Tank Storage Magazine v06 i01


Volume: 6
Issue: 1
Date Published: February 4, 2010



Things can only get better

A year ago things were looking bleak for the storage sector. Rapid construction had just raised terminal capacity but demand was widely anticipated to slump as the worldwide recession took effect. In reality, business remained surprisingly buoyant for most and tank occupancy rates and throughputs remained high. And now tank owners stand to make a killing as traders and refiners alike clamour for storage space. With crude inventories in the most industrialised countries at all-time highs, global oil demand declining for the first time in a quarter of a century and a contango still in place, it seems likely that a significant amount of oil will remain in storage. For the time being the ocean remains the world’s biggest oil storage facility – floating tankers are currently holding around 100 million barrels of oil products.

Florida: 97% success

Around 30 states have aboveground storage tank (AST) regulations, but Florida has some of the most stringent requirements in the country. Florida’s AST regulations are contained in Chapter 62-762 of the Florida Administrative Code, and require secondary containment, on-site piping in contact with the soil, and AST dikefields. Why did Florida adopt these rules? The primary influence for the state’s decision was the Ashland Oil incident involving brittle fracture and the sudden catastrophic discharge of thousands of gallons of petroleum into the Ohio River system. In addition, Florida relies on groundwater resources for nearly 92% of its drinking water, and wanted to minimise the risk of contamination.

TankChem capitalises on silver lining

In 2007 Russia halted deliveries of oil products and other chemicals to Estonia, causing severe headaches to terminals in the region. Russia announced plans to carry out maintenance on the rail link to Estonia, causing extreme disruption as Russia sends a quarter of its oil product exports – including fuel oil, diesel and petroleum – by rail to Estonia, from where it is reexported to northern Europe. Estonia-based terminal TankChem was one of the companies affected. However in spite of a loss of general cargo from Russia, the terminal began attracting traffi c from other countries.

Developments across eastern Europe

Russia is enjoying a good start to 2010. Oil output grew by around 1.5% in 2009 to a new post- Soviet high, putting the world’s largest crude producer on an upward trend again after a 2008 blip, when production fell for the first time in a decade. Analysts are now saying that Russia will produce 1.1% more oil this year as fields in East Siberia pump enough crude to mask a decline in mature deposits further west. Russia is currently producing more oil than traditional world leader Saudi Arabia, which has reigned in output to comply with OPEC cuts. The country extracted 9.925 million barrels per day last year, a record since the collapse of the Soviet Union, up from 9.78 million bpd in 2008 and 9.87 million bpd in 2007. At the end of 2008 analysts had largely expected the decline to continue due to a lack of new Greenfield developments and a sharp drop in crude prices. However, as crude prices recovered and oil majors such as Rosneft sped up the development of East Siberian fields to fill Russia’s first pipeline to the Pacific, output outpaced expectations and growth is expected to continue. Terminals across eastern Europe will benefit from this growth as Russia is a major source of fuel oil for the Amsterdam-Rotterdam- Antwerp market and other European markets. Much of it is exported through St Petersburg and other Baltic ports. The JSC Petersburg Oil Terminal (POT), the largest Russian terminal for oil products in the Baltic Sea region handled 12.1 million tonnes of exported oil products in 2009, 2.5% more than the same period of 2008.

Tank terminal update

Tank Storage magazine provides an update of the terminals being built across eastern Europe

Reducing blend times

The average time for blending a 28m tank using two side entry propeller mixers is 50 hours. Bringing this time down can improve throughput, reduce energy consumption and minimise costly production delays.

Mixing advances

Crude oil storage tanks need a simple method of blending crude to minimise the accumulation of bottom solids and water. The heavy tank bottoms containing water, paraffin and sediment cause sludge to form. Improper mixing hinders processing, transfer, and reduces the effective available volume for crude storage. Jet mixers offer one solution and have been used in different design configurations to create high shear jet plumes to dissolve the paraffin solids and blend the contents of the tanks.1

Cost-effective and energy efficient?

When evaluating the most appropriate process and technology, operators must be absolutely clear in their minds as to what they are trying to achieve: is it mixing, blending, homogeneity or preventing the build up of basic sediments and water (BS&W) in the bottom of the tank? Mixing covers all process applications: liquid/liquid; gas/liquids; liquid/solids and solids/solids. Blending assumes two or more liquids are present to achieve a fi nal state or third product within a given time. This can include solids suspension. Homogeneity typically involves only a single product. Preventing BS&W involves maintaining water and solids in suspension within crude oil. All blending applications in large tanks are fl ow-related, so achieving the best solution has to be made by calculating the required fl ow and selecting the mixer(s) to achieve that flow.

Efficient and reliable mixer

In most cases petroleum and other stored products are mixed using a rotating agitator located on the tank wall. Side entry mixers, however, have many advantages in terms of size, ease of installation and reduced capital costs. France-based Milton Roy Mixing has brought out a new range of mixers dedicated to the oil and gas sector, particularly for tank farms over 100,000m3. With such large tanks the other side of the tank wall can be up to 100m away so the mixing equipment must be carefully designed to provide a high flow rate.

Minimising expansion liabilities

Several options are available for expanding a terminal: acquiring/ leasing additional property, acquiring another terminal, or developing/redeveloping the existing terminal property. In all cases if contamination is discovered companies may incur environmental liabilities, along with loss of operating revenues, penalties, compliance costs, permit transfer problems, and local government and public scrutiny. Yet, in many instances, environmental due diligence is treated as an unwanted stepchild. While the financial and operational due diligence is pursued enthusiastically, the environmental due diligence is often seen as creating only costs, problems and impediments to the deal, and is often left to the end of the transaction. Environmental issues are often considered immaterial when making a large acquisition that costs multimillions or multibillions of dollars. Some agreements for acquisitions are even negotiated and signed prior to, or subject to subsequent environmental due diligence. Sometimes, companies use their own inhouse environmental managers to perform the environmental due diligence, regardless of the fact that they may not have any experience in this area and may not know the current rules and standards. However, the environmental due diligence process can present significant opportunities during a transaction. The information obtained can be used in price negotiations and to incorporate legal protection (indemnifications, warranties, representations, hold backs, or escrows) in the acquisition agreement to cover identified environmental liabilities and costs. Often, the unidentified or potential environmental liabilities (data gaps), can be even more significant and costly. These issues can also be incorporated into the transaction agreement if identified early in the due diligence process.

Flexible systems

How to choose and install floating roof drains for maximum effect

Why lower emissions are not always better

The standard emission levels from a typical vapour recovery unit (VRU) are around 1g of hydrocarbons per m3 product loaded, which complies with most legislation. However, countries such as the Netherlands, are reducing the levels of VOC emissions permitted at a terminal, which may actually be having a detrimental effect on the environment. This is something that Germany did in the past, but then reversed the decision when officials realised the impact it was having. By demanding lower emissions, the energy consumption of the VRU will be much higher, which will therefore have a negative effect on the environment due to secondary emissions from the electrical power plant. If for instance a terminal has 10,000,000m3

Act now and save later

VOCs released in wastewater processes such as aerobic bio-treatment can lead to costly control measures if the vapours violate air emission rules

Improving flow measurement

Accurate measurement of hydrocarbon gases and liquids using industry measurement standards is vital for process control systems, leak detection, and the transfer of product between two parties, more commonly known as custody transfer. The need to accurately measure fl ow originated many years ago when those purchasing energy (i.e. oil, petroleum, natural gas) questioned the accuracy of the invoices they received from the sellers. This led engineers to develop mechanical fl ow meters using paddlewheel and propeller techniques in the pipeline to count the amount of fl owing material. Unfortunately, these systems were not very accurate and were prone to mechanical breakdown, but at least the buyer and seller could agree to abide by their numbers.

Helping re-fuel the Marine Corps

Providing technology for a Marine Corps base is not an average project. Larger-than normal military vehicles and taller-than standard tanker trucks use the facility, so the owners required a customised refuelling system. Michigan-based fluid handling and equipment contractor Oscar W. Larson provided the facility with a refuelling system that includes five loading racks from the Green Access and Fall Protection line by Benko Products, which customised with access options such as safety stairs and bridges. Some racks included canopies incorporated into their design, which are used to protect operators from rain, snow or even sun during the refuelling process. They also help protect the integrity of the petroleum, diesel and JP-8 fuel that operators use to fill the vehicles, keeping unwanted moisture from entering the tanks.

Moving to Malaysia

The unique formula of coinciding a conference on the terminal sector in Asia with one on the biofuels industry worked well and attracted a wide variety of delegates such as traders, storage operators, producers, regulators and investors. These came from 30 different countries, many from southeast Asia but also from as far as Australia, Ukraine, Israel and Canada. Highlights in the tank storage stream included Morimasa Ogawa from Nippon Vopak, the world’s leading terminal operator, who gave delegates a unique insight into the Japanese market. The Japanese storage market is unusual in that refi neries and terminal operators both want more third party storage capacity. Refi neries in particular see tanks on site as a burden as they do not contribute to the company’s core business. However strict regulations, soaring land costs and high construction costs make it nearly impossible to start greenfi eld developments and there are very few opportunities for investment. There is a signifi cant amount of capacity that lies idle, but many of these tanks are unsuitable for certain products and situated in remote areas which are not worth developing. A future opportunity for these tanks, Ogawa explained, is in the biofuels sector. The annual consumption of petroleum in Japan is approximately 60 million litres, so in order to have an E3 blend the country needs 1.8 million litres capacity to store ethanol.