Skip to Content

Canal prepares for LNG ship transit boom

by December 21, 2016 General

In the first 50 years of operation of the Panama Canal, the core of its business consisted of bulk cargo ships. However, when the use of containers was consolidated by Malcolm McLean, designing it for use for the first time in April 1956 for a voyage between New York and Houston, container ships displaced bulk carriers, and both segments have been maintained as best canal customers.

The start of operations of the expanded Canal on June 26, 2016, coincided with the start of LNG exports from the United States, mainly to Asian markets. The implementation of fracking of enormous natural gas deposits found in Texas and other regions of the United States has allowed the exploitation of shale deposits and made available to industrialized countries what is considered the most clean energy source in the world.

LNG exploitation has placed the United States as the world’s leading producer, followed by Qatar and Australia. But, according to the Australian Minister of Resources and Energy, Josh Frydenberg, the enormous investment that this nation makes in LNG exploitation will allow it to move Qatar to second place in the next five years.

The first LNG export was made by the United States in February 2016 to Brazil.

On July 25, 2016, almost a month after the opening of the third set of locks, the first transit took place of an LNG vessel in the expande canal. It was Shell’s “Maran Gas Apollonia” from Shell International Trading & Shipping Company, which had sailed from the Sabine Pass LNG terminal in the US Gulf to Asia. Until then, the limitations of the old locks did not allow the transit of those ships, which had to use a much more expensive alternative route.

The 22.8-day savings on the Panama Canal route, instead of the Strait of Magellan, earned the “Maran Gas Apollonia” the first Green Connection medal awarded by the ACP to companies that make large savings in CO2 emissions by using the Panama Canal greenway.

Another historic milestone occurred on November 14 when the LNG ship “Esshu Maru”, the first of three Moss type ships, transported, for the first time under a long-term contract, that kind of fuel from the LNG plant in Freeport, Texas, to Chubu Electric Power Co. of Japan. It is the first of three ships of that class that will provide such service. The spherical design of Moss tanks is considered highly reliable and flexible for the transport of that product.

The Panamanian route not only saves time, money and CO2 emissions of US LNG exports; It also saves 6.3 days of transit to the exports of production plants in Trinidad and Tobago to Chile.

“Promising future” Panama Canal administrator, Jorge Luis Quijano, underscored the “promising future” opened for the Canal by this new type of cargo.

Administrator Quijano told The Bulletin that in 2017 the LNG flow will be substantially increased on the Panamanian route. Demand for natural gas has been boosted by the increase in crude oil prices.

“In 2017 we estimate that some 133 ships with liquefied natural gas will be transiting the Canal, generating revenues of $44 million,” he added, noting that this includes ships loaded and in, ballast as the Panama Canal will gradually increase the lock width from the current 49-meters, to 51.2 meters, allowing larger Q-Flex vessels to transit,these vessels also serve the route between the US Gulf and Asia, that are not able to use the Panamanian route for now.

This temporary limitation generated in 2014 the concern of the Minister of Economy, Commerce and Industries of Japan, Ryo Munami. However, Quijano explained that in meetings in Japan, England, Greece, Singapore and other regions, it was explained that this limitation would be temporary (see The Bulletin, May 5, 2014).

“Gradually we will increase the width from 49 meters to reach 51.2 meters,” he said. With a 50-meter width, Q-Flex ships can carry up to 38% more LNG than the 49-foot models. The ACP has designed a training program for the safe and efficient transit of this new customer segment.
Source: The Bulletin Panama