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A new storage frontier

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The 38th annual ILTA saw more than 4,100 tank terminal professionals gather to discuss the latest market trends affecting terminal operations in the US,
network & do business in one of the country’s most important oil and gas hubs.
The three-day event included 39 education sessions, training courses as well as the trade show spread across the Marriott Marquis Houston hotel and George R. Brown Convention Centre in Houston, Texas.
The country is currently reaping the benefits of a thriving oil and gas industry. It is now the second biggest crude producer behind Russia and is producing almost 11 million barrels per day. US exports continue to increase and as a result, midstream infrastructure – namely pipelines and storage – are struggling to keep pace, resulting in many companies expanding their footprint or building new facilities.
Against this backdrop, and the regulatoryreforms enacted by President Trump’s Administration, there was plenty to discuss at the ILTA conference.
ILTA’s new president Kathryn Clay opened the event by noting the terminal industry’s importance in the global supply chain and its role as a fundamental link between various industries and the transportation network.
The morning plenary session was delivered by American philosopher Tom Morris about the art of achievement in times of change. He gave insights into the seven universal conditions for sustainable excellence and the importance of goal setting.
Breakout sessions during the conference covered various topics including emergency response, incident management, cyber security risk mitigation, terminal valuations and virtual reality.
Gregg Manzione, from Nationwide Consulting, discussed trends in terminal sales & valuations. He noted that the price of crude has a big impact on the price of a terminal and that since 2016, rig counts are continuing to climb. In early 2018, the active rig count stood at 58.
‘Crude oil is a big boom to the storage market,’ he said. ‘A lot of terminals have been expanded because of crude, partly due to crude exports.’ Since the US crude oil export restriction was lifted in 2015, there has been between 1.5 million to 2 million barrels per day of export and Manzione said there needs to be
infrastructure in place to handle that.
He also noted the growing importance of LNG. ‘It has been a rollercoaster market. Ten years ago we were importing it in but because of shale we have more LNG than we need.
Import terminals have now been converted to export terminals and Lake Charles, for example, has been turned into an export hub.’
He also looked at the multiplier range for terminal transactions, which is ‘tightening in the 6 to 8x range’.
He rounded off his presentation by discussing President Trump’s America First Energy Plan. ‘The Trump Administration has been good to the storage industry,’ he said.
‘LNG exports are up, total rig counts are up and domestic consumption is up.’ But he questioned how long this growth will continue.
Looking at the new regulatory landscape for the oil and gas industry, and the reforms enacted under President Trump’s energy plan, John King, partner at Breazeale, Sachse & Wilson, noted that many rules published under the Obama Administration have been revisited under President Trump through court
orders, administrative stays, executive orders and proposals to roll-back some of the more controversial regulations.
He said: ‘There has been a sea change in the perception of fossil fuels to unleash the power of the energy industry.
‘The America First Energy Plan is a blueprint for the next four years of action. Its focus is on energy policies that lower costs for Americans and maximise the use of American resources.’
Since President Trump came into power there have been several notable policy achievements. This includes withdrawing from the Paris Climate Accords, reducing burdensome government regulations, repealing the Clean Power Plan and Waters of The United States Rule, promoting energy dominance and ending sue & settle.
King notes that there have been 22 deregulatory actions and nine policy achievements in Trump’s first 500 days.
He said: ‘The EPA (Environmental Protection Agency) is backing off and they will not get involved in the day to day regulation of facilities. They will be looking at everything that brings facilities into compliance.’
The morning session finished with a presentation on the impacts of recent trends in the port industry & the challenges by Captain Jeff Monroe, from the International Association of Maritime and Port Executives.
These challenges include waterway limitations as vessels get wider and deeper, shoreside infrastructure limitations, a lack of systematic port policies, global economic conditions and security.
He says that trends that will emerge in the next decade include the emergence of new maritime hubs in the Caribbean, Africa, Mediterranean and Asia as well as North America railroads adjusting their rates to compete with anticipated higher Panama Canal tolls.
In the afternoon, John Little, formally of IMTT, provided his 40-year career perspective on managing terminals. ‘Leadership is the constant,’ he said. ‘Good leadership is what makes things work in the terminal industry.
‘Leadership is the recognised responsibility for the performance of other people. Your job title does not make you a leader.’
The second day, following the ILTA safety awards presentation, the conference covered environmental due diligence, combating fatigue and the use of virtual reality to streamline construction projects.
The conference concluded with a panel discussion on building and operating storage terminals in Mexico.
The country’s energy sector has experienced a significant transition thanks to reforms allowing private investors back into the country following a 75-year monopoly by state-owned Pemex.
Ferrnando Pereira, business development manager for Grupo Lodemo, including subsidiary Hidrosur, a marine storage terminal in Mexico said that the country has not been able to adapt to the changing global energy environment.
In addition to declining oil and gas production and increasing power production costs, the country is hampered by ageing infrastructure that has suffered from limited investment. Its newest refinery was built in 1979.
He said: ‘Mexico has not been able to upgrade its refineries and is relying more on imports for petrol. 68.8% of the fuel consumed in Mexico is imported.
‘There is a need to develop the entire distribution and import system. The country currently has 14 million barrels of storage capacity, with an operational capacity of 11 days.’
All of this points to the need for an energy reform from a state-owned monopoly to an open market. He added that storage capacity is efficiently
distributed, which creates opportunities for the private sector.
Robert Howse, from Kiewit Engineering Group, said that there is a lack of clarity in the market at the moment as it evolves to this new regulatory landscape and that there is opportunity to grow the country’s storage terminal footprint.
Alan Roach, from Watco Companies, talked more about the company’s first venture into Mexico – a unit train liquid fuels terminal in San Luis Potosi.
Following the end of the conference, the trade show commenced, featuring 345 exhibiting companies, including 54 first-time exhibitors.
The 39th annual ILTA conference and trade show will take place on June 3-5 2019 in the same venues. For more information, visit: