Tank Storage Magazine v04 i03


Volume: 4
Issue: 3
Date Published: June 1, 2008



Guest comment: Oil’s journey to $120

The crude oil market made a dramatic change in 2007, a change that set it on its present course that has seen the spot-month futures market move to within striking distance of $120 (€77) per barrel. Up until that time it had been a typical over-hyped commodity market, one that had caught the speculative community’s eye but did not have the fundamentals to support a long-term rally. In July 2006 the futures market had rallied to a high of $78.40 and many pundits were talking the market up to $100. The Alaskan pipeline had sprung a leak, war was being waged in the Middle East, and troubles were brewing in Nigeria. However, traders focusing on the real fundamentals of the market realisd that it was only a pinprick leak in Alaska, war is almost always raging in the Middle East, and trouble is constantly brewing in Nigeria. In other words, the fundamentals didn’t support the rally or the projection for $100 – at that time – and the market responded as anyone who watches futures spreads to understand supply and demand knew it should. It sold off all the way back to $50 by January of 2007. But then the market began its metamorphosis. The spot to first deferred futures spread began to strengthen (spot gaining on deferred) until in July of 2007 the spread had moved into backwardation (spot holds a premium over the deferred contract) signaling the underlying fundamentals had finally turned bullish. This move coincided with the continued bullish outlook of the speculative/investment side of the market due in part to the slide in the US dollar index to new lows. To read this article in full you will need to subscribe to Tank Storage Magazine or buy the back-issue. Click here for further details

Small but effective

Family-run Wolf Lake Terminals shows that big is not always best Indiana-based Wolf Lake Terminals (WLT) has been operating since 1974, when the Long and Middendorf families purchased 72.5 acres of land from the US General Services Administration. The terminal now has 130 tanks, with a combined capacity of 550,000 barrels and a throughput of 200,000 barrels a month. Although this may not be enormous compared with its competitors, WLT focuses on giving its customers a specialised, value added services. By providing a large amount of smallsized tanks WLT allows refineries and producers the opportunity to move into new markets without building up substantial inventory levels. The terminal has a successful balance of tanks containing petroleum, petroleum products and vegetable oils. Its tank occupancy is over 90% but is has regular availability to entice new customers and products. Although WLT did not add any tankage in 2007, the terminal did expand in other ways. The terminal has just added a new secure railcar cleaning package to its portfolio, by partnering with US-based rail car services company CRMS. CRMS provides for the inspections and repairs of railcars, while WLT affiliated company Rapid Rail Services cleans them – a unique service for a bulk liquid storage provider. ‘This has proved extremely popular and 20-25% of our customers use it,’ explains Kip Middendorf, sales manager at WLT. WLT has also recently increased its railroad track by 2,500 linear feet over the past two years, for a total of 12,500 linear feet. This provides room to stage over 200 railcars at a time. An average of 60 tanker trucks are loaded or unloaded at WLT daily for a total of over 15,000 loads each year. To read this article in full you will need to subscribe to Tank Storage Magazine or buy the back-issue. Click here for further details

Prime target

Since 9/11 security has increased everywhere, but in even more so at storage terminals. A successful attack would not only be devastating to the surrounding area, it would also bring the region to a standstill The downing of tools at the Grangemouth oil refinery in Scotland, UK, at the end of April and the feeling of being held to ransom by the country’s demand for energy only lasted for a matter of days, but the fall out of a plant closure is far reaching, whatever the cause and the duration. Energy facilities are clearly easy and hardhitting targets for anyone with an axe to grind. Facilities such as refineries, storage terminals and tank farms are not just potential targets for those intent on petroleum jihad as it has been termed, but for anyone intent on mischief. Whether the threat is a lone suicide bomber or a gang of bored teenagers looking for a thrill, plant security is a major issue and ignored at peril. The authors of a recent report about security risks to the oil and gas industry from the Centre for Contemporary Conflict (CCC), point out that attacks on oil and gas installations have become the weapon of choice for international terrorism, irrespective of the political system and social-financial boundary conditions of the society under attack. The report highlights attacks by the terrorist groups FARC and ELN on Colombia’s national pipeline Cano Limon- Covenas, so numerous over the past five years that it has become known as ‘The Flute’; and pipeline attacks attributed to Chechen terrorists in and around Moscow, Volgograd, Dagestan and Stavropol despite increased efforts by the Russian security forces. September 2007 saw six simultaneous attacks by terrorists against oil and gas pipelines in Mexico, causing severe supply shortages and leading to the temporary closure of several factories. Iraq, India, Pakistan, Turkey and Sri Lanka have also seen their fair share of similar attacks over the years, storage facilities in the latter being totally destroyed by a rocket and grenade attack in 1995. For a country like Sri Lanka, almost entirely dependant on imports, to have a third of its national crude storage capacity and over half its kerosene and diesel storage capacity rendered unusable caused a major national energy crisis. To read this article in full you will need to subscribe to Tank Storage Magazine or buy the back-issue. Click here for further details

Testing testing

Just one incident of fuel contamination is enough to validate the terminal industry’s stringent requirements on testing and analysis Only in a minority of cases are petroleum products transported by road tanker from the refinery directly to the service station, where they are sold to the motorist. Most are pumped by pipeline or moved by ship or rail car to an intermediary storage terminal owned by the oil company itself, or to an independent tank farm, before finally being delivered to the tanks at the service station. The Oikos Storage terminal at Canvey Island in the UK accepts chemicals and oil products, most of which are imported from marine tankers through pipelines at its Thames River mooring. Distributed amongst 100 tanks, the largest being in excess of 20,000m3 and the smallest just 55m3, is a total storage capacity amounting to 300,000m3. Oikos exports most of the oil products through one of two pipelines; the Government Pipeline and Storage System (GPSS) extending to some 2,500 km, and the UK Oil Pipeline (UKOP). Through the UKOP system, Oikos has access to London’s Heathrow, Gatwick and Stansted airports. Although it has a comprehensive laboratory, Oikos, in common with all public liquids storage companies, does not have the ultimate responsibility for the quality of the products it is storing. This responsibility lies wholly with the owner, especially at the point where the product is sold and the transfer of ownership takes place. In most cases, quality inspection is outsourced to a third party independent inspector trusted by both parties to the sale. The specifications governing petroleum products in Europe are BS EN 590 for diesel fuel, BS EN 228 for petroleum, and BS EN 14214 for B100 biodiesel. To read this article in full you will need to subscribe to Tank Storage Magazine or buy the back-issue. Click here for further details

Spotlight on internal floating roofs

Although floating roofs are a mature technology, the designs and components are still evolving, with emphasis on improving durability and increasing safety in line with mandatory regulations Aluminium internal floating roofs (AIFR) were first developed in the 1950s, but they have come a long way since then. One of the first designs involved pillow floats and a skin deck, but this approach was superseded. These noncontact AIFRs lacked sufficient buoyancy and strength, so the foam-filled rectangular pontoon was introduced, and non-contact pillow floats ceased service because failed deck seam sealants lead to excessive emissions. The pillow float system was replaced by tubular skin and pontoon IFR systems. These consist of interconnected hollow tubular pontoons surfaced with a grid of aluminium beams and sheets. There have been many significant changes to the design over the years, and the skin and pontoon IFR is now the most widely used AIFR system. There are three major manufacturers of skin and pontoon AIFR in the US: Allentech, HMT and Ultraflote, with several more producers worldwide. The quality of design, fabrication and installation differ between manufacturers, but a good AIFR is expected to provide service life of 25 years or more. For longest life and best performance, Bill Grimes, senior engineer at Allentech recommends the honeycomb roof, which has roots in the aerospace industry for optimum strength to weight ratio. The honeycomb full contact floating roof is more than twice the price of the pontoon style. It is both stiffer and stronger, maintaining full contact with the liquid, i.e. avoiding vapour space. The honeycomb style uses a series of flat interconnected composite modules consisting of a honeycomb hex core sandwiched between aluminium sheeting. There are two fabricators in the US, Allentech and Petrex, which both market their products worldwide. But there are significant differences in the two designs. The non-perforated honeycomb core system is based on the premise that an accidental puncture to the surface skin will isolate the breach to a single cell of the honeycomb. The Petrex system is based on using a fuel-tank sealant to assemble modules. To read this article in full you will need to subscribe to Tank Storage Magazine or buy the back-issue. Click here for further details

Evolution of floating roofs

As tank contractor HMT celebrates its 30 year anniversary, the company looks back at how technology has changed In the course of storing bulk liquids, which range from crude oils to highly volatile refined hydrocarbon products, terminal operators have encountered various problems. This has resulted in the evolution of improved storage containers, including the development of storage tanks with various types of floating roofs. Types of storage containers Hydrocarbon liquids are stored in several types of containment structures. These include: Tanks designed for storage only, with no other consideration. These tanks include open top tanks, having no fixed or floating roof, and fixed roof tanks, having no floating roof Tanks designed for changes in liquid volume. These tanks include floating roof tanks, designed to adjust to the varying liquid volumes, always keeping their retaining surfaces in contact with the liquid, thus eliminating the vapor space Tanks designed for changes in vapor volume. These tanks include those containers designed to adjust themselves to varying vapour volumes, either at constant or variable pressure. Tanks designed for changes in pressure. These tanks include various types of pressure containers and pressure vessels, designed to accommodate varying internal pressure and/ or vacuum conditions, allowing the pressure of the vapour space to build up or decrease. Why floating roofs? Floating roofs have been used in conjunction with the storage of volatile hydrocarbon products since the early 1900s, primarily to reduce the loss of stored product due to evaporation. Vapour evaporation can increase the risk of fire or explosion, as well as resulting in air pollution. But the most compelling reason for reducing this evaporation loss is that of cost savings. Losses can occur when the tank is being filled or emptied, or when it is standing, due to breathing or boiling of the stored liquid at the surface, and the resultant air-vapour mixture. When these hydrocarbon rich vapours escape from the tank, product loss and subsequent product deterioration (the loss of light ends) occurs. To read this article in full you will need to subscribe to Tank Storage Magazine or buy the back-issue. Click here for further details

Perfecting Performance

Valve manufacturers are placing their products through rigorous testing to meet the latest performance expectations Within the vast compounds of a tank farm, oil or petrochemical terminal, numerous valves, such as ball, butterfly and check valves assist bulk liquid flow in a number of applications. Before they are installed, all valves must measure up to strict industry regulations from a number of international bodies. ISO 15848-1:2005 specifies testing procedures for evaluation of external leaks of valve stem seals (or shaft) and body joints of isolating valves and control valves intended for application in volatile air pollutants and hazardous fluids. End connection joints, vacuum application, effects of corrosion and radiation are excluded from this. The updated standard ISO 15848-1: 2006 specifies industrial valves through measurement, test and qualification procedures for fugitive emissions, part 1: classification system and qualification procedures for type testing of valves. There also others including ISO 7121:2006 steel ball valves for general-purpose industrial applications; ISO 15848-2:2006 industrial valves – measurement, test and qualification procedures for fugitive emissions, part 2: production acceptance test of valves; ISO 10434:2004 bolted bonnet steel gate valves for the petroleum, petrochemical and allied industries. To read this article in full you will need to subscribe to Tank Storage Magazine or buy the back-issue. Click here for further details

A magnetising solution

At a time of high oil costs, pump manufacturers are concentrating on seal-less equipment to prevent the loss of those precious petrochemicals Pumps play a vital part in most petrochemical process systems to transfer hazardous and heated liquids. The scope and number of pumps at oil and petrochemical terminals is vast, including gear, centrifugal and air operated double diaphragm (AODD) pumps. To respond to customer demands and environmental regulations, pump manufacturers have introduced innovative technology to prevent product leaks, and accommodate higher flow volumes. One trend which can offer many advantages is to use mechanical seals or seal-less pumps. The power of magnets To eradicate risk of leaks, companies such as Johnson Pump, Viking Pump and Michael Smith Engineers have introduced new seal-less magnetic drive centrifugal pumps, adhering to ISO 13709:2003 – centrifugal pumps for petroleum, petrochemical and natural gas industries. SPX Johnson Pumps, a division of the SPX Process Equipment Operation, released its Top Gear Mag Drive range for corrosive, toxic or expensive liquids in April 2008. The pumps are magnetically driven so they are seal-less by design. Total containment of the liquid inside the pump is achieved using a hermetically sealed can, which effectively isolates the liquid from the surrounding environment. This eliminates the need for shaft seals and the associated wear and leakage that would normally occur. TopGear MAG pumps provide a maximum capacity of 80m3/h, a maximum differential pressure of 16 bar and can operate on liquids with a maximum temperature of 25°C. ‘Within the chemical process industry this pump is used for safe transfer of toxic liquids, eliminating hazardous leaks into the environment,’ Johnson Pumps’ sales manager Peter Robinson says. ‘Typical examples would be road tanker offloading, of products such as phenol, or isocyanates, which are used in the polyurethane manufacturing industry.’ US-based Viking Pumps, part of Idexcorp, also released a dimensionally interchangeable seal-less Universal Mag Drive Series this year, in January 2008. The seal-less pump features a thrust-controlled design that allows short-term run dry capabilities and bi-directional pump operation for enhanced application flexibility. Available in cast iron, steel and stainless steel, the seal-less pumps eliminate seal leakage and environmental concerns, along with downtime often associated seal replacement. To read this article in full you will need to subscribe to Tank Storage Magazine or buy the back-issue. Click here for further details

Moving through the maze

Transportation costs chew through a company’s profits, so must be kept as low as possible, either by outsourcing, streamlining or using specialist software to keep track of where and when a product is at all times The task of transporting crude oil and refined products can be conducted by the producer, refiner, pipeline trader or one of several downstream distributors, such as a terminal operator or independent marketer. In most circumstances product is transported from one storage facility to another by a dedicated logistics company, whose only role in the distribution chain is to provide the means of transportation. Due to the nature of the products being moved, transportation costs are high and there is a significant amount of challenges involved, including high fuel prices, new regulations and a shortage of drivers and vehicles. The working time directive regulates the amount of hours in which a driver can be on duty and drive. Different member states in the EU interpret the working time directive differently, posing questions such as what is duty time and what is rest time. There is an increase in output in the European chemicals industry, and insufficient movement in European infrastructure of intermodal capacity means more driving capacity is needed. The working time directive restricts hours and driving capacity creating a bottleneck. ‘It is the not length of time the chemicals are in storage that is a concern, but if product sits for too long it is occupying space and costing money,’ Nigel Hobson, GM global supply and logistics at Shell Chemicals, explains. ‘Shell Chemicals’ aim is to continually move tanks and ensure safety in storage. We build into the inventory a requirement in case of ship or rail delays.’ The most cost and timeeffective movement of chemicals or petrochemicals would be through pipelines, but in most locations they do not exist. Instead companies are looking at intermodal transportation, using several different methods to make the journey as efficient as possible. To read this article in full you will need to subscribe to Tank Storage Magazine or buy the back-issue. Click here for further details