US, Panama to cash in on sale of gas to Asia market

Bloomberg/Fuel Fix:

When the newly widened Panama Canal opens in 2015, it will handle an estimated 12 million metric tons of liquefied natural gas annually, a cargo planners didn’t even envision when starting the $5.25 billion expansion in 2007.

LNG carriers will cross the 48-mile waterway 350 times a year, and voyages to Asia from the U.S. will cost 24 percent less than longer routes, according to calculations from the canal authority. The expected 12 million tons, assuming half the transits are hauling cargoes, would be equal to about 5 percent of the world’s trade in 2012, Fearnley Consultants AS estimates.

The U.S., now the world’s largest producer of natural gas because of the extraction of fuel from shale rocks, will account for much of that traffic as it becomes the third-largest exporter of LNG by 2020, Morgan Stanley estimates. With American energy independence now at a 27-year high of 86 percent, the route will boost exports to Japan, offsetting nuclear-power generation lost after the earthquake and tsunami in March 2011.

“There’s a huge market in Asia, a huge resource in the United States, and the Panama Canal is an enabler of this trade, reducing the cost of getting LNG to the market,” said Sverre Bjorn Svenning, an analyst at Fearnley in Oslo, who managed a research project a decade ago for the waterway’s expansion. “We didn’t see this coming.”

Construction to double the canal’s capacity is 64 percent complete, the Panama Canal Authority said on its website Sept. 10. The expanded waterway will be able to handle ships as long as 1,200 feet and as wide as 160 feet, compared with the current 965 feet and 106 feet, data on the website show.
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I think Japan and China are both huge markets for LNG shipments.  This is going to be a boost for the Texas economy where gas wells currently are not being drilled because of the low price.