Panama Canal Expansion?

How a Mega Project Snafu Could Snarl America’s Gas Exports.

America’s energy companies want to sell LNG(liquefied natural gas) to Asia.  This will boost their profits and raise the price of gas – currently there is an oversupply, and the price is low.  The plan has run into a major sang, though.

The consortium building the third set of locks on the canal, which is the biggest part of the $5 billion canal expansion, said it can’t continue work unless the Panama Canal Authority picks up the tab for about $1.6 billion in cost overruns. The construction of the new locks is a $3 billion contract, won by an international consortium with firms from Spain, Italy, Belgium, and Panama. 

Currently only 6% of LNG-carrying ships can fit through the canal; after the expansion 90% will be able to transit it.

Japan, in particular, is eager to tap into the U.S. natural-gas boom: Since the 2011 accident at the Fukushima nuclear power plant, Japan has been importing energy at high prices. Japanese shipbuilders plan to spend about $18 billion on new LNG tankers through the end of the decade, which, needless to say, would require the expanded canal to shave shipping times. 

How will all this play out?  The companies have 21 days to respond to Panama’s declaration that the project must be finished, and that the companies must pick up the tab for the cost overruns.  Will the project stay on track to open (late) in a year, or will does delay foretell the end of the dreamed of expansion?

Global Shipping Routes and the “New” Panama Canal

$300 Million Harbor Deepening Moves to Water – ABC News.

The State Ports Authority wants the harbor channel deepened from 45 feet to 50 feet so the port can handle larger container ships that will routinely call when the Panama Canal is expanded.

With the canal expansion set to open in 2014, harbors and ports across the US are preparing for the new ships: Post Panamax vessels.  Already 30% of shipping vessels are the giant Post-Panamax type.

How will shipping costs change?  What affect will that have on consumers?

And how will this new volume of containers be transported away from port?  According to GlobalSecurity,

One train is physically limited to 240 40-foot containers. Therefore, about 10 double-stack trains would have to be arranged to move the inbound containers from one such 9000 TEU ship. Those problems can be solved through infrastructure improvement. Container vessels in the size range of 400-3,000 teu still hold a very important part of the freight market.

Who pays for this “infrastructure improvement”?  How much congestion will this create on highways if trucks are used, instead?  Are cities and states really prepared for this influx?  We’ll find out soon…

Panama Plus the Port of Houston Equals Money and Traffic Jams

Panama Canal Expansion Raises Expectations in Houston — Transportation | The Texas Tribune.

The Panama Canal is expanding to accommodate larger ships.  Many of those large ships may dock at the Port of Houston.

The port is overseeing $3 billion in updates to its berths and cranes and other facilities, many of which are being completed in anticipation of the 2014 debut of the expanded Panama Canal.

This year a record 8,073 ships docked in Houston, off-loading cargo from all over the world – Volkswagons, bananas, and iPads.  These products were then shipped across the US on trains and trucks.  If the traffic at the port increases due to the larger ships able to traverse the Canal, how much more traffic will these transportation routes see?

“I think that we will see an increase, but we are very, very conservative in what we forecast, about a 15 percent increase of the traffic we get on the trade lane from Asia to Houston,” Kunz said, discussing the movement of container ships.

Kunz, a Vice-President of the Houston Port Authority, says some of these transportation routes need updating:

“The rail system needs to be redesigned, because even though the two major railroads serving here do a good job, the rail system was designed well over 100 years ago, and a lot of those rail tracks still go through downtown, which doesn’t make any sense.”

Houston won’t be the only port to benefit; New Orleans, Mobile, and those along the East coast will see more traffic:

“The West Coast is going to lose some. We’re going to get a little bit. The East Coast ports are going to get a little. Everyone is going to share a little bit more in the wealth.”

What effect will the increase have on road traffic in Texas?  How much more barge/ship traffic will traverse the Mississippi River?  How will the decrease in West Coast port traffic affect train traffic across the US (a large percentage of Union Pacific train business is transporting cargo from West Coast ports to Chicago/New Orleans ports for transport to Europe)?

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