LNG Shippers Have a $45,000-a-Day Problem

Panama Canal expansion map – canal bottlenecks still hold up LNG shipments.

Dealing with costly delays in getting tankers through the Panama Canal may slow down U.S. LNG shipments, according to Octavio Simoes, president of LNG export terminal developer Sempra LNG & Midstream. Bloomberg reported that Simoes calculated that every day a cargo is held up at the canal can cost a trader $45,000. Simoes was speaking at Energy Dialogues LLC’s North American Gas Forum in Washington.

More than one-third of ships are running up against delays in getting through the canal, Simoes said, warning that the holdup could limit the amount of LNG the U.S. can sell to Asia, according to Bloomberg.

There is a way to ship U.S. natural gas to Asia and entirely avoid traversing the Panama Canal, however.

The Alaska Gasline’s proposed pipeline and LNG export project would circumvent the Panama Canal by shipping LNG directly from Alaska’s Kenai Peninsula to Asia. The proposed project was exited by its major oil company backers–ExxonMobil, BP Alaska and Conoco Phillips–because of the expense of it, but the State of Alaska is hoping to single-handedly keep the project going, attract investment and complete the 800 mile gas pipeline. The Alaska Gasline Development Corp. plans to submit the project for FERC approval and forge ahead. Gov. Bill Walker and AGDC executives have traveled to in 2017 Asia to solicit interest from Asian customers in buying Alaska’s natural gas. The Alaska LNG would be shipped directly from Alaska.

Alaska LNG

The maritime route of travel from Alaska avoids any canals, or other shipping bottlenecks, including the Panama Canal. However obtaining capital and committing financial backers for the estimated $45 billion project may prove the biggest bottleneck of all.

LNG Shippers Have a $45,000-a-Day Problem

Alsaka Gasline LNG export project, if completed, would liquefy and ship Alaska’s vast natural gas reserves to China, Japan and other premium Asian buyers from an existing LNG export facility on the Kenai Peninsula. Photo: Alaska Gasline Port Authority

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