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Page added on March 17, 2018

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The Oil Canal That May Never Be

Business

People have conceived of linking the gulf of Thailand with the Andaman sea for around 300 years but, as of yet, such plans have remained firmly in the realm of fantasy. Dividing the peninsula of Thailand is obviously a massive undertaking, which is certain to have its proponents and opponents, past, present and future. Reasons for opposition are myriad, including irreversible damage to local communities, insurmountable expenditure, and even the division of the country itself. In recent years, the problem has not merely been the absence of political will, but rather direct opposition from the Monarch himself. This opposition has kept the construction of the Kra canal firmly on the drawing board. Now, after yet another resurgence from its proponents, this project could be closer than ever to becoming reality.

Whilst Thailand’s junta has stated that the project is not a priority, talks are well underway and many concerns have already been addressed. Fears of Thailand’s division have not only been allayed, but there is weight to the argument that economic development will have the effect of easing tensions in the breakaway south. Two birds with one stone then. The political opposition has been reversed with the current monarch reportedly in favor of the project, and there have been offers to finance the project, most notably in the Chinese private sector.

The project’s cost is estimated at $28bn, with a further $22bn earmarked for a special economic zone. This level of investment will have a positive effect on the local communities, as will the knock-on effect of upgraded infrastructure that will be borne from keeping both sides of the canal well connected. Such a requirement will surely be a prerequisite to the project being given the go ahead. The canal would require to generate $4.57m in revenue per day to pay for itself within 20 years. This equates to an estimated price of $115,000 per passage, assuming a throughput of 40 ships per day. What then, does this mean for shipping in the region?

Ships currently wishing to make passage between the Indian and Pacific Oceans must negotiate the straits of Malacca, Sunda or Lombok. Today, the journey from Saudi Arabia to China takes 30, 32 and 33 days respectively, with fuel consumptions of 1500 ($600,750), 1600 ($640,800) and 1650 ($660,825) tons, at today’s prices. The Kra canal would mean savings of 2-3, 4-5 and 5-6 days, which equates to between $40,000 and $120,000 in fuel per trip. Despite the savings in time and associated running costs, there doesn’t seem to be much in the way of financial incentives for shipping companies to use the canal. There is also the processing time of passage to be taken into account. Economic benefits to Thailand notwithstanding, there seems to be little to gain from the canal’s construction. Analysis of shipping trends however, may paint a different picture. Related: Audi Unveils Its Flying Smart-Car

VLCC traffic along the strait of Malacca rose to an all-time high of 84,456 ships in 2017, a figure that shows no sign of falling. This rise could ultimately lead to traffic exceeding capacity, although it is worth mentioning that this assumes a consistent rise in SEA exports. Should that be the case, a canal at Kra would serve to alleviate this strain by expanding capacity across the entire shipping route as opposed to simply poaching traffic and revenue from the straits at Singapore and Malaysia, which is currently a major concern for both nations. Perhaps the greatest upside though, is the issue of piracy. The canal would result in a greatly decreased risk of attacks, not only to those ships passing the canal, but also to shipping as a whole. This is due to the fact that the resulting reduction in straits traffic would make policing the waters more manageable.

It seems then, that the benefits of the Kra canal are only very long term, as well as being contingent on many factors that are far from certain. The financial benefits to shipping are negligible, even assuming that oil prices don’t fall below current levels, which begs the question of why investors would seriously consider such an undertaking. After 300 years of a complete lack of progress, the success of this project is still far from certain.

By Gary Norman for Oilprice.com

 



18 Comments on "The Oil Canal That May Never Be"

  1. Go Speed Racer on Sat, 17th Mar 2018 7:17 pm 

    An oil canal ??
    Thats a dumb idea.

    Nobody does that.

    Cause what if somebody threw in a cigarette butt. Better than a tire fire.

  2. dave thompson on Sat, 17th Mar 2018 10:02 pm 

    Nothing beats agood ol’fashion’d Sofa loveseat combo conflagration to power the way to the inevitable future.

  3. Cloggie on Sun, 18th Mar 2018 12:33 am 

    Thailand and energy… rings a bell.
    Ah yes:

    https://deepresource.wordpress.com/2017/06/06/suitable-offshore-wind-locations/

    Scroll down at 2/3, “Thailand”.

  4. Cloggie on Sun, 18th Mar 2018 3:50 am 

    An oil canal that will cost $28B.

    Hmm, that’s the cost of the canal only. You still have to pay for the oil afterwards until Kingdom comes.

    For that money you can easily exhaust the potential 7 GW offshore wind energy (see link in previous post) and have 30 years of energy “for free”, as Mother Nature doesn’t invoice for wind.

  5. Davy on Sun, 18th Mar 2018 5:38 am 

    “30 years of energy “for free”

    “The second law of thermodynamics states that the total entropy can never decrease over time for an isolated system”

    https://tinyurl.com/y85t839p

  6. Go Speed Racer on Sun, 18th Mar 2018 7:25 am 

    First you get bulldozers and dig the canal.

    Then you fill up the canal with oil, and
    that’s a lot of oil,
    that costs the most money of all.

    Thats why its such a dumb idea
    to have an oil canal. Usually you just
    use an iron pipeline.

  7. Go Speed Racer on Sun, 18th Mar 2018 7:32 am 

    HEY EVERYBODY
    I got this oil canal all figred out.
    One end of hte oil canal dumps out into
    the “Andaman Sea”.
    Great news! It’s pretty there!
    Check out the pictures:
    https://www.gadventures.com/blog/thailands-top-6-islands/

    So when we dig hte oil canal, we don’t even
    need no tanks at the far end. Just let
    it flow straight into the Andaman Sea
    and pollute it directly and efficiently.

    Of course that means we don’t get to sell
    the oil, but who cares with that much
    white-sand beaches to wreck, an oil canal
    directly into the Andaman Sea that’s
    the way to do it.

  8. Go Speed Racer on Sun, 18th Mar 2018 7:33 am 

    That message was paid for by
    the Re-Elect Trump for President,
    Republicans Polluting the Oceans for Profit,
    the Coke Brothers, NRA, and other
    profitable right-wing organizations.

  9. Go Speed Racer on Sun, 18th Mar 2018 10:54 am 

    Look what Mastered Mind discovered.

    Every single day, we’re
    Making America Great Again

    https://www.indystar.com/videos/news/2018/03/17/when-they-smoke-they-almost-become-zombie-like/32970225/

    I’m saying lets start a government program,
    to give them free cans of bug spray.

    Because not everybody can afford bug spray.

  10. BobInget on Sun, 18th Mar 2018 1:24 pm 

    The first Canadian transmission pipeline was built in 1853. A 25 kilometre cast-iron pipe moving natural gas to Trois Rivières, QC. It was the longest pipeline in the world at the time. Then in 1862, Canada built one of the world’s first oil pipelines, from the Petrolia oilfield in Petrolia, ON to Sarnia, ON.

  11. MASTERMIND on Sun, 18th Mar 2018 3:05 pm 

    Go speed Racer

    Meanwhile at the blacks for Trump rally!
    https://i.redd.it/s1tg5rwp8im01.jpg

  12. Go Speed Racer on Sun, 18th Mar 2018 7:17 pm 

    MM LOL

    Black Republican
    that always was
    the big contradiction.

  13. Boat on Sun, 18th Mar 2018 7:59 pm 

    Mm

    That was funny.

  14. Cloggie on Mon, 19th Mar 2018 1:17 am 

    Meanwhile at the blacks for Trump rally!

    https://i.redd.it/s1tg5rwp8im01.jpg

    Very funny. Reminds me of the quip they used to make about the Tea Party gatherings: “there are more blacks and jews on the stage than in the crowd”.

    Or this one: when somebody entered a board meeting of the NAACP in the sixties, all he saw was white faces, or jewish faces to be precise. Then for jews, blacks can be used as a weapon against whites, namely for demographic displacement and disempowerement and cementing their own.

    https://documents1940.wordpress.com/2017/09/27/paul-krugman-white-americans-are-losing-their-country/

    Note the glee, exactly the same as with millimind/apneaman when he gloats about the demise of white America. Or when he brags about how he is going to rape white icon “Nazi Barbie” Taylor Swift, with which he means to rape entire white America. And does whitey here lift a finger? None. Total cucks, with meathead being the #1. Totally paralyzed bunnies staring into the poachers light, patiently waiting to be clubbed.

  15. Davy on Mon, 19th Mar 2018 5:02 am 

    “Europe Faces A Perfect Storm In 2020”
    https://tinyurl.com/yaksggja

    “Clouds are gathering: Weidmann will end QE while Macron’s reform will not solve any problem whatsoever. It’ll be the final push for a Eurosceptic Italy, where plans for parallel currencies are popping up. Add Trump’s trade war to the soup and 2020 promises to turn nasty. It is becoming increasingly clear that at the end of 2019 Jens Weidmann, current President of the Bundesbank, will replace Mario Draghi at the helm of the European Central Bank. The change in terms of economic beliefs will be radical and, combined with the other developing issues in Italy and the US, which will be discussed later in the text, might as well put an end to the misery of the Eurozone.”

  16. MASTERMIND on Mon, 19th Mar 2018 9:15 am 

    119 Developing countries face debt collapse

    There are 119 countries around the world in dire financial straits, weighed down by massive debt, says a report from the Catholic aid organization Misereor. Their coffers are empty, the threat of bankruptcy looms large.

    http://www.dw.com/en/developing-countries-face-debt-collapse/av-42996076

  17. MASTERMIND on Mon, 19th Mar 2018 12:46 pm 

    Self-driving Uber car kills Arizona woman in first fatal crash involving pedestrian

    https://www.theguardian.com/technology/2018/mar/19/uber-self-driving-car-kills-woman-arizona-tempe

    https://imgur.com/a/5XUss

  18. Go Speed Racer on Mon, 19th Mar 2018 3:20 pm 

    I don’t like self driving car.
    1978 Ford LTD Royal Brougham wirh
    a 460 cubic inch engine, it’s like fine wine
    you drive it yourself,
    It would be sacrilege to let some computer
    drive it.
    Why let the computer have all that fun of
    driving the land yacht.

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