HOUSTON — The rapid growth of U.S. oil and gas production is dramatically changing trade patterns in the region, and next year’s expansion of the Panama Canal likely will prompt even more dramatic shifts, according to a new report from the U.S. Energy Information Administration.
The widening of the Panama Canal, scheduled for completion next year, will vastly increase the opportunity for energy producers in the Americas to export their liquefied natural gas to Asia, according to the report.
As it stands, no LNG trade goes through the canal, and the crossing isn’t used for significant volumes of petroleum trade either. Size limitations often makes it too costly to ship those fuels. But Panama’s multibillion-dollar effort to expand the canal to accommodate larger vessels and double its transit capacity is scheduled to be complete in 2015.
The U.S. EIA report says both petroleum and LNG trade through the passage likely will increase.
“While the Americas have accounted for a considerable portion of the global markets in liquid fuels and natural gas and have attracted sizable investments, the region has the potential for further expansion and development,” the EIA wrote in its report.
Today, the Panama Canal can only accommodate tankers with strict size limits — about 80,000 deadweight tons and a draft of less than 39.5 feet. Ships of that size are known as Panamax vessels.
But once the expansion is complete, the isthmus will be able to accommodate a much larger style of tanker, known as an Aframax, which can carry 120,000 deadweight tons. Once that happens, the canal will accommodate more than 80 percent of the world’s LNG carrier fleet.
That move coincides with the growth of LNG liquefaction projects being developed in the U.S., mostly along the Gulf Coast, that will dramatically increase liquefaction capacity. There are 35 LNG export projects in varying stages of approval, according to the EIA.
At those projects come online, the EIA says, the widening of the canal would help facilitate exports to Asia. The continent is the world’s largest LNG import market, particularly China, Japan and South Korea.
U.S. oil boom
The new EIA report also shed light on the scope of the U.S. energy boom and it’s impact on trade within the region.
In 2012, the U.S. exported 2 million barrels per day of petroleum products to other countries in the Americas — namely Mexico and Canada, and increasingly Brazil and Chile — making it a net exporter. That’s a dramatic change from 2003, when it exported just 600,000 barrels per day to other nations in the Americas.
Crude oil production in the U.S. has increased 27 percent over the course of the decade, largely the result of increased production of tight oil. Production in the Bakken, for example, grew from 120,000 barrels per day in 2008 to more than a million barrels per day last year. From 2010 to 2013, Eagle Ford production soared from 29,000 barrels per day to 843,000.
Meanwhile, over the last few years, the U.S. has increased its proportion of crude imports coming from countries in the Americas. The mix of the sources of those imports, however, is shifting, according to the EIA.
Canada, Mexico and Venezuela all remain important sources of crude for the U.S. But Canadian imports are rising — up 57 percent over the course of the decade — while Mexico and Venezuela imports are declining.