Tank Storage Magazine v05 i04

40.00

Volume: 5
Issue: 4
Date Published: September 18, 2009

Category:

Headlines

Storage on the up

Recessions are certainly not always good news for the terminal industry. The late 1970s saw a levelling-off in demand for oil and a sharp rise in the price, which led to a fall in tank utilisation. Terminal operators were forced to lower rates to unprofitable levels to fill tanks, and then got stuck with those rates when conditions improved. As a result many terminals were no longer viable and had to close.


Tank terminal update - Canada

Canada’s oil industry hit the headlines on 1 August with the completion of a merger between Suncor Energy and Petro-Canada. The merger, named Suncor Energy, is now Canada’s largest energy company and the fi fth largest North America-based energy company by market value. Under the terms of the agreement, the companies will sell approximately 1.1 billion litres of terminal storage. The company’s 20 billion barrels of petroleum will undoubtedly have an impact on existing storage volumes. Meanwhile major expansions are underway with Canterm Canadian Tank Terminals looking to add quarter of a million barrels for clean petroleum products at its Quebec facility, and 1.5 million barrels in Montreal depending on customer acquisition demand. Canterm currently operates three terminals and intends to develop two others on brownfi eld sites.


COMAH regulations: why waiting five years could risk safety

Every company that owns and operates a top tier COMAH installation will be aware that, under Regulation 8 of COMAH, they are required to review their safety reports at least every five years. The key word being review – a full re-submission of the safety report is neither obligatory or, in many cases, necessary. However what many companies fail to appreciate it that Regulation 8 is much broader than the ‘five year’ review and places a requirement on operators to undertake a formal review of their safety report: • In response to new facts or to take account of new technical knowledge about safety matters (Regulation 8(1)(b)); • Whenever the operator makes a change to the safety management system which could have significant repercussions with respect to the prevention of major accidents or the limitation of consequences of major accidents to persons and the environment (Regulation 8(1)(c)); • In advance of any proposed modification to the establishment or an installation, the process carried out, or the nature or quantity of dangerous substances present and where that modification could have significant repercussions as above (Regulations 8(4)(a)).


A new experience

For storage terminals the onset of a recession normally means a very busy beginning, followed by lots of empty tanks as the situation worsens. But it is different this time, as John Hoblyn, a director at Canadian terminal Valleytank, explains: ‘Our terminal has been exceptionally busy all this year and is likely to remain so for the whole of 2010. It seems that it is the same for many of our colleagues in this industry.’ This situation is good for terminal operators, many of whom can, at last, avoid being forced to lower the rates to unprofi table levels to fi ll tanks (and then get stuck with those rates even when conditions improve). ‘Our industry needs this healthier market, with customers demanding more and more specialised equipment for which many are reluctant to pay adequate rates of return over short contract periods,’ Hoblyn explains.


A need for change

Canada has, unsurprisingly, not escaped the economic downturn and there have been plenty of headlines lamenting refinery and production plant closures. These are depressing for local labour markets, but not necessarily for the storage sector. Closed refineries coupled with sustained product demand means an increased need for imports and product movements, the very backbone of storage. The dynamics are subtly changing and the terminal community in Canada is surviving through adaptation and careful strategic and financial planning. Just a few weeks ago, at the beginning of September, Canada’s biggest energy company Suncor scrapped plans for a C$1 billion €0.64 billion) heavy oil processing unit at its Montreal refinery, and in July, Royal Dutch Shell said it may sell, close or even convert to a terminal, its 76-year-old refinery in Quebec’s largest city as the industry struggles with weak profit margins.


Tank Storage goes north

North of its gasguzzling neighbour, storage levels in Canada remain strong. In August Canada’s transportation, processing and storage player Inter Pipeline Fund announced it experienced high usage rates in its storage tanks, averaging 95.9%, up from the 94.3% usage rate achieved in Q2 2008. Funds from operations totalled CA$68.5 million (€43.5 million) in the second quarter this year, and the company introduced a $72 million expansion project on the Bow River system in Alberta to allow shipment of segregated crude oil streams from the Hardisty oil storage hub. Subsequent to quarter end Inter Pipeline Fund also extended its Nexen storage and marketing agreement for three years. The need to add capacity to North America’s oil infrastructure will be resolved with the construction of a 1,000-mile long Canada to US oil pipeline, part of which began in August.


How compulsory stocks affect storage operators

In 1974 the industrialised world signed up to the International Energy Programme (IEP) which set up the International Energy Agency (IEA). IEA member country governments are committed to taking joint measures to meet oil supply emergencies and have agreed to share energy information, co-ordinate their energy policies and co-operate in the development of rational energy programmes. The IEP Agreement requires the 28 IEA member countries to hold oil stocks equivalent to at least 90 days of net oil imports and – in the event of a major oil supply disruption – to release stocks, restrain demand, switch to other fuels, increase domestic production or share available oil, if necessary.


Growth in tough economic times: survivial guide for the chemical industry

Without question, 2008 was difficult for everyone – chemical companies in particular. And unless top management go into full-out survival mode it is possible that many companies in operation today will simply disappear. No one in the industry forecast that oil prices would reach nearly $150 (€106) per barrel, sending materials costs soaring. These remained volatile throughout last year and economic conditions around the world, which initially seemed weak but essentially stable, suddenly fell through the floor. Vehicle sales, for example, are down 30% to 40% in the US alone and mixed, often conflicting economic signals throughout 2008 made it hard for chemical companies to lock in mediumand long-term commitments. As the global recession developed it became increasingly difficult to pass along price increases, particularly to clients with contracts that were fixed for six to 12 months.


Terminal growth what does it involve

Expanding economies such as those in China and India have been the main focus for construction of new terminals over the last few years. However there are areas of the world such as east Africa that have had low usage of petroleum products in comparison to their population. These economies are not particularly connected to the world economy and new terminals are being constructed to meet growing local demand. There is also a growing interest among financial institutions to directly own and operate storage terminals, rather than just providing financial backing. Many are attracted by the fact that storage terminals can generate a stable income over a long period of time. In an era of low interest rates, oil storage terminals provide a high return with a reasonable guarantee of effective use of capacity. In China additional capacity for Titan has been provided by China Storage which is owned 50.1% by Titan and 49.9% by Warburg Pincus. The money required is raised through issuing China Storage Notes.


Weighing the risks of leak detection against the rewards

Preventing volatile organic compound (VOC) fugitive emission leaks from equipment and piping has been a hot enforcement topic for the Environmental Protection Agency (EPA) for over a decade. Fugitive emissions historically accounted for over half of VOC emissions reported by petroleum refineries, and those emissions may have been under-reported.1 But through leak detection and repair (LDAR) bestpractice settlement agreements reached with most major refiners in the US, the EPA has reduced toxic fugitive emissions from the petroleum sector by 44% since 2000.


Being prepared is only half the battle

Anyone who has ever been faced with the nightmare scenario of a major storage farm fire will know that the response in the first few minutes is critical to the final outcome. The reality is that, no matter how sophisticated the fire fighting equipment, nothing will make up for a lack of emergency preparedness, inadequate training or poorlyimplemented tactical incident management. The golden rule when preparing for such an emergency is: assume nothing and test everything.


Reducing load rack incidents

Refined products terminals have a very high exposure to spills on their truck load racks. It does not matter if it is top or bottom loading, new or old: this is where there is the greatest amount of activity and consequently, the greatest exposure to incidents. The industry has a large and continually changing driver pool, little consistency in design across the racks, a wide range in the quality of driver training and experience and various levels of facility technician experience. And with both facility and carriers constantly striving to control costs, these conditions can lead to failures. Fortunately, with a well designed management system, these risks can be controlled and incidents virtually eliminated.


Meeting the challenge head on

Fixed foam systems are undeniably the best method of protection for storage tanks because they do not require marshalling of emergency equipment and manpower. Much has been written on the various techniques since Sweden-based Skum developed the first reliable storage tank fire protection solution 60 years ago. Today, systems are available for cone roof and fixed roof tanks, open-top floating roof tanks, covered floating roof tanks, and horizontal tanks. However, storage tank fires frequently start with an explosion that may seriously damage the tank structure and nullify the effectiveness of foam generators used in fixed or over-the-top systems. This has led to the more widespread use of the less vulnerable subsurface injection and semisubsurface injection systems for applications where there is sufficient water pressure available for their use.


Fighting fire with foam

On 29 July 2005 the US Congress signed the Energy Policy Act of 2005 into law. This was the fi rst major piece of legislation passed in the US that actively responded to climate change. One facet of this created the Renewable Fuels Standard (RFS), which regulated the minimum volume of renewable fuel that is to be blended into petroleum sold in the US. As a result of this legislation, in the fi rst full year under the RFS (2006), the US produced 35% more biofuels by volume than what was required by regulations.


Valve sealing with verification

Valves have an intrinsic paradox. The worst thing to do with a valve is to turn it and the next worst thing to do is to never turn it. In both cases damage to the integrity of the valve is very common – by cycling the valve it causes wear to the moving parts, particularly the seats, but these can also be damaged if they remain stationary for long periods of time. There are many valve options on the market today, so it can be confusing to choose the best option. ANSI B16.104-1976 defines the different levels of acceptable valve leakage by listed categories from Class 1 to Class 6. Class 6 is the most stringent, measured in fractions of ml per minute using air.


Pad-ready foundation support

Many factors need to be considered when determining where and how to construct an aboveground storage tank (AST). When Marathon Petroleum in Powder Springs (Georgia, US), decided to build a new large-diameter petroleum AST it took the prudent step of investigating whether the existing subsurface conditions could adequately support the tank on a shallow foundation mat. The new tank’s location at the Powder Springs Terminal was slated to be approximately 150 feet away from the closest existing tank. The proposed steel tank design measured approximately 140 feet in diameter and 48 feet high, and was to be constructed using a reinforced concrete ring-wall type foundation. As a first step, Marathon Petroleum contracted with USbased geotechnical consultant Arcadis to investigate the site.


If your terminal's not doing well, why not?

This year’s International Liquid Terminals Association (ILTA) conference and exhibition had a very positive feel, with the overall message being that most storage terminals are doing better than just surviving in the current uncertain economic and fi nancial climate. The storage industry has, and will continue to have, very attractive fundamentals and as such remains of interest to fi nancial investors with longer term horizons. Tighter lending restrictions are also providing many opportunities for terminals with good cash fl ow and credit rating. Although most speakers agreed that they’ve never seen a situation like this before, the consensus was that storage terminals should make the most of the opportunities the current climate is bringing.