalon Peninsula in Fermeuse, Newfoundland. Ottawa has also entertained the idea of converting Saint John LNG to an export terminal. 

The rosy outlook for Canada’s burgeoning LNG industry meshes well with Shell’s strategy, as the London-listed company is going all-in on LNG. In its LNG Outlook 2026, Shell forecast that global demand for the super-chilled fuel will rise by around 65% from 2025 levels to almost 700mn tpy by 2050.

Meanwhile in the near-term, Shell predicts about 180mn tpy of new LNG supply will enter the market by 2030, improving gas availability and affordability and opening up demand in new markets. Shell also believes about 200mn tpy of new supply will be required on top of projects already under construction.

As Shell bets big on LNG, its investment in Canada’s LNG sector through its acquisition of ARC resources remains consistent with its wider strategy that LNG demand will continue to grow as a bridge fuel and a critical source of strengthening energy security.