Questions have been raised about the newly enlarged Panama Canal’s ability to handle all the LNG shipments U.S. producers are gearing up for. How will the canal’s huge, new third set of locks handle all the traffic? With Corpus Christi, Texas, two other U.S. Gulf Coast terminals expect to join Cheniere Energy Inc.’s Sabine Pass, La., facility loading tankers. Dominion Energy Inc.’s Cove Point, Md., plant on Chesapeake Bay is adding still more, and Kinder Morgan Inc.’s Elba Island, Ga., terminal is on the way.

Panama Canal Authority chief administrator Jorge Luis Quijano has an upbeat answer. On a May trip to Asia, he told surprised import officials that the new traffic posed no problem. Panama expects LNG shipments across the canal to grow to 5x the current levels by 2020. Despite being the Panama Canal’s fastest-growing traffic segment, LNG vessels currently use only 60% of the reservations they acquire, Quijano said in an August statement. That’s with the authority’s count of gas shipments already filling nearly 40% of the 4,000 NeoPanamax vessels that have sailed through the canal’s big new locks between the expansion project’s June 2016 opening and July 30, 2018. Some 27% of those ships transiting were LPG tankers, while LNG transits—10% of the total to date—are ramping up.

Container ships account for 52% of canal traffic, while dry and bulk carriers, car carriers and cruise ships make up the rest, the authority reports.

LNG ramp-up
Quijano’s boast seems believable since Panama has not only expanded its canal, but it has made the waterway a two-way avenue. The original century-old system permitted ship transits only one way at a time, but in 2016, canal authority personnel told this writer they’d begun training canal pilots, merchant captains and tugboat operators to handle “meeting engagements” between vessels going in opposite directions.

So in addition to adding parallel, deeper channels between the new locks, Panama made way for even more traffic, and it is paying off.

On Oct. 1, Panama officials announced that four LNG tankers transited the canal’s larger locks on the same day. The Bahamas-flagged Torben Spirit, capacity 174,000 cubic meters (cu.m); and Marshall Islands-flagged Oceanic Breeze, capacity 155,000 cu.m, headed south to the Pacific. The Norway-flagged Ribera del Duero Knutsen, capacity 173,000 cu.m, and Greek-flagged Maran Gas Pericles, capacity 174,000 cu.m, went north to the Atlantic.

Dominion’s Cove Point shipped its first LNG load through the canal on May 1, the first one fulfilling a long-term Sumitomo Bank and Tokyo Electric contract for Japan’s power producers.

And in October, a four-ship transit could happen because of dredging the canal’s new channels deeper—60 feet (ft) against the old locks’ 40 ft; 180 ft wide compared with slightly more than 100 ft; and 1,400 ft long compared with the old locks’ 1,000 ft. To get the best preparation, the authority sent canal pilots, tug captains and cargo ship skippers to France’s Port Revel Training Facility.

There, ship-drivers practiced real-time maneuvers in a lagoon built to mimic dimensions of the Panama Canal and Gatun Lake during construction of the new locks. Later, in the canal authority’s own smaller replica of France’s facility, they communicated by radio—just like on ships’ bridges—training on 1/25th-scale-model ships and tugs operated by onboard instructors, canal pilots and merchant ship captains. Trainees learned to handle ship “encounters” and maneuver through the enlarged canal.

In regular operations, two-way meetings now happen in Gatun Lake, which provides water to power the locks’ operation as it supplies hydroelectric power and potable water for Panama, in addition to serving as the waterway’s central passage.

Safely opening the way
As the fourth quarter began, the authority also relaxed certain daylight travel and meeting restrictions on LNG tankers, responding to the demands of shippers and reflecting canal personnel’s improving experience handling the tanker transits. The authority has made space for two LNG tanker reservations per day. Notably, the authority reports capacity for up to two more ship-transits per day through the new locks, in addition to the 5.5 transits per day it now averages.

“We are fully committed to understanding and meeting the ever-changing needs of the global shipping community. These changes, guided by input from our customers, strategic planning and years of experience, are an essential next step in assuring the continued availability of the expanded canal for all,” Quijano said in a statement.

With new experience, canal pilots, tug captains and lock-side personnel have refined their ship-handling techniques for safety.

When a ship transits the existing, century-old Panama Canal, it gets hooked by steel cables to four electric locomotives, two up front on each side and two at the rear. But the big NeoPanamax vessels are towed by 100 ft long tugs instead. Earlier, canal pilots, tug captains and the Society of Panamanian Engineers complained that this arrangement was less safe, opening the way for uncontrollable ship movements in times of high winds.

A long story by the The New York Times, published just as the expansion project was completed, detailed those worries.

Where they belong
Today, however, an authority news release details the best practices canal personnel have worked out.

Instead of the old canal policy of one tug following a ship through the canal, ships transiting the new locks use four tugs to move them into the first set encountered, Agua Clara on Panama’s Atlantic side, and Cocoli on the southern, Pacific side. One tows at the bow, one each port and starboard, and one is tied to the ship’s stern, to maintain positive steerageway. Once the ship is in the lock’s entry channel, the side-guiding tugs move off but the towing and tailing tugs stay with it.

Inside a lock, ground-side line crews tie cables from the ship’s sides to bollards set into the locks’ reinforced-concrete sides, preventing excess lateral motion. The line-setting and releasing continues as the ship moves through the lock sets. The ship crosses Gatun Lake under its own power, accompanied by tugs.

As with the existing locks, no vessel transits the Panama Canal without tugboats close by, watchful against untoward incidents such as a loss of power that might run the ship aground. The Culebra Cut is the canal’s narrowest channel through a mountain range, so there are no exceptions.

Welcome windfall
The U.S. shale revolution caught the authority’s leaders off guard. They decided to expand the cross-Isthmus waterway after watching their Suez Canal competitors complete an expansion, and they meant to keep up, José Ramon Arango, a canal authority senior bulk liquids segment specialist, said when interviewed during the project’s opening ceremonies.

Especially the U.S.-sourced LPG shipments, Arango said. Underscoring his point, the second ship to steam through the canal’s expanded Cocoli locks on its way to the Pacific Rim was the Japanese-owned Lycaste Peace LPG tanker, headed out from the U.S. Gulf Coast.

It may surprise other observers now that U.S. shippers are not the only ones energized by the Panama Canal’s enlargement. According to the authority newsletter, The Canal Connection, Peru has sent 575,529 tons of LNG through the canal to European destinations in fiscal year (FY) 2018. Trinidad and Tobago, the Caribbean’s largest exporter, transited 1,340,396 tons to Asia, Mexico’s west coast and Chile. Together, the newsletter said, the two nations account for nearly one-fifth of all LNG transits.

Saving days and miles
It’s all economics: An LNG tanker leaving Trinidad for Chile saves more than six days using the Panama Canal instead of sailing around South America, while ships leaving Peru for Spain save up to eight days.

On the import side, since the NeoPanamx locks’ opening, Mexico has imported an estimated 3.1 million tons of LNG, while Chile has imported some 1.1 million tons.

Across the Pacific, South Korea and China became top importing nations in FY 2018, with Korea taking 1.7 million tons and China taking 1.6 million tons, according to Canal Authority’s newsletter. And according to a Bloomberg report published months after the Expanded Panama Canal went into business, LNG already had become the world’s second-most traded commodity after oil in 2015, before the Panama Canal’s expansion project was finished.

Gas is expected to challenge coal at European power plants and become affordable in emerging markets, the Bloomberg report said, quoting the International Energy Agency (IEA) and Goldman Sachs Group Inc.

Americans change the game
That report said that U.S. shale gas, adding to a global glut triggered by new Australian gas output and weakening Asian consumption, is having an outsized impact on how LNG is sold, prompting spot trading in lieu of long-term contracts. Bloomberg noted that, with supplies growing, some Asian nations like Japan are contracted to buy more LNG than they can consume, leaving surpluses to be sold elsewhere.

“The U.S. clearly changed the picture,” Costanza Jacazio, a senior gas analyst at the Paris-based IEA, said in that report. “It’s going basically from zero to the third-largest LNG capacity-holder in the space of five years, and it brings a new flexibility to the LNG market.”

But don’t forget the oil markets.

The U.S. Energy Information Administration’s most recent estimate is that American petroleum exports are minimal compared to surging natural gas exports. But, as Arango noted in that 2016 interview, American shale oil, flowing from Texas’ Eagle Ford fields and the burgeoning Permian Basin plays, is low-sulfur light oil, whose specific gravity could permit transiting even a fully loaded Suezmax tanker through the expanded Panama Canal.

With the new Dakota Access Pipeline pouring Bakken petroleum down to the Gulf Coast, and with new transmission lines snaking out from West Texas and eastern New Mexico to reach Corpus Christi—and with that city’s leader’s recent investments to deepen their already-busy oil port and their recent experiments to train local port personnel to handle very large crude carriers—there’s more to come.

U.S. petroleum exports, reaching the world through the expanded Panama Canal, are soon bound to change some other games in energy.

Garland L. Thompson is a Philadelphia-based writer and editor covering engineering and technology issues. He has covered the Panama Canal extensively.