Kick the tyres before you buy
The recent global financial crisis has created many opportunities in the terminal business. Conducting thorough due diligence and asking the right questions before purchasing a terminal can go a long way in determining whether your acquisition will be successful. The following questions are not all encompassing but they will help make any acquisition go smoother, and hopefully be more financially rewarding. One of the first questions to consider when looking at a terminal for purchase is how long have the current owners been planning on selling? Have normal maintenance activities been deferred? Have regular tank inspections and maintenance activities been delayed? Is the fresh paint still wet? This is why reviewing several years of operating and maintenance costs are necessary to get a good picture of the true cost of ownership.
Tank terminal update - US
The US is the world’s third largest oil producing nation, and has the world’s highest rate of fuel ethanol production. The boost in production of liquid fuels has necessitated extra tankage space. Tanks brought on by NuStar Energy’s $400 million (€294 million) construction programme, for example, will help cater for demand for storage. Eight NuStar terminals have been expanded in 2008, with the tools to be laid down on a further two this year. The San Antonio-based operator also acquired a 300,000 barrel terminal in Texas in Q4 2008. Magellan Midstream Partners maintains an impressive portfolio of growth. During 2009 its pipeline tankage builds will amount to 2,077,000 barrels. The next year’s projects lift this number further to an additional 2,350,000 barrels storing crude, ethanol, transmix and refined products. The partnership added six new terminals to its Southeastern Terminals assets already this year. It is set to bring on another 14 projects later this year and one in 2010. Another big name player upping its capacity is Kinder Morgan Energy Partners, which started expansion programmes on at least five terminals generating an extra 7.3 million barrels of storage. Europe-headquartered Vopak still makes an appearance with an acquisition and an expansion on American soil in 2008.
Bucking the trend
Buckeye Partners is best known for its 5,400 mile pipeline network across the US providing refi ners, wholesalers, marketers, airlines, railroads, and other commercial end-users with dependable transportation of refi ned petroleum products. In addition to pipeline transportation services, Buckeye has also quickly become one of the largest refi ned products terminal operators in the world. In the last fi ve years alone, Buckeye has acquired 46 terminals across the midwest and northeast US, bringing its total terminal portfolio to 64 facilities. With locations in the states of Connecticut, Illinois, Indiana, Massachusetts, Michigan, Missouri, New York, Ohio, Pennsylvania, Tennessee, and Wisconsin, Buckeye’s terminals have an aggregate storage capacity of approximately 24 million barrels. These facilities provide a variety of services for customers, including product receipt and storage, loading of refi ned products at fully automated truck racks, injection of additives, ethanol and biodiesel blending, railcar offl oading, barge loading and unloading, and transfers to connecting pipelines. In addition to its extensive pipeline and terminal assets, Buckeye has also expanded its energy logistics portfolio by entering the natural gas storage business and acquiring a wholesale distribution business. This diversity is one of the factors helping the company maintain solid results despite what it calls ‘diffi cult market conditions’.
US terminals remain cautiously confident
Storage is not immune to the global economic downturn, but nor is it vulnerable in the way that the car manufacturing or luxury goods markets are. Ironic though it is that the current recession began in earnest just as millions of barrels of new tank capacity came online last year. The economics of an independent terminalling sector characterised by long term contracts mean that even those companies that injected millions of dollars in new facilities in the boom period of 2006-2008 are far from worried that their tanks, some of them still almost sparklingly new, will lie idle and empty. Tank lease rates remain sustained at high levels of recent years, and in some cases are higher than a year ago, while operators quote tank usage fi gures of 97.5% and above. ‘The storage sector is something of a hedge to a recession environment, because crude prices going down begets a contango,’ says Danny Oliver, vice president of marketing and business development at San Antonio-headquartered NuStar Energy, the world’s third largest independent liquids storage operator. ‘The market is strong today because the contango is steep and traders are looking for anywhere to stick crude oil. We also see the same type of contango in distillates and in petroleum.’ Certainly, earnings have been strong for independent operators, particularly those with a large presence in petroleum storage as opposed to chemicals. NuStar was one of those demonstrating a strong Q1 2009 performance, beating analysts’ expectations through strong actions by its storage business and taking net income to $31.6 million (€23.8 million). Although down from $49.6 million in the same period of 2008, NuStar says this was largely due to the seasonal costs incurred as it took over CITGO’s asphalt business.
ILTA ignites the industry
As the number of barrels stored in the US rises – almost half a million barrels of oil storage were added at Cushing, Oklahoma, sources reported in April – so does the number of new exhibitors at this year’s ILTA show. In June, visitors to the exhibition will see a total of 44 new companies displaying their products from the UK to China. The conference will kick start with an overview of the new political landscape and its impact on the terminal industry. Central themes for the twoday conference include inspection, biofuels logistics, expansion implications, leak detection and others. ILTA represents 81 companies and partnerships that operate bulk liquid storage terminals in 43 countries. These facilities are located in ports and along rivers, canals and pipelines. They serve the vital economic purpose of transferring liquid products from one transportation mode to another. Products handled by its members include crude oil, petroleum products and a wide variety of chemicals, as well as ethanol, biodiesel and vegetable oils. New exhibitors ATEC Steel designs, fabricates and constructs ASME vessels, shop built tanks, specialty / custom fabrication and fi eld erected storage tanks. The company is backed by key employees with extensive backgrounds in tank and steel fabrication; proven industry experience; provides a single point of contact project management; low cost – high quality producer; precision fabrication; reliable performance on every project; and commitment to safety being a member of IS Networld, industry low TRIR and EMR ratings.
Alternative floating roof design
For over 50 years aluminium internal floating roofs (AIFR) have been used in storage tanks to reduce emissions, cut fuel loss from evaporation, provide a barrier to airborne contaminants, and improve safety. The traditional skin and pontoon designed floating roofs use tubular pontoons as structural members that also provide buoyancy. For most designs, these pontoons are usually either eight or 10 inches in diameter and will vary in length from shorter make-up rim and additional flotation to full deck pontoons. Caps are welded to each end of the pontoon bodies. The end caps are fitted with leg or rim attachment mechanisms and the leg and rim joints are where the support of the roof’s weight is transferred to the pontoon. Rails are installed on the top of the pontoons for structural support and to clamp the lapped deck skins. Skin and pontoon roofs function by intentionally having a free liquid surface that evaporates into a trapped air space under the deck skin. This vapour space has to become saturated and stay saturated to prevent further evaporation. These trapped vapours are released to the atmosphere when the roof is landed and through anomalies in vapour pressures. Full contact roofs greatly reduce or completely eliminate the amount of vapour under the roof and therefore the emission of saturated vapours when landing the roof. Experience has shown that the flotation pontoons are the most common component failure in the skin and pontoon design. The weld of the end cap to the pontoon body seems to be the most vulnerable to failure. When the skin and pontoon roof is landed, the weight of the roof rests in most part on the pontoon spans.
Floating roof design
Floating roofs have been in existence for over half a century, providing operators and regulatory bodies a reliable, time proven safety and emission control system. They function by reducing the formation and release of environmentally harmful and potentially explosive volatile organic chemicals in aboveground storage tank systems. Floating roof design generally varies with the material used for construction. External floating roofs (EFRs) which are exposed to the elements use a carbon steel construction with pontoon or double deck designs. These designs allow the floating roof to support potentially heavy loads of rain and snow and are also usually coated to prevent corrosion from weather exposure. Carbon steel floating roofs use heavy leg supports when landed as well as large airfilled compartments known as pontoons for buoyancy. Carbon steel EFRs also incorporate some form of articulating pipe or flexible hose deck drainage system to remove excess precipitation from their surface. For tanks that use fixed covered roofs, like steel cone roofs or aluminium geodesic domes, the internal floating roof (IFR) systems are typically constructed using lightweight materials because they do not have to support the environmental loads placed on the external floating roof systems. While materials vary, IFRs typically use aluminium as their structural material, though some use fibreglass, thin gauge stainless steel or other composite panels. Depending on the design, internal floating roof systems can usually be cable supported from the tank fixed roof structure, due to their low mass. One of the key differences between tanks with a carbon steel external or aluminium IFR is their working volume. Each floating roof has a different cross sectional area displacing volume that would otherwise be filled with stored product, translating into lost working volume due to the profile depth of the floating roof system.
Product movement tracking systems
Aterminal operator has very little control over product receipts and there are many factors that can affect the actual amount of product received compared to the amount requested or invoiced. They need a product movement tracking system to accurately measure the physical receipt at any given moment, again at fi nal receipt and then automatically provide daily close-out data that can be given to a corporate accounting department to assist with the consolidation of physical versus book inventories. Real-time communication between the system and all connected devices For a marketing terminal receiving product from a pipeline company, this may mean connecting the system to the pipeline meter and any tank gauging equipment or meters that provide inventory data for the receipt tanks. If an existing system is already providing this data or a new system can be plugged into existing fi eld wiring, it will save on additional costs of connecting or wiring the facility. By using live communications for all connected devices the operator can see real-time measurement that can then be clearly identifi ed with an exact time, such as at the end of a movement. And by ensuring the system can be confi gured for the movement path based on the facility’s piping, tankage and equipment the specifi c tankage and the inventory volumes within the pipeline before, during and after receipt can be accounted for.
Maximising the return on automation investment
With increased customer and internal requirements and expanding government regulations today’s IT project must prove to be a quick return on investment and solve serious business needs. The most important step in improving return on investment is to understand exactly how the current system works. Terminals should read the user documentation on the system to review unused features and functionality. They should also take advantage of additional training for staff, request on-line training or in-person site training and attend user conferences to stay up-to-date. Clearly define challenges It is crucial to review day-today operations at sites and seek out manual bottlenecks to automate. It is also important to specify how long a process takes, what the impact is on staff, associated costs and the impact on customers and internal teams. Regulatory changes and required ERP system updates often have hard dates associated with them. Understanding changing business needs –even as regulations are being written – will help an automation vendor solve your challenges. Approaching the vendor early in the review process Some terminaling companies approach their automation vendors too late in the process of a business challenge review. It is important to present the vendor with a detailed description of the challenge instead of project requirements. Working together to fully flesh out requirements allows brainstorming to occur. This way, the project becomes an extension of the partnership between client and vendor.
Exercising extreme caution
One of the side effects of the decision to blend biodiesel into hydrocarbon diesel to form a standard 5% (B5) fuel to ASTM D975-09 and EN 590:2000 specifications, is the potential for the FAME to contaminate other fuels due simply to its one-time presence. Martin Honeybun, a technical team manager at the UK’s Energy Institute (EI), describes this as ‘the biggest issue to affect the industry since the introduction of unleaded fuel’. Following the introduction of B5 biodiesel containing FAME into multi-product pipelines (MPPs) along with jet fuel, no detectable trail back of the FAME component was found in the subsequent jet fuel batch during a trial run in 1995. This was conducted by Trapil, in France, using the best available analytical methods at that time. It was not until October 2005 that Shell Petroleum collected samples of jet fuel from the Trapil system and found, using a new technique of two-dimensional gas chromatography (2DGC), 11 parts per million (ppm) FAME in the head of the jet batch; but none in the composite samples. In early November 2006, Colonial Pipeline of Alpharetta, Georgia, US, ran trials on a batch of biodiesel transported through its pipeline. As a result of its findings, the company said: ‘test shipments of biodiesel, while feasible, had raised concerns of potential contamination to other products in the pipeline, especially jet fuel.’ It also confirmed that biodiesel shipments would not be permitted in its distillate products pipeline.
New twin screw pump for heavy oil duties
Heavy duty fuel oil is viscous and can contain foreign matter that can influence and damage the internals of the pump. Were centrifugal pumps to be used for bulk transfer duties, the process would require substantially higher costs as large motors would be needed to drive the pumps, together with higher running costs due to the inefficiency of centrifugal pumps handling heavy duty oil. For these and other reasons, the most appropriate solution is to employ a twin screw rotary positive displacement pump. This pump type has very high efficiency characteristics and low power consumption when operating at very high capacity/flow demand. With this pump, the principle design feature is the absence of any metallic contact between the screws or between the screws and their bores. This enables them to handle a wide range of fluids, including those that lack any lubricating properties. When running, the liquid passes through the pump chamber in an axial direction with the minimum degree of shear and with little or no pulsation.
The 3 Rivers Terminal, strategically located southwest of Chicago, consists of 17 storage tanks and 15 blend tanks used in the storage, handling and packaging of mainly hydrogen peroxide, but also caustics, amines (a derivative of ammonia), glycerin propylene, glycol and chemical de-icers. of hydrogen peroxide. This for-hire terminal facility currently provides storage, transfer and packaging services to the chemical industry for both bulk liquid and dry chemicals in truck and rail quantities. To accommodate its constantly growing customer base the 3 Rivers Terminal is served by seven truckloading racks and 42 railcarunloading positions. These racks and railcar positions also enable the terminal to offer transloading services to its customers, allowing loads that arrive via railcar to be transferred to tanker truck, and vice versa. An on-site truck scale ensures quick and efficient product handling coupled with accurate inventory control. The facility has a total storage capacity in excess of 650,000 gallons (2,460,500 litres).
Building momentum in a challenging economic climate
In a deep recession, investment capital tends to be tight. However, tank storage operators and the energy sector in general have to take the long-term view, so there is still plenty of construction underway worldwide in anticipation of growing long term demand. Last year, high energy pricing stimulated a boom in tank building. Though the price of oil has come down significantly, economists reckon the price is bound to rise given the threat of reaching peak oil reserves in an energy hungry world. Furthermore, demand for biofuels is forecast to rise significantly with demand for specially coated tanks and new distribution infrastructure. Tank farm operators are also seeking greater flexibility in order to handle a wider range of products, and are seeking to locate new storage capacity at strategic locations closer to transport infrastructure given changing distribution demands. As new technology is introduced, tank operators are investing in more automated systems to reduce labour costs and improve the accuracy of delivery systems. Installation of vapour recovery and more advanced safety systems is also becoming standard, driven by stronger regulatory environments locally and internationally.
Safe marine access
The same hazards exist when considering safe access to road and rail tankers, as with personnel transfer on marine vessels. These include: • A bridge has to be created between a permanent structure and one that is temporarily visiting the facility • The bridge needs to span a void that could well result in death for someone unfortunate to fall into it • The height and distance of the vessel, like road tankers, can vary. However, the main difference is that during its time at the dock or jetty the marine vessel may transform from being a low level deck near the water line to something approaching what looks like an apartment block facing the jetty. The marine access gangway has to accommodate this variation, cope with it and always offer the same levels of safe, assured access, to the operators. Depending on where it will be sited, the marine access system may also have to withstand extreme marine environments. These considerations all have to be factored into the design. It is important to understand the likely range of vessels that will visit the jetty and design a facility that meets and exceeds expectations for current and future needs and regulations.
‘Stability in an uncertain world'
This year’s StocExpo Europe kicked off in style with a preshow tour of the Port of Rotterdam, the home of the storage industry. To mark the beginning of the fifth European event dedicated to bulk liquid storage, the Port of Rotterdam Authority showed guests key sights including building work on the new Gate LNG terminal, construction of Spanish biofuel producer Abengoa’s ethanol plant, and storage tanks belonging to major terminals in the port, such as Vopak, Rubis, Odfjell and LBC. Throughout the tour Ronald Backers, business development manager for bulk cargo and shipping at the Port of Rotterdam Authority, gave visitors an update of the surrounding activities. One of the features the port is most proud of is its buoys and dolphins, which increase the speed and efficiency of ship-to-ship transfers. These have been so popular that the port has introduced a pilot scheme so that terminals can now view their availability online.