Expanded Canal boosts traffic to Asia

Adrienne Blume, Editor, Gas Processing and Executive Editor, Hydrocarbon Processing

The expansion project, which broke ground in 2007, is scheduled for a June 26 opening. Its debut is fortuitous for US gas producers, as the shale boom has sent domestic supplies surging and drillers are looking to send their fuel to markets abroad.

Panama government officials estimate that 20 MMtpy of LNG will pass through its newly-expanded waterway, which equals nearly one tanker per day. Most of the supplies will travel to Asia, which is the world's largest LNG-importing region. The economies of South Korea and Taiwan, which are heavily tied to trade, stand to benefit greatly from the $5.3-B expansion. Japan and China are also expected to import LNG through the enlarged canal.

The expansion project, which broke ground in 2007, is scheduled for a June 26 opening. Its debut is fortuitous for US gas producers, as the shale boom has sent domestic supplies surging and drillers are looking to send their fuel to markets abroad.

At present, the Panama Canal can accommodate ships carrying 5,000 containers, but the expansion will allow vessels with 14,000 containers to pass. The new locks will be able to accommodate vessels up to 160 feet wide and 1,200 feet long, which means that ships carrying LNG will be able to gain access. The larger waterway will help US gas producers avoid the longer trip around South America, cutting transits to Asian markets and thereby increasing profits.

The volume projected by the Panama Canal Authority represents about 8% of global LNG trade, which is equivalent to nearly 300 ships a year. Two shipping alliances—CKHYE and G6—have already announced plans to upgrade the size of the ships they use on the US-to-Asia route on the Panama Canal. The Canal expects its total revenues to increase 17% in 2017, to $2.8 B, as a result of the expansion.

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