I am equally inappropriately exuberant about the US energy industry. I'm not convinced the average American is remotely aware of how incredible this story is likely to become over the next two decades.
That's why I tried to keep track of the US energy revolution ever since I started blogging, over at "The Big Stories." It looks like I'm going to have to add "ethane" to the list. Just some of the gazillion posts on ethane at the blog:
- first ethane shipment departs Texas, August 1, 2016
- update on ethane production in the Bakken, June 28, 2016
- Shell announces $2 billion ethane processing plant, January 7, 2012
Let's see if any of the data points have been foreshadowed or mentioned previously on the blog:
- Ethane Crystal: the carrier is the first of its kind to be classified as a VLEC, or a very large ethane carrier; can carry 3x the terminal's initial shipments
- first of six VLECs to be manufactured by South Korea's Samsung Heavy Industries Co;
- building these VLECs for India's Reliance Industries;
- Houston-based EPD terminal;
- Morgan's Point;
- 228 meters long -- source
- 37 meters wide
Although the Panama Canal has remained a significant shipping route, its importance to energy markets has diminished as ship sizes have grown larger.
Oil and petroleum products make up only about 20% of commodities passing through the canal. Ultra Large Crude Carriers (ULCCs) are nearly five times larger than the maximum capacity of the current canal, and most other big crude vessels won’t fit.
But even though the largest crude oil vessels still will not be able to use the expanded canal, a lot of other ships will. Today size restrictions prevent more than 90% of the world’s fleet of LNG carriers from using the waterway. In stark contrast, after the expansion only 10% of the LNG fleet will not fit.
In fact, the only LNG carriers that will not be able to use the canal because of their width are the Q-Flex (164 feet wide) and Q-Max (180 feet wide), vessels whose use was pioneered by Qatar Gas to move staggering volumes of LNG (up to about 157 metric tons or MT for the Q-Flex and about 193 MT for the Q-Max). And it’s possible (due in part to pressure from the Japanese government and others) that the Panama Canal Authority may eventually allow Q-Flex carriers through, once canal operators gain some experience with carriers 160 feet wide.
In summary, the expansion project will be a very big deal for LNG, LPG and petroleum product exports from the U.S. Gulf Coast, allowing these commodities cheaper and faster access to Asia/Pacific markets. The canal expansion will be less significant for crude oil exports. However, the improved economics of moving petroleum products to Asia/Pacific markets will likely improve margins for Gulf Coast refineries, and as a consequence support U.S. crude oil prices. Bottom line – the Panama Canal expansion should provide a boost to natural gas, NGL and crude prices. In the light of current price levels, it won’t stave off any creditors or put many rigs back to work. But these days, every little bit helps.FuelFix also posted a story on the Ethane Crystal yesterday:
- en route to India
- feedstock for plastics
- Morgan's Point: the world's largest ethane export terminal opened this fall
- Ethane Crystal was the first; Ethane Emerald, the second, completed in December
- can carry up to 87,000 cubi meters of ethane
- ethane used primary to make ethylene, the primary building block of most plastics
- the first vessels exporting ethane from Morgan's Point were called "dragon class ships": carried 27,500 cubic meters of ethan
- this year marked the first US natural gas was exported to Europe, both in ethane and in LNG form
Despite the Obama administration keystoning three important crude oil pipelines the energy sector continues to make huge strides.
