Gas Providers Look to Panama Canal Expansion

Social IssuesEnvironment

  • Author Laura Ginn
  • Published July 22, 2013
  • Word count 700

Originally, of course, the Panama Canal wasn’t constructed with the idea that tons of liquefied gas would be shipped through its slim passageway, but that is exactly what is happening today. Moreover, with the planned expansion of the Panama Canal, many gas providers hope that increasing shipments of natural liquefied gas will take the canal to parts of the world where it is needed to fuel everyday life.

The Panama Canal

Just slightly more than seventy-seven kilometres in length, the Panama Canal was completed in 1914. The shipping canal links the Atlantic and Pacific at a point midway between the Americas.

Previously, ships had to round the coast of southern South America down to its very tip where weather conditions and rough seas hampered the business of trade. The canal, consequently, cut shipping time and proved to be one of the greatest transportation feats of the twentieth century. After all, digging a canal in the tropic zone amidst plagues of mosquitoes and other insects was no easy endeavour, particularly when one considers the equipment they were forced to rely upon.

After nearly a century of use, the Panama Canal Authority launched an initiative in 2007 to expand the canal to accommodate more shipping traffic. Although in 2007, PCA had no idea that so much liquefied gas would be heading across the canal, the timing of the expansion and increasing exports of gas are a happy coincidence, particularly for gas providers!

Serendipity

According to a report by Rigzone, "the timing and convergence of two unrelated events – the Panama Canal expansion and the unlocking of North American shale resources – will have extraordinarily positive affects for U.S. producers and LNG terminal owners and their counterparts in Asia who purchase LNG". In fact, the report continues, "LNG shipments from the region coupled with the expansion of the Panama Canal could exemplify serendipity on a grand scale."

This type of happy coincidence doesn’t often happen, but gas providers are seizing the opportunity to make plans for shipments. The Panama Canal Authority, as a result of the recent U.S. expansion to export more shale gas, is likely to see many new LNG customers proposing to use the canal to deliver its shipments.

Shale Gas Abundance

OilPrice.com reported that "Two-thirds of the assessed, technically recoverable shale gas resource is concentrated in only six countries; the U.S., China, Argentina, Algeria, Canada and Mexico". The U.S. is number one in terms of "recoverable shale gas" deposits. In the past year, the country has been debating about how much of this new natural resource to keep for its own use (and keep energy prices low) and how much, if any, to export. Recently, the Wall Street Journal reported that the "U.S. Approves Expanded Gas Exports". Opening the door to more export means that more shipping will be required to transport the shale gas to waiting recipients. The abundance of shale is changing energy pictures for many nations the world over.

Canal Expansion

According to the Rigzone report, "the size determined for the new locks will allow over 80 percent of the world LNG fleet [LNG carriers as well as Very Large Gas Carriers (VLGCs)] to transit the Panama Canal." The expansion of the canal will allow the U.S. and its gas providers to tap into new and lucrative markets for gas. Canal de Panama reported that "he program consists in the construction of two new sets of locks - one on the Pacific and one on the Atlantic side of the Canal. Each lock will have three chambers and each chamber will have three water reutilization basins. The program also entails the widening and deepening of existing navigational channels in Gatun Lake and the deepening of Culebra Cut".

Seeking Alpha reported that the expansion "is due to be completed in early 2015". At a cost of about "5.2 billion," according to the report, will double "the tonnage of trade that can transit the Canal as well as a 160% expansion in the ship size that will be able to transit the Panama Canal." The timing, of course, from the U.S. point of view could not be better as it readies its gas to bring to world markets.

Laura Ginn appreciates the importance of seeking new sources of fuel for our gas providers.When you switch energy supplier with uSwitch.com you can learn about the current providers that are available to you.

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