The Calcasieu Ship Channel
Channel Economic Impact Study
The Calcasieu Ship Channel drives $39 billion of the U.S. Gross Domestic Product and two-thirds of the gross domestic product (GDP) of Calcasieu and Cameron parishes.
Those are among the findings of a 2021 study commissioned by Lake Charles Harbor and Terminal District.
The study states that the port district and the ship channel are substantial sources of jobs and tax revenue, which will increase with the $46 billion in planned projects over the next five years.
The study, “The Economic Impacts of the Calcasieu Ship Channel,” was conducted by Martin Associates.
Martin Associates estimated the national, state and local economic impact of the port district and the ship channel.
To calculate the local economic impact, the study measured economic impacts on the Lake Charles Metropolitan Statistical Area (MSA)—Calcasieu and Cameron parishes.
Calcasieu Ship Channel
Cargo moving via marine terminals along the Calcasieu Ship Channel in 2020 supported 158,485 jobs nationwide. That includes 108,773 jobs in Louisiana and 42,075 in Calcasieu and Cameron parishes.
The Calcasieu-Cameron figure represents 45 percent of the area’s non-farm jobs. There were 13,279 direct jobs generated in the Calcasieu-Cameron area, the study found.
Marine cargo activity along the Ship Channel supported $39 billion of total economic value to the U.S. economy. Of that, $29.9 billion of it was in Louisiana, representing 13 percent of the state’s Gross Domestic Product. About $12 billion of that value was in Calcasieu and Cameron parishes—or 67 percent of the region’s GDP.
Infrastructure, Environment Benefit
The study also measured the environmental and infrastructure benefits provided by the use of the Ship Channel. The Ship Channel “provides about $1.1 billion in benefits to the U.S. economy by avoiding the environmental emissions, safety, and external trucking infrastructure degradation costs that would result if the domestic cargo now shipped and received along the Calcasieu Ship Channel could no longer use the Ship Channel and would have to be delivered by truck,” the study notes, adding: “4.2 billion gallons of petroleum products are moved from the area refineries by the Colonial Pipeline. The ability to use this pipeline rather than the use of truck distribution throughout the United States removes nearly 500,000 trucks from the nation’s highways.”
Planned Growth Ahead
Over the next five years, there are $46 billion of planned projects that will use the Ship Channel—adding 90.8 million tons of cargo per year to the current cargo handled.
About The Calcasieu Ship Channel
The Ship Channel is home to the Lake Charles Harbor and Terminal District’s public marine terminals and privately-owned marine terminals. The private industries along the Ship Channel include petroleum refineries and chemical manufacturing facilities. With the opening of the Cameron LNG facility, liquefied natural gas became a key export commodity.
About The Port District
The public facilities of the Lake Charles Harbor and Terminal District handle exports of coke by-products from local petroleum refining, imported lumber, exported bagged and bulk grain, wind energy equipment, project cargo, limestone, rutile, barite, rubber and chemical products. The Cameron LNG facility was developed on property leased from the Lake Charles Harbor and Terminal District. The port district owns the City Docks, a general cargo terminal, bulk terminals, Industrial Canal property and Industrial Park East property. It also leases land to the L’Auberge and Golden Nugget casino/hotel complexes and to others.
To review the full study, contact the Port at marketing@portlc.com.
Channel Traffic Study
Port of Lake Charles officials released the 2018 Update of the Calcasieu Ship Channel Traffic Study which analyzes the current and future increase in Calcasieu Ship Channel vessel traffic.
Traffic in the channel is expected to grow significantly over the next ten years due to the expanded operations of existing terminals and the construction of various proposed facilities. Deep-draft ship traffic is forecasted to more than double by 2025, growing from 1,098 to over 2,342 vessels. The fifteen-year horizon of the study projects 2,607 deep-draft vessels annually in 2033.
The final report found the channel, with its existing infrastructure and operations, has the capacity to handle the forecasted traffic increase. The port’s leadership commissioned the study, which used a detailed simulation model, to assess the need for changes to the channel’s operation.
Both the original and updated Traffic Studies deal with vessels’ wait times and the factors that impact those times. In particular for LNG vessels, the Base Case assumed that LNG vessels would not meet other vessels anywhere in the channel. Case 3 studied the impact on vessel wait times if LNG vessels could meet other vessels on the Outer Bar. Case 3 is more representative of expected vessel wait times.
Ship Channel Simulation Study
As confirmed by the U.S. Coast Guard, 33 CFR 165.805 allows for the establishment of a moving security zone from U.S. territorial waters (essentially 12 nautical miles from the coast) and extending on the Calcasieu Channel and the Calcasieu River around “certain designated vessels” while in transit. The regulation does not specify which vessels will be designated by the Captain of the Port to have a moving security zone. It should not be assumed that all LNG carriers will have a moving security zone around them.
The determination to implement a moving security zone around “certain designated vessels” will be made on a case-by-case basis. This allows the Captain of the Port the operational freedom of action and authority to make risk assessment-based decisions in order to balance the unique needs and characteristics of the port.
Lake Charles Pilots confirms that its Standards of Care will apply to LNG vessels meeting other vessels on the Outer Bar if no Security Zone is in place.
The Calcasieu Ship Channel is vitally important not only to the Port of Lake Charles and surrounding industries that daily depend on access to it, but also to the entire country. This waterway handles nearly 55 million tons of cargo annually and is absolutely critical to supplying the nation’s energy needs. Keeping the channel operating smoothly for trade is the port’s top priority.
The port is currently the 10th-busiest port in the country based on tonnage handled.
Other conclusions reached by the traffic study are related to seasonal impacts, pilots needed, and tug requirements. The study determined wait times were highly seasonal, which was attributed to wind and visibility delays. The channel will require additional pilots to handle the forecasted traffic. However, the study determined the current number of channel tugs is likely sufficient for the channel, assuming the LNG terminals provide their own dedicated tugs.
Ship Channel Traffic Study
New capital investments in industrial projects totaling in the billions of are under way or have been announced in Southwest Louisiana.
Most of these projects are a direct result of the Calcasieu Ship Channel, as well as an efficient pipeline infrastructure, which will deliver economical natural gas for refining into finished product for export and domestic use. These projects are dependent upon the ship channel’s efficient operation, as well as consistent dredging funds from the U.S. Congress that allows the Corps of Engineers to maintain the Calcasieu Ship Channel at authorized dimensions.
Petroleum and LNG
The ship channel is an experienced and reliable highway for energy cargo.
- 85% of tonnage shipped on the Calcasieu Ship Channel is energy cargo.
- The ship channel is home to the nation’s sixth-largest refinery, and carries 7.5% of the nation’s daily oil consumption.
- The world’s first trans-ocean LNG shipment sailed from Lake Charles in 1959.
- More than 600 LNG ships have safely and efficiently transited the ship channel.
- The Port of Lake Charles has 17 pilots highly trained and experienced in handling LNG vessels.
- The U.S. Army Corps of Engineers maintains the ship channel, and dredging is funded in the federal budget.
Water Institute of the Gulf Study
The study “Identifying Sediment Sources and Optimizing Placement of Dredge Material to Protect Critical Infrastructure” was issued in 2019 by The Water Institute of the Gulf.
The Calcasieu Ship Channel has become an important economic driver in Lake Charles and in the southwest Louisiana region. The ship channel is a 68-mile long, deep-draft commercial waterway located in Southwest Louisiana, from Lake Charles into the Gulf of Mexico. Beginning in the 1920s, the ship channel was channelized by straightening, widening, and deepening the Calcasieu River to its current dimensions of 400 feet wide by 40 feet deep. Maintaining the adequate channel dimensions to accommodate ship traffic that is increasing in both volume and maximum vessel size requires a rigorous dredging plan. There is a need to carefully investigate the sediment dynamics along the length of the ship channel and surrounding areas in order to understand the sources and character of the sediment and design a feasible and effective dredging strategy.
The goal of the present project is to assist the Port of Lake Charles in strategizing to maintain its deep-draft commercial competitiveness through the 21st Century, while at the same time minimizing its environmental footprint and keeping dredging and dredge material disposal area maintenance costs to a minimum. This observational and modeling effort provides the necessary scientific underpinning to develop an integrated plan in the future that may include novel strategies that use dredge material to limit future dredging needs and qualify as beneficial use, and green infrastructure, such as ecosystem habitat improvements.
Future Growth Expected
The Port of Lake Charles commissioned the Calcasieu Ship Channel Traffic Study to project future channel use. The study used scientific methods to analyze actual historical shipping, tide and weather data, and simulated more than doubling ship traffic over 20 years, with much of the traffic increase occurring by 2023.
The study concludes: “The Channel handled all of the scheduled traffic. This shows that the Channel has sufficient capacity to receive and handle the additional traffic forecasted.”
The channel was created to provide deepwater access for maritime commerce. A look at the channel today reinforces the theory of “build it and they will come.” Dozens of industrial plants now line the channel, primarily refineries and petrochemical companies, bringing raw materials in, and shipping products out via the channel. Many more facilities that rely on the channel are planned, and some are already under construction.
With the recent addition of natural gas installations, the Calcasieu Ship Channel has become one of the nation’s most active “energy corridors.”
The Calcasieu Ship Channel:
- Carries 7.5% of the nation’s daily oil consumption.
- Is home to the nation’s sixth-largest refinery.
- Is home to two of the nation’s largest liquefied natural gas (LNG) facilities.
- Handles 56 million tons of cargo annually.
- Serves an area that stores one-third of the nation’s Strategic Petroleum Reserve.
- Holds a complex of energy pipelines and the Henry Hub, a major natural gas hub for the U.S.
With such critical cargo depending on the channel, its depth and width must be maintained by regular dredging. The Port of Lake Charles is the sponsor of the Calcasieu Ship Channel, acting on behalf of the state of Louisiana, which means it is responsible for providing disposal locations for dredged material and sharing the cost when those disposal site require major rehabilitation.
The announcement of new capital investments in the billions of have made Southwest Louisiana “biggest story in economic development in America today,” according to Site Selection magazine.
Most of these projects are a direct result of the Calcasieu Ship Channel, as well as an efficient pipeline infrastructure, which will deliver economical natural gas for refining into finished product for export and domestic use. These projects are completely dependent upon the ship channel’s efficient operation, as well as consistent dredging funds from the U.S. Congress that allows the Corps of Engineers to maintain the Calcasieu Ship Channel at authorized dimensions.
