Ship channel could get widened
After Panama Canal’s expansion, Houston pulls in larger vessels
The U.S. transferred operation of the Panama Canal to the Panamanians 20 years ago this week, a move that ultimately fueled the canal’s expansion and opened Houston for larger container ships bringing in consumer goods and outgoing tankers laden with products including liquefied natural gas and liquefied petroleum gas.
And now that larger ships are calling on Houston, local port officials and energy companies are lobbying Congress for funding to deepen and widen portions of the Houston Ship Channel.
“The growth that we’ve seen now that larger ships are able to go through the canal has really
increased business into the Houston Ship Channel,” Port Houston Executive Director Roger Guenther said.
The expanded canal opened in 2016 to accommodate ships that measure 180 feet wide and 1,400 feet long, with hulls immersed up to 50 feet below the waterline. The Galveston Bay portion of the 52-mile Houston Ship Channel measures 530 feet wide, which must accommodate two ships traveling in opposite directions. The channel’s deepest portions can accept vessels with 45 feet of draft.
Port Houston and others are seeking to widen the Galveston Bay portion of the channel to 700 feet, and then deepen parts of the channel’s shallower upstream segments to accept ships with 45-foot drafts.
While such projects take a notoriously long time, the Port of Houston Authority is hoping to accelerate this process by getting companies that operate fuel, LNG, chemical and other terminals along the waterway to help pay for the roughly $1 billion project. Energy companies are eager to participate as exports to Asia, using the canal as a faster path to the Pacific Ocean, are a growing segment of the sector’s business, said Vincent DiCosimo, executive director of the Coalition for a Fair and Open Port, which advocates on behalf of the energy sector.
Hydraulic fracturing unleashed a trove of natural gas that is being exported as liquefied natural gas and liquefied petroleum gas. The petrochemical boom has increased exports of plastic resins, particularly to Asia, where they are used to make packaging and consumer goods that are shipped back to the United States. All of this is occurring on larger ships that need more room in the ship channel, DiCosimo said.
“We want to work together and have this be the largest public-private project that the United States has ever had,” DiCosimo said, “and get it done in the next four to five years.”
The Panama Canal opened in 1914 with the U.S. operating it as a break-even endeavor. Viewed as a military asset, the U.S. government became less interested in its operation when Navy ships became too big to transit the canal, which was used to quickly move these ships between the Atlantic and Pacific oceans, said Juan Sosa, a Houstonian who was Panama’s ambassador to the United States from 1987 to 1989.
In 1977, the two countries signed a treaty, ratified by the U.S. Senate in 1978, that created a path for Panama to take control of the canal and surrounding canal zone that was controlled by the United States. After the transfer at the end of 1999, Panamanians recognized the canal needed an update.
“They realized that the canal had limitations that could not grow and accept the cargo, the volume, that was expected by the new millennium’s economy,” said Sosa, who also co-founded the U.S.-Panama Business Council in 1994 to facilitate trade and investment between the two countries.
Panama started operating the canal like a business, raising tolls to more competitive levels and adjusting that cost every few years based on demand and the global economy. In 2006, Panamanians voted to approve the third set of locks for the Panama Canal. The project ultimately cost $5.25 billion and was completed in 2016.
“The Panama Canal Authority has done a really good job of taking over and moving (the canal) forward,” said Jim Kruse, director of the Center for Ports and Waterways at the Texas A&M Transportation Institute.
The Port of Houston Authority has spent hundreds of millions of dollars since the early 2000s to prepare for larger container ships. Since 2016, the year the canal was expanded, containers received from East Asia have increased 61 percent and now represent 45 percent of all imported containers at Port Houston.
But when container ships measuring longer than 1,100 feet arrived in 2018 — prompting the Houston Pilots to restrict the ship channel’s typical two-way traffic to one-way for safety reasons as they gained experience guiding these larger vessels — energy companies grew concerned about traffic jams. Companies including Enterprise Products, Targa Resources Corp. and Kinder Morgan formed the Coalition for a Fair and Open Port.
This coalition successfully lobbied state lawmakers to pass legislation mandating two-way traffic in the ship channel and adding new requirements for vessels longer than 1,100 feet, permitting them only if they can be moved with efficient two-way traffic. In addition, larger ships’ requests to call on Houston must go through two public hearings and gain approval of 80 percent of Houston pilots.
Houston pilots, who guide vessels in and out of the ship channel, are now moving container ships up to 1,096 feet long with two-way traffic (the other vessel can be up to 934 feet long) around the entrance to Galveston Bay. The Houston Ship Channel has not had ships longer than 1,100 feet since the law took effect Sept. 1.
Both the Port Authority and the coalition have since turned their focus to Congress. The Port Authority has committed $28 million to begin engineering and design work for deepening and widening the channel. It hopes to have a completed design later this year, when Congress is expected to review and consider authorizing the project.
With the Port Authority obligated to pay 35 percent of the project’s cost and industry also expected to pay a substantial portion, port and company officials hope that Congress will appropriate money quickly.
Kruse agreed with the port’s plans and efforts to accelerate the work. Historically, these projects have required more than 10 years to get completed.
“The business needs it now,” Kruse said. “And every day you’re constricting your business, you’re losing money or driving it to another area — or some other region of the world, possibly.”