Posted on 05/06/2015 5:17:28 AM PDT by thackney
HOUSTON — Panama is well positioned to serve as a distribution hub for the liquefied natural gas that will power Central America in the future, the country’s officials told attendees at Houston’s Offshore Technology Conference on Tuesday morning.
The biggest advantage the country has is its namesake canal, an overseas shortcut linking the Atlantic and Pacific Oceans, panelists said at the breakfast talk. The canal is currently too small to handle LNG tankers, but a multi-billion dollar expansion is in the works that will allow all but the largest gas-carrying ships to pass.
The massive construction project was interrupted by a dispute with contractors in 2014, but is now on track to completed in 2016.
“The expansion as of today is 88 percent completed,” said Ambassador Juan Sosa of Panama’s Consulate General in Houston.
Few imagined that the U.S. would be exporting natural gas when the larger canal was first envisioned, he said, but the fuel transport ships will be a big part of the project’s maritime traffic in the future.
When completed, the canal could also leave Panama as a nexus for natural gas in the region, said Víctor Carlos Urrutia Guardia, Panama’s secretary of energy. Plans for adding natural gas infrastructure remain far off, he said.
“With [LNG] actually becoming a market, there might need for a place to do storage, and Panama might be exactly in the proper place to do that,” Urruita said. “We are just throwing the idea out there.”
Other talk about natural gas powered electricity generation within Panama is closer to breaking ground. Panama’s electricity demand is expected to grow by about 7 percent annually in the coming years, and that new generation will increasingly come from natural gas, Guardia said.
He echoed many other energy ministers in Central and South American countries that have increasingly looked to natural gas to meet the electricity generation needs of their growing and modernizing economies.
“Panama has to join the future, and we think that the future is in gas,” Guardia said.
http://www.timera-energy.com/panama-canal-upgrade-impact-on-the-lng-market/
The Panama Canal is synonymous with the global shipping industry, facilitating over 14000 transits per year. But currently it is not a significant feature of the global LNG market. This is because only 21 of the 370 LNG vessels currently in service can pass through the canal. However the Panama Canal expansion project will allow over 80% of LNG vessels to pass through from late 2015 when it is due to be completed.
When the $5.25b project was approved in 2006, the consensus view was for a limited impact on global LNG trade. The key beneficiary of the expansion was expected to be the owners of Trinidad and Tobago cargoes, given canal transit significantly shortens the trip to Asia.
But the rapid development of plans to build large volumes of LNG export capacity on the US Gulf Coast means that the canal expansion project is set to have a far greater impact on the LNG market than previously envisaged. In addition, it may increase the competitiveness of lower volume existing trade routes (e.g. Trinidad to Chile) or open up new ones (Peru to Europe). Panama is also looking to start importing LNG in 2013.
At link: Comparison of shipping distances and voyage times for cargoes delivered to Japan
Panama Canal Authority announces proposed LNG tolls
http://www.icis.com/resources/news/2015/01/07/9851299/panama-canal-authority-announces-proposed-lng-tolls/
07 January 2015
The Panama Canal Authority has released the proposed LNG tolls to take effect following its expansion which will allow LNG tankers through the passage and for the first time directly between the US Gulf and Asia.
The expanded canal locks are expected to be operational by the first quarter of 2016.
The canal authority has created a tiered rate system, based on the cubic metre capacity of the vessel, both on a ballast and laden basis. This differs from tariffs set at the competing Suez Canal, which is based on net tonnage and varies between Moss and membrane-type vessels.
Fees are tiered to cover the first 60,000cbm of LNG aboard the vessel, with two subsequent tiers of 30,000cbm in volume, and a final tier to cover the remainder.
For one example, it will cost $380,480 for a 173,000cbm fully laden vessel to transit the canal for one way. If the same size carrier were ballast, it would cost $334,830.
A discount would apply if the laden vessel goes through the canal once and then returns to make its ballast trip through the canal within 60 days, so a round-trip estimate through the canal twice would equal $680,480, after applying an additional ballast of $300,000.
According to an estimate by the consultancy Wood Mackenzie, this would mean a shipping cost of about $1.75/MMBtu from the US Gulf to Japan through the Panama Canal. This assumed a dual fuel diesel electric propulsion vessel of about 174,000cbm traveling at 19 knots an hour and with a charter rate of $70,000/day. This compared with Wood Mackenzie’s estimated shipping cost of just above $2.50/MMBtu from the US to Japan around the Cape of Good Hope.
Multiply that times ten, build pipelines to distribution points all OVER SA .. north and south ... and get back on their feet
But that would take 10 years and therefore shouldn’t be done. /sarc
I think you under estimate the cost of building the pipelines thousands of miles through mountains.
Once you go through the expense of converting natural gas to LNG and loading it on the ship, plus the cost to unload and vaporize, traveling extra miles on the same ship, same load, is not that expensive.
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