Cheery traders turn teary
Eighteen months ago many of the futures contracts were in contango. Tank storage construction was booming and tank lease rates were increasing. The loss of Libyan crude oil production, coupled with other supply losses due to production problems, put Brent crude oil in backwardation. The European gas oil and North American petrol markets backwardated as well. Then, after three years of contango, the crude oil market in North America found itself backwardated in October. Stuck with large amounts of storage under lease and several major expansions underway, traders found it difficult to make money leasing significant storage volumes. That has translated into pressure on tank leasing rates, with many wondering, have rates now peaked? The last few years have been dominated by contango, when the price of crude oil or a petroleum product is cheaper in the nearest or prompt month and more expensive in the next month.
The refining system in the US has never been the most reliable thing in the world. Outside of the Arab Spring, the most instable part of fundamentals in the oil complex has to be the refining system. As almost everyone knows, Marathon Garyville was the last US refinery built in 1976, but what most people stop short of saying is that the average age for the basic US refinery is about 55 years. Anything that has been working for 55 years should be close to its golden age. Refining margins can be wherever we like to think they are. They can be pulling in large returns or small inefficient margins, US refiners are all working on borrowed time.
API update: 2011
Tank owners and operators have faced tank inspection requirements for many years, with increasing demands for tanks to be equipped with secondary containment. Now, more than ever before, the effort expended to run a profitable enterprise may just be approaching the breaking point for many smaller, independent operators. While many organisations have jurisdictional authority over product storage tanks, the two regulators, the US Environmental Protection Agency (EPA) and the US Department of Transportation Pipeline and Hazardous Materials Safety Administration (PHSMA), combine to produce a large percentage of the regulations that impact the safe operation and protection of the environment through the use of large aboveground bulk storage tanks in the US. However there are not enough inspectors to actively examine the vast numbers of facilities upon which storage tanks are operated. With this lack of trained inspectors from both agencies clearly noted, the changes or additions mentioned hereafter will work only to over whelm the already stretched staff.
Profile: Vopak Asia
In Asia, the sector show edits resilience in the face of two major challenges that Patrick van der Voort had to deal with as soon as he joined Vopak Asia, the Singapore-based subsidiary of the Dutch oil and chemicals logistics giant, in 2008. First, there was the potential threat of increased competition with the entry of many new players and reports of capacity expansion across the world. Then, in 2008, the world economy collapsed as the credit bubble burst: why would anyone want to store oil when a supply glut and a price crash were just around the corner? Unlike volatile, speculative commodities, independent oil storage has largely delivered steady returns as traders, consumers and even governments have grown fearful of fuel supply disruptions. The increasingly popular lucrative contango trade has also made storing oil for future deliveries one of the most durable trades of recent years.
Asian storage still growing
There has been a noticeable increasein the number of companies entering the southeast Asian market to trade petroleum and chemical products overthe past two years. This trend is creating additional demand for storage as more international traders hold stocks in Singapore and other nearby countries to supply China and the regional market. ‘Storage terminal operators generally have had a good year nearly everywhere, including in Asia,’ comments Peak Oil consulting director, Chris Skrebowski. ‘Petroleum products are held as strategic storage in southeast Asia. Petroleum demand in Asia is growing but a slowdown started mid to late summer. The indications are that China’s 6% oil demand growth has slowed to 3%.
The search continues
As the completion of Jurong Rock Caverns (JRC) nears, an operator needs to be engaged to manage, operate and maintain the facility. Besides Jurong Aromatics Corporation (JAC), there have been discussions with other potential players to take up the available storage capacity at phase one of the JRC project, which is due to be completed in sub-phases from 2013. Phase one saves the equivalent of 60 hectares of land space. Storage volume of caverns ranges from 150,000m3 to 330,000m3. The caverns are made up of storage galleries, each with average dimensions of 20m (width) x 27m (height) x 340m (length) (height is equivalent to a 9-storey building).
Indian private ports become storage hubs
India’s Central Reserve Bank has estimated the country’s GDP will continue to grow at +7% from its earlier estimates of +8%, from 2012-2016. The growing economy will keep the import demand for crude oil, chemicals, edible oil and other liquid cargo buoyant. The country’s private ports are looking to benefit from this demand by becoming alternative storage centres to the government-run ports. Most private ports have been developed since 2001. They have minimal pre-berthing vessel detention compared to their government counter parts. Vessel turn around is quicker at the ports based on faster cargo evacuation from storage tanks to users. They are strategically located in India’s west coast where 75% of India’s import and export liquid cargo are handled. Significantly, the ports serve the industrial rich hinterland of west and northwest India.
Five steps to API 2350 compliance
Tank overfill incidents have resulted in loss of life and billions of dollars in damages to petroleum facilities worldwide. One of the worst incidents – the overflow of a petrol storage tank at Buncefield Oil Depot (UK) –has been traced to the failure of level control to maintain containment of the flammable liquid. More common are minor spills that cause significant environmental impact and result in millions of dollars in clean-up fees and environmental agency fines. In the wake of this incident, the American Petroleum Institute’s (API) Recommended Practice (RP) 2350, the most widely accepted guideline for overfill prevention of petroleum storage tanks, has been revised. The fourth edition should be finalised by the end of 2011 and is expected to combine the prescriptive standards of RP 2350 with the functional safety standards of Safety Instrumented Systems (SIS), as described in IEC 61511.
Total lightning protection
Lightning protection systems for floating roof petroleum storage tanks (FRTs) should do more than just intercept incoming lightning strikes, which are still likely to cause ignition of the tanks’ contents. A total FRT lightning protection system (LPS) should be designed to eliminate all lightning related direct and indirect risks. The typical strike location on an FRT is the top of the rim or the gauge pole. The FRT is endangered if a stroke terminates on the roof, the shell, anything attached to the roof or shell, or as tructure or ground near the FRT. Termination on any of these locations will cause a portion of the total lightning current to flow across the roof-shell interface. If lightning terminates near an FRT, either to the earth or a nearby structure, smaller currents will flow across the roof-shell interface. If the impedance between the roof and shell is high, arcing will occur across the seal. Lightning strikes are high stroke currents arriving in a very brief time. A typical lightning stroke contains numerous components. The first return stroke (A) is extremely brief, yet contains the peak current. The long, slow component (C) contains less current, but is defined as the continuing current component. This component lasts 500-2,000 times longer than the fast component and thus contains the most energy.
Adaptable actuation aids tank storage systems
Electric actuators provide automated intelligence to operate valves and help to maintain the functionality of tanks. Automation systems should be robust enough to withstand operation in extreme environments while offering essential safety features to provide the required resilience in performance. Importantly, a modular approach needs to be demonstrated that ‘future proofs’ the technology, giving peace of mind that extensions, revisions and upgrades can be made without any break in operation. Mangalore Refinery and Petrochemicals (MRPL) in India has placed an order for 150 electric actuators to help valve operation at its newtank farm. The refinery has increased its capacity from 12-18.5 million tonnes a year.
Liners versus coatings
According to API, a coating is a liquid applied surface onthe outside of a storage tank and a liner is a liquid applied surface on the inside of a tank. However the definitions need further clarification in the evolution of emerging options. Geomembrane and new coating products have been developed to better serve the petrochemical industry’s liquid storage requirements. Liquid applied coatings arethe historic and predominantapproach to corrosionprotection but geomembranesare beginning to be seenby owners and regulatorsalike as an alternative.
Kuwait Oil (KOC) has taken the initative to upgrade and stabilise the still pipe where its automatic tank gauge (ATG) is mounted and the official manual tank gauging (OMTG) still pipe used to verify the accuracy of the ATG. As a result, minimal or no vertical movement of the ATG mounting location has been recorded and more stable ATG verification test results can be obtained, enabling the reduction of radar calibrations basically enforced by this mounting movement. ATGs are electronic devices that are permanently installed in storage tanks to automatically read and record basic information such as level, multi-point spot temperature, mass,density, entrained and free water, vapour and atmospheric pressure; which are required to determine the amount of liquid product contained in the tanks.
Wireless in Mexico
Wireless level gauging technology is a simple, yet affordable solution for monitoring product level and improving profitability. As one of the largest enterprises and highest fiscal contributors in Mexico, Petroleos Mexicanos (PEMEX) produces approximately two million barrels of crude oil a day. The Pajaritos Marine Terminal, located near Minatitlan along the Gulf of Mexico, monitors approximately 55 of their tanks. The company wanted to monitor all of its tanks using wireless level gauges that communicated their data back to a central control room containing a touchscreen interface. At the time, touchscreen interfaces were not prevalent in the industry so IPC de Monterrey, L&J Engineering’s Mexican sales representative, introduced the company to the MCG 3630 Touch Panel Tank Monitor.