Change the world, yes. But how will it affect Alaska’s LNG Project?
MAERSK shipping is one of the great transport support companies in the world. Its Panama Canal story BELOW could be read as an advertisement.
Bill Walker, Governor of Alaska. NGP file photo by Dave Harbour.
However, we read it as a documentary on how competition for an Alaska LNG project has just increased. Larger draft vessels transporting LNG from the Gulf coast and abroad through the new/improved Canal will have cheaper access to Alaska’s natural Asian markets, than formerly.
Add this potential, new competition to the long list of reasons that Alaska Governor Bill Walker would be foolish were he to consider nationalizing the Alaska North Slope O&G resources on state land — a la Hugo Chavez — by refusing to extend Prudhoe Bay leases.
More foolish still would Alaska’s leader be to contemplate doubling down on the state’s current equity investment in a pipeline/LNG project whose feasibility has not been proven and whose long term operations could only be corrupted by public ownership and political management…and the assumption of monumental commodity and world LNG supply/demand risks.
On a brighter side, the new Canal’s capacity could make Gulf Coast-Alaska oil field support less costly and bring goods to Alaska consumers more cheaply. -dh
Four Ways The New Panama Canal Will Change The World
1. Lifting people out of poverty
In Panama alone, more than a quarter of the population live in poverty. The government’s five-year plan aims to improve the lives of Panamanians, and it’s counting on the largest sector of its economy – logistics, an important sector in trade – to help it reach its goal of creating 120,000 jobs and lifting 150,000 people out of extreme poverty.
Beyond Panama, ports in neighbouring Latin American countries and along the east coast of the US are modernising their infrastructure to accommodate the expected increase in trade. With investment in infrastructure comes jobs and new opportunities to improve the economy, as we’ve seen in other regions such as West Africa.
2. Making your money go further
Bigger ships carry more containers. The freight costs per unit of shipping come down, and with these the price of goods. When Panama gave the canal expansion the go-ahead in 2006, the US ambassador at the time, William Eaton, was quick to see the benefits for consumers, anticipating “an impact on pocketbooks”.The knock-on effect of the expansion doesn’t stop there. US energy markets are also set to gain, as the drop in natural gas, propane and petroleum shipment costs will make it more attractive to export.
To put the scale of commercial savings – and the benefits for the consumer – into perspective, the alternative journey via the west coast of the US and over land to the east coast costs roughly $600 per container more than going down the Panama Canal, depending on a ship’s operating costs, which are around $60,000 a day.
THE OLD LOCKS in the Panama canal are 33.5m wide, 12.8m deep and 304.8m long. 
Early container ship
- 17m wide
- 137m long
- 9m draft
- 800 containers (TEU)
Maximum ship size, existing locks
- 32.3m wide
- 294.1m long
- 12m draft
- 5,000 containers (TEU)
THE NEW LOCKS in the Panama canal are 55m wide, 18.3m deep and 427m long. 
Maximum ship size, new locks
- 49m wide
- 366m long
- 15m draft
- 13,000/14,000 containers (TEU)
3. Thinking global, acting local
Of the 100-plus countries that ship through the canal, just 10 account for more than three-quarters of its traffic, from Asia to South America to the US. These flows are likely to increase in the coming years.In the US in particular, there’s much anticipation about trade flows shifting from the west coast to the east coast. Ports and terminals on the east and Gulf coasts of the US have been gearing up to handle this trade. Around 16% of small-to-medium-sized businesses are looking to expand their Latin American and Asian operations, with new bases already being set up in Florida.
4. Helping the planet
Shipping as an industry has been under pressure to reduce its carbon emissions. Maersk Line has already implemented a successful programme that has seen carbon emissions drop by 42% per container by the end of 2015. And now we’re seeking to lower that even further to a 60% cut in emissions per container by 2020. With bigger, more modern vessels the canal will be able to further reduce the carbon footprint of its operation, as will the companies that operate within it.
Shipping emissions are estimated to be cut by 16% per tonne-mile. In fact, it’s expected that during the first 10 years of operations on the newly expanded canal, CO2emissions will drop by an estimated 160 million tonnes.
From Ak-Headlamp this morning:
Is Walker Coming Clean on State-Led Gasline Plans? Alaska Senators Anna MacKinnon and Cathy Giessel are both anxiousabout AGDC President Keith Meyer’s announcement concerning the AKLNG megaproject’s future “vision.”“We’ve heard the governor imply that he wants to go it alone but this was the first time that we had seen it said explicitly,”by someone in the administration, state Sen. Cathy Giessel, said at a Commonwealth North task force meeting Friday, June 24. “We’ve been asking why we need to be spending $1 million a month on attorneys, including some brought in from London, and we were told that all of this was on work that was ‘inside the lanes,’ to support the present partnership structure,” and not on a new go-it-alone strategy said MacKinnon. Walker has always wanted the state in a lead role or even as sole developer of the giant gas project. Last year he pushed a plan for the state gas corporation, AGDC, to expand a smaller back-up pipeline plan, developed as a backstop to get gas to Alaska communities, into a larger project that could feed an LNG export plant and be in competition with the Alaska LNG Project. Headlamp hopes that more members of the legislature question the recent announcement for AKLNG. Alaska has a long history in resource development, but the private sector has always been a partner every step of the way.
The Associated Press reported that Gov. Bill Walker has picked an attorney with oil and gas experience as his new commissioner of the Department of Natural Resources. Walker on Thursdayannounced the appointment of Andy Mack. He replaces Mark Myers, who retired in February. Mack worked as a civil and criminal defense attorney for five years and as a legislative assistant for more than 10 years.
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