29.09.2022

Panama and the shale revolution: what do they have in common?

The shale revolution in the US has allowed the Panama canal to increase revenues over the past two years dozens of times. Why did this happen?

The transport of liquefied natural gas and petroleum products from the United States is the most rapidly growing and promising business of the Panama canal, according to the Wall Street Journal, citing the statement of the head of administration of the canal, Jorge Luis Quijano.

Tanker transportation of liquefied natural gas American canal began in 2016, after completion of the expansion of its gateway to the cascade. The upgrades allowed to triple the tonnage conducted through his ships and tankers.

During this period, as the newspaper notes, the supply of gas has increased to 6 million tons, while previously this type of fuel is almost transported. This year, Quijano expects that this figure will increase twice.

Today, according to the newspaper, through the Panama canal is 45% of us exports of liquefied natural gas and 46% of liquefied petroleum gas. In the next couple of years, according to estimates Quijano, the gas will become a leader. At present tankers with the American gas provide 10% of the total annual income from the use of the channel and 38% of revenues from the exploitation of new and enhanced gateways.

Growing consumers of liquefied natural gas from the United States, according to the newspaper, are China, South Korea, Mexico and Japan.

In may, as reported by Quijano, the administration of the Panama canal has registered a new monthly record for the transport of goods through the channel of 1.23 thousand ships, perenesshikh a total of 38.1 million tons of cargo. The previous record was registered in January 2017: 1,26 thousand ships, on Board of which there were 36,1 million tons of cargo, writes finanz.ru.

June 26 will mark two years since, what started as a movement for the new gateway to the cascades of the channel. Work on expansion of the waterway was begun in 2007, Each of the new locks has 426,7 m in length, 54.8 m wide and 18.2 m deep, allowing you to pass through them vessels of up to 14 thousand containers.

Sands threatens U.S. infrastructure crisis

Factors constraining the growth of oil production within the Permian basin, more and more begin to disturb the oil market.

Some analysts even have started talking that the shale production in the US may not fall short of her high expectations.

The boom in West Texas has predictably led to numerous problems in all parts of the value chain. Oil drillers are faced with rising prices for labor, drilling rigs, services and land rent. Due to the low throughput of the pipeline have to reduce the price of oil.

A new study by Rystad Energy indicates that impediments such as lack of pumps and proppant (the material granulometry for hydraulic fracturing). When wells are drilled, the company installing the equipment connected to the pump pressure, which is injected water, proppant and chemicals into the earth to reach the source.

Obviously, for those who produces and sells this equipment, now is the Golden time. “We at the moment are a little behind, but we are quite satisfied,” – said Vice-President of an unnamed manufacturer’s pumps.

Rystad Energy predicts that by the end of the year will be put into operation the new pumping capacity to 2 million horsepower, which is almost 10% more than in 2017 This should help to eliminate the shortage.

At the maximum of their capabilities and the market for proppant. But it also should be a temporary phenomenon. Rystad Energy expects production of proppant will increase in 2018 to 52 million tons, and in close proximity to drilling sites, which is extremely important, as to date the majority of proppant is transported to Texas from Wisconsin and Minnesota.

However, here arises another problem. For the transport of proppant requires a large number of trucks, but the truck market is also running at the limit. It should also be borne in mind that constantly moving multi-ton trucks quickly wear out the roads, which endangers the rhythm of deliveries.

“We may be faced with the same situation as on the field Eagle Ford many years ago: the roads were very much broken, but no one wanted to close them for repairs,” said the researchers a senior representative of the company E&P.

However, the bottleneck in this year could be the throughput of the pipelines. According to the Wall Street Journal and Goldman Sachs, oil production in the Permian basin in may, reaches of 3.18 million barrels per day, while total pipeline capacity of 3.07 million barrels a day.

The piping is completely filled, so Brent Midland have to be discounted. Additional volumes will likely have to be transported by road, which will raise the final cost.

All these factors increase the cost and probably will further raise the bar break even. According to estimates by the WSJ, the drillers of the Permian basin may face rising production costs by 15% this year.

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