Panama Canal to Offer LNG Bunkering

An artist’s rendering of Crowley’s planned Panama Canal LNG bunkering barge.
An artist’s rendering of Crowley’s planned Panama Canal LNG bunkering barge.
An artist’s rendering of Crowley’s planned Panama Canal LNG bunkering barge.

U.S. energy logistics and shipping firm Crowley has secured the first permit from the Panama Maritime Authority to provide liquified natural gas (LNG) bunkering on the Pacific side of the Panama Canal, according to the Florida-based firm.

Crowley will manage the ship-to-ship LNG transfer services for fuel and cryogenic tank cooldown services, with a potential start date sometime in 2024.  

LNG bunkering at the canal “is a continuation of ongoing Crowley operations in Central America and the Caribbean, where the firm already distributes LNG,” according to Arturo Cruz, the company’s director of business development.  

The company aims not only to supply vessels traveling through the canal, but also container shipping lines running up and down the West Coast of the Americas, and eventually to pipe the fuel to inland communities, he said, adding that, “It’s a corridor that not only has maritime potential, but there are communities that could benefit from the availability of natural gas,” Cruz said. 

Crowley chose to focus on LNG for Panama because the global infrastructure is pretty much ready, the order books are increasingly filled with dual-fuel engines for vessels, and its use is increasingly widespread, according to Cruz. 

Like many maritime firms, Crowley expects demand for LNG to grow as more ships utilize cleaner fuels to comply with greenhouse gas regulations, cost imperatives, and public pressure. LNG is broadly considered a practical transitional fuel and multiple companies are ordering new LNG-powered vessels. 

It’s premature to speculate on the demand for LNG bunkering at Panama, according to Cruz, but he expects a few vessels a month when the infrastructure becomes operational, increasing to several vessels a week.  

“Definitely there is a market available for this transitional fuel, particularly since the Panama Canal Authority has shared its focus on reducing emissions and supporting the environment,” he said.

Economist Willy C. Shih, in a report published in the Harvard Business Review in 2022, said “CMA CGM, the third-largest container line, has made a big bet on liquified natural gas as an interim transition fuel and plans ultimately to go to some form of hydrogen. It has already put 12 LNG-powered vessels into service and will have 44 operating by 2024.”

That international firms like CMA CGM plan eventually to go to some form of hydrogen is important for companies investing in LNG bunkering, as future hydrogen fuels with methane carriers can make use of existing infrastructure.

“Long term, when and if we get to the hydrogen economy and hydrogen is made from renewables,” said Peter Keller, chairman of SEA-LNG, an industry coalition. “The infrastructure that we’re building and has been built over the last 50 or 60 years or more that LNG has been a major product around the world is future proof.” 

According to Keller, investment in LNG infrastructure is a strong strategy.

“We talk about this energy transition as if it’s almost a mature market, but it is not. It is only starting, and we have a long, long way to go,” he said. “There’s a lot of ships that ultimately will have to be replaced over the next couple decades. When we consider that a ship has a useful life of two to three decades, that’s an awful lot of building and work that has to be done over the next couple of years.” 

Opponents of LNG argue that during extraction, emissions of methane, a powerful greenhouse gas and the main constituent of natural gas, can, in some circumstances when handled improperly, make the fuel as dirty as traditional fossil fuels. That is a contributing factor to major carriers like Maersk that opt for methanol. 

A Maersk representative told Professional Mariner that “we acknowledge the pathway to net zero is transferring to the use of bio-LNG or e-LNG as soon as possible. Since we do not have any gas ships in our fleet, we prefer the green methanol pathway; this technology is mature, it provides fewer limitations in the form of feedstock availability and transport infrastructure options, and it does not come with a methane slip challenge.” 

In a January 2023 article, Mark Radka, head of the United Nations Environment Program’s (UNEP) Energy and Climate Branch, said, “Methane is a powerful greenhouse gas, about 84 times more potent than carbon dioxide measured over a 20-year period, so any emissions undermine its credentials as a better fossil fuel. 

“Cleaner is probably not the best word to describe natural gas,” said Radka. “But provided that methane emissions are well managed, it’s not as problematic in terms of planetary warming as coal or oil.”