When the Panama Canal expansion is completed, an estimated 80 percent of the world’s liquefied natural gas shipping fleet will be able to pass through it, which is good news for various players in the US LNG sector looking to move product to Asia, according to Oil & Energy Insider.
The remaining hurdle for exporters is the canal’s completion. Originally the expansion was to be completed by next month. However, various setbacks have moved the canal’s completion and open date to the end of 2015 or early 2016.
The expanded canal will provide larger opportunities for US LNG suppliers as they compete in the global marketplace. At its Sabine Pass facility in Louisiana, Cheniere Energy is already equipped to handle incoming LNG and plans on adding two liquefaction trains by the end of 2015, with two more to be built in the 2016-2017 timeframe.
According to the Panama Canal Authority, travel times for Cheniere from the Gulf Coast to East Asia could be cut from 63.6 days down to 43.4 days, reducing costs by 24 percent.
Shipping owners also stand to do well as a result of the expansion. Teekay LNG has already booked five-year contracts for two of its ships to carry US LNG. Golar LNG, which currently manages 13 ships, is building more ships and also building floating LNG liquefaction vessels. The ships will be able to liquefy natural gas at offshore fields, and ship directly from there.
At the end of 2013, Shell, General Electric and Clean Energy Fuels announced they would begin construction this year on the US’ first fuel station for liquefied natural gas-fueled cargo ships in Jacksonville, Fla.
In addition, in February Phillips 66’s board of directors approved a $3 billion investment in two Texas facilities, including a liquefied petroleum gas terminal in Freeport that could export 4.4 million barrels of butane or propane monthly by 2016.
Photo Credit: Panama Canal via Shutterstock