Panama Canal Expansion Will Help Provide a World Market for US Natural Gas

Panama Canal Expansion Will Help Provide a World Market for US Natural Gas

For nearly 100 years, the Panama Canal has provided a faster and safer path for goods to be shipped between Asia and North America.  However, with ships growing wider and deeper to carry more goods per trip, the Canal has been forced to expand.  Six years ago, Panama started a $5.25 Billion dollar expansion so that vessels up to three times larger can carry goods along the 48-mile route.

Meanwhile in the United States, technological advances in the drilling industry have allowed us to tap into some of the largest natural gas reserves in the world.  Though natural gas prices in the United States have steadily declined since 2008, global demand and global prices are rising.  Previously a local commodity, natural gas is now being transformed into a liquid state, becoming Liquefied Natural Gas (LNG), making it easier to be shipped overseas and sold at higher prices.  Therefore, shale gas in the US combined with an expanded Panama Canal provides an opportunity for natural gas to enter the global marketplace. This could mean pricing mirroring the oil market, thus eliminating the current low price advantage of the domestic stock.

Jorge Luis Quijano, the Panama Canal Administrator, promises that the expanded passage through Panama will create new markets to exploit bigger ships and deeper ports (Washington Post). The new locks will help accommodate another 2,600 ships, oil tankers and LNG carries.  Previously, only 10% of the world’s 369 LNG-carrying vessels could pass the canal.  However, the expansion will accommodate up to 80% of the fleet.  Expected completion is June 2015.

For more information on the opportunities the expansion can bring please visit this link.

Two cargo ships entering Panama Canal’s Gatun Locks. Ships are raised up to 87 feet to pass through the different lanes of the canal. Image courtesy of PRWeb.

/ Energy Buzz, National, Texas

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