By Velda Addison, Hart Energy

Pesky disease-carrying mosquitoes, a troublesome mountain range with landslides, equipment in need of repair and the challenge of devising successful engineering designs were just a few of the obstacles facing the team that constructed the Panama Canal.

But the team overcame those obstacles leading to what is considered one of the biggest accomplishments of the 20th century. The canal, a global trade route, officially opened on Aug. 15, 1914, a few weeks into World War I, as a 50-mile stretch connecting the Atlantic Ocean to the Pacific Ocean.

More than 100 years later, the Panama Canal Authority—the agency charged with managing, operating and maintaining the canal—and many others, will come together June 26 to inaugurate the expanded, deeper canal. The $5.25 billion project, which began in September 2007, created a new lane of traffic with the construction of a third set of locks. The new locks will enable larger ships to pass through.

The expanded canal is expected to double the waterway’s cargo capacity, giving a boost to economies and international maritime trade, according to the Panama Canal Authority. The new lane can handle vessels up to 49 m (160 ft) wide, 366 m (1,200 ft) long and 15 m (50 ft) deep, or with a cargo volume of up to 170,000 deadweight tonnage (DWT) and 12,000 twenty-foot equivalent units (TEU).

That’s great news for some larger vessels, considering the older lock system with the slimmer and shallower two-lane canal had a maximum capacity of 4,400 TEU for vessels. It is also expected to ease traffic. According to the U.S. Energy Information Administration (EIA), the canal’s previous size created logistical bottlenecks, particularly for U.S. propane exports traveling to Asian markets. Shippers sometimes had to carry out ship-to-ship transfers.

But the project is not expected to significantly change the flows of crude oil and petroleum products, according to the EIA.

“The maximum vessel dimensions in the old lock system, known as Panamax vessels, limited tankers to those of approximately 300,000 to 500,000 barrels of capacity of petroleum products like gasoline and diesel fuel. The newer lock systems allow for the transit of larger Neopanamax vessels, with estimated petroleum product capacities of 400,000 to 600,000 barrels,” the EIA said in a report published June 23.

“The economics of shipping crude oil and petroleum products improve as the size of the ship increases along with distance traveled. Crude oil typically is loaded on vessels classified as Very Large Crude Carriers (VLCC) or Ultra-Large Crude Carriers (ULCC), both of which are too large to transit the Panama Canal fully laden, even through the new locks,” the EIA said, noting that crude oil traffic along the canal is restricted for the most part due to the ship size restrictions.

The case is different, however, for petroleum products. These are usually transported on smaller vessels, the EIA said.

“The new, larger Panama Canal locks will allow most Very Large Gas Carriers (VLGC), the type of ship that carries propane and other hydrocarbon gas liquids, to transit, likely reducing or even ending the practice of ship-to-ship transfers,” the EIA said.

That will prove useful when market conditions improve enough to spark U.S. producers to ramp up production, giving momentum to the midstream sector.

Velda Addison can be reached at