Tank Storage Magazine v11 i01


Volume: 11
Issue: 1
Date Published: January 5, 2015



New regulations affecting marine vapour control systems

Since 1990, the regulations for vapour control during marine loading operations have been determined by the Coast Guard and laid out in 33 CFR 154.800. A revised set of regulations, 33 CFR 154.2000, was finalised and went into effect in 2013. New facilities and those currently under construction should reference the revised regulations for their initial design and certification. Existing facilities will need to comply with the new regulations and be recertified, if necessary, by 15 August 2016 in order to continue operations. The revised regulations include several significant changes that will affect all facilities involved in marine loading operations. The most impactful of these changes is the new requirement for an operational review every five years.

Seveso III Directive: what's new?

In 1976, the small Italian town of Seveso was severely contaminated with dioxin as a result of a major accident at a chemical factory. This prompted the adoption of the first Seveso Directive in 1982 which was replaced in 1999 by the current Seveso II Directive (96/82/EC), amended in 2003 (2003/105/EC). In June 2012 the Seveso III Directive was adopted (2012/18/EU) which will replace the current Directive on 1 June 2015. The adoption of the Seveso III Directive is mainly driven by the need to align with the new system of classification of dangerous substances under the European Regulation on Classification, Labeling and Packaging (CLP). In addition it aims to improve on the current framework drawing on past experience. Some of the differences compared to Seveso II are highlighted below.

All change

In January 2015 new legislation will come into effect which will restrict fuel oil consumption in Emission Control Areas (ECA) for marine vessels. It is therefore beneficial to explore the likely impact of this piece of legislation and expected future environmental legislation on fuel oil consumption, trade flows and storage markets. In a push to limit sulphur content in fuels various organisations like the IMO and EU have drafted legislation which will result in a gradual decrease of the maximum amount of sulphur allowed in marine fuels. The aim is to reduce SOx emissions globally and regionally. In 2015 the maximum sulphur content in marine fuels will be reduced from 1% to 0.1% in the ECA’s of the North Sea, Baltic Sea and North America. In 2020 or 2025, if the implementation date is pushed, the sulphur content of marine fuels globally will need to drop from 3.5% to 0.5%. The EU has already implemented legislation that will limit sulphur content in fuels to 0.5% in 2020 for its Exclusive Economic Zones (EEZ) irrespective of the possibility that the IMO might push out implementation till 2025.

Explaining the price plummet

It’s supply! It’s demand! It’s a price war! It’s a recession! Oil prices plunge! These same words were spoken in 2008 and 2009 when oil prices dropped more than $100 (€80) per barrel from over $140 per barrel to less than $40 per barrel. Crude oil prices went into the steepest contango ever seen, reaching over $6 in the front two months benefitting anyone with crude oil storage. Is history repeating itself? The rapid decline in oil prices is the result of a confluence of factors. Global oil demand continues to grow. According to its November Oil Market Report, the International Energy Agency (IEA), oil demand of 91.8 million barrels per day in 2013 is expected to grow by 680,000 barrels per day (bpd) in 2014 and another 1.1 million bpd in 2015 to 93.6 million barrels per day. The forecast increases in demand have been generally revised downward over the last several months as economies in the EU, and Japan struggle to expand while the Chinese economy experiences slower growth. On the other hand, the higher price environment of the last several years combined with improvements in technology and efficiency has led to the now well known oil shale revolution in the US. The Energy Information Administration (EIA) reported that US oil production in 2013 was 7.4 million bpd and expects that to rise to 8.5 million bpd in 2014, which is simply more than enough to meet the increase in world oil demand in 2014. Combine that increase with another 200,000 bpd from Canada, and the world looks flush with supply.

The changing role of storage

Over the past few years there have been some interesting additions to the list of companies owning and constructing storage. Companies that trade hydrocarbons, large and small, are increasingly moving into the storage sector. How this will change the market dynamics in the long term remains to be seen, but understanding their reasons may help. VTTI – An almost pure storage company based on an initial investment in Russia in 1995, Vitol founded VTTI in 2006 and Misc Berhard became co-owners of the company in 2010. From an initial capacity of 3.6 million m3 in 2008, VTTI now has 8 million m3 and completion of new projects will expand this to 10 million m3. Puma Energy – jointly owned by Trafigura and Sonangol. Originally a storage and distribution company in Central America, it was purchased by Trafigura in 2000 and in 2010 it bought a number of African businesses from BP. Since then, Puma has acquired a number of other businesses from the Caribbean to Australia accumulating almost 5 million m3 of storage capacity. VTTI and Puma Energy are just two examples of companies expanding their business into storage and in Puma’s case other downstream businesses. They are not alone in seeing the business benefit of owning storage and understanding the benefit that an integrated business can have. Galana Petroleum based the growth of its trading business on the purchase of a storage terminal in Madagascar and more recently construction in Mozambique. In 2008 the State Oil Company of Azerbaijan Republic (SOCAR) set up SOCAR Trading to market crude from the Azeri-Chirag-Guneshli fields and other surrounding fields in Azerbaijan. Expanding into product trading they will have over 0.8 million m3 of storage in a joint venture terminal in Fujairah. Even the majors are starting to move into storage – with BP’s trading business announcing in 2013 an agreement with the Government of Iraq to construct a product terminal in Khor Al Zubair, Iraq.

Opportunities in Iraq

Iraq’s oil refineries, like much of the country’s infrastructure, have suffered the effects of long periods of under-investment. Nameplate capacity currently is estimated at around 932,000 bpd, according to FACTS Global Energy (FGE) data1, but efficiencies and throughputs are typically low. FGE data indicate average capacity utilisation is currently only around 60%.This is likely to have fallen further in recent months following the shutdown of the country’s biggest refinery, Baiji, located some 200km north of Baghdad, and restrictions at some of the smaller northern refineries. Production at the 310,000 bpd Baiji refinery ceased in mid-June after ISIS seized control of the facility. The refinery is now back in federal hands after Iraqi forces regained control in late November. Local media, quoting sources at the refinery, say state run Northern Refineries estimates it will take some three months to restart operations. The Baiji facility, together with two other refineries, Daura (210,000 bpd) near Baghdad and Basra (140,000 bpd) in the south of the country, account for over 70% of Iraq’s refinery capacity. Refinery output is supplemented by numerous topping plants dotted around the country. Oil products output in 2013 was estimated by FGE at some 558,000 bpd, but this volume as well as the range of products produced fall well short of Iraq’s needs.

Middle East refinery investments: Good news for storage operators?

Middle East Gulf oil producers are in the midst of a surge of new refinery construction, which will see substantial new capacity added by the end of 2017. The bulk of these refinery projects are coming into the GCC region with only minor volumes anticipated from Iraq. ‘There are big refinery projects within the GCC countries where construction has yet to start,’ says Farrah Boularas, senior analyst, downstream Middle East & North Africa at IHS Energy. ‘I’m thinking, for example, of KNPC’s Al Zour refinery project with 615,000 bpd capacity. But EPC contracts have yet to be awarded and even if it goes ahead, we don’t expect the refinery to be streamed before the end of the decade. ‘If we talk only about very high or medium-to-high probability projects over the next three years, we expect some 1 million bpd of additional refinery capacity to be online by the end of 2017,’ she says. ‘The bulk of these projects are coming online in the GCC region, with the rest comprising some very minor additions in Iraq.’

What next?

CLH, LBC, Tepsa and Vopak reflect on 2014 and take a look at what lies ahead for 2015

The sweet smell of success

Vopak Terminal Europoort is one of the biggest petroleum storage and transshipment facilities in the heavily populated harbour area of Rotterdam, The Netherlands. Pumping the oil from one container (either cargo hold or land-based tank) causes the existing air inside the receiving container to be pushed out, which results in the emission of high concentrations of odour which disperses into the surroundings. Small towns surround the terminal in all directions, which can lead to incoming complaints from the residents. Too many complaints may result in temporarily working restrictions, fines or – in the worst case permit withdrawal or refusal of new permits.

Cold bonding: A safer alternative to hot work

Hot work required for welding, grinding and cutting operations presents certain potential hazards when conducted in potentially explosive and flammable environments. According to the Health and Safety Executive guidance 2013, ‘flammable liquids and vapours such as petrol, diesel, fuel oil, paints, solvents, glue, lacquer and cleaning agents are found in many places of work. If a welding torch or powered cutter is used on a tank or drum containing flammable material (solid, liquid or vapour), the tank or drum can explode violently’. In order to minimise the risk, cold bonding solutions involving materials that are applied and cured at ambient temperatures can offer an alternative solution for repair and newbuild applications on metallic surfaces.

Equipping Stolthaven's terminal for the growing biofuels demand

In late 2011, Marstel Terminals released a scope of work specifications for the design, manufacture, installation, and commissioning of a four-bay gantry truck loading and automation control system that would fit the distribution needs of a diesel terminal. During the design and engineering period, the scope of the project developed in complexity. This was due to the acquisition of Marstel by Stolthaven Terminals. Stolthaven has corporate requirements for instrumentation and safety systems that needed to be included in the scope. The scope also expanded to meet the specific requirements for two of the terminal’s major customers – a global mining company and major oil company both operating in the local energy market.

Why choose swivel-angle tank mixers

Crude oil held in storage tank farms, refineries, pipelines and terminals usually contains varying amounts of sediment and water sometimes laden with paraffin, heavy ends, sand and silt. Left unchecked, these materials can accumulate and cause corrosion of the tank floor and lower shell plates. The accumulation can also seriously limit operational flexibility, damage the floating roof when the tank is being pumped down, damage transfer pumps and meters, and disrupt refinery process units if sediments break free. To control or prevent this basic bottom sediment and water (BS&W) accumulation, the tank needs high velocity circulation that will completely scour the tank bottom and keep sediment, water, and solids in suspension. A side-entry tank mixer with 60 degrees rotation is ideal for handling this problem. The mixer can be equipped with an electric motor with long-life sleeve mounted bearings, one-piece cast iron drive housing, steel mounting flange with integrated swivelangle assembly, mixer drive shaft with prelubricated, sealed-for-life shaft bearings, rugged transmission and special propeller to minimise maintenance and operating problems.

Double mixing in half the time

In the spring of 2014 a pipeline operator in western Canada installed two DS jet mixers to reclaim the capacity in its tank. The tank, which is 140ft in diameter, is used to store diluent. One mixer would normally be sufficient for a tank of this diameter, but the client elected to install two to cut the required jet mix time in half. Installation of these mixers was expected to be complicated by high LELs in the tank. The two DS jet mixers were purchased by the client so they could be left installed on the tank when the job ended in order to reduce tank downtime during future jet mixes. Allerion Oilfield Services arrived onsite on 20 May (day one) to do infrared imaging. This showed the sludge to be about a foot deep near the inlet, rising quickly to 8ft as the company moved around the tank towards the side opposite the inlet, which equated to about 17,000 barrels of sludge.

Mixing it up

There have been two primary materials used in today’s floating roof technology; aluminum and steel. The composite floating roof, however, has been catching the attention of many tank owners and operators for several reasons. Composite floating roofs are corrosion resistant, do not require painting or coating, are lightweight, flexible, impact resistant, easy to work with, and composite material can be moulded to virtually any shape. Composites can also be customised with additives to provide conductivity and to make them fire resistant. The composite floating roof construction process is fast and efficient and, since no prefabrication is required, construction can often begin sooner than the alternatives, which require some advanced fabrication; making this roof a serious consideration when time is of the essence to get the tank back in service. Composite floating roofs are designed to the same loading criteria as traditional metallic floating roofs and can handle all traditional seal systems and appurtenances including guide pole anti-rotation/ gauge pole sleeves, manways, PV vents, column wells, and other appurtenances found in aboveground storage tanks

First successful long range ultrasonic testing on an AST

When a tank operator discovered a leak as a result of a large crack on a tank, it set about the need for non-destructive testing (NDT). The insulated stainless steel tank measured 35ft in diameter and 36ft tall. The inspection, completed in 2012, was able to quickly assess the condition of the tank and determine suitability for continued service. The inspection procedure was developed with a focus on identifying environment-assisted cracking, particularly chloride stress corrosion cracking (CL-SCC).

Five years on and going strong

Brenntag, one of Europe’s leaders in chemical distribution, operates with a global network with more than 480 locations in more than 70 countries. To meet and fulfil the latest operational safety and business requirements, one of its sites in the UK, Scunthorpe, embarked on an upgrade project bringing the tank gauging and overfill prevention systems up to a world leading standard exceeding current legislation. Brenntag were looking for a state of the art, integrated system that could be introduced in stages across the site, on both legacy tanks and new. The aim was to bring even safer operations to site, offer real-time inventory and allow information to be shared across the company to optimise the operation of the facility and improve fiscal visibility. There was also the requirement for monitoring remote inventory at other sites, where Brenntag supply on a ‘Vendor Managed Inventory’ (VMI) contract. This is where Brenntag (the supplier) has a contract to supply product. They monitor the tank at the customer site, then manage the inventory and schedule their own replenishment deliveries to meet the customer’s production requirements. This means the customer does not have to waste time on re-ordering and knows product is there when they need it. In return the supplier gets a long term, delivery optimised supply contract.

Improving throughput and safety via business intelligence

Terminal operators have long been able to track drivers from ‘gate to gate’ but a new solution goes one step further. In October US-based Toptech launched Synetics, a business intelligence solution that is able to track over 40 data points. These data points tell, among other things, exactly what drivers are doing once they have entered the facility. This is a level of visibility never before experienced by the industry. The system allows terminal operators to access data such as average wait times, load times, gateto- gate times, number of alarms and bay utilisation at the touch of a button. Business intelligence solutions tend to focus on the what, never giving the user the ability to delve into the why. But Synetics is allowing users to do just that. For example, the Synetics user interface allows terminal operators to quickly discover that authorisations are the reason wait times are higher than average. Synetics also gives visibility into what has been coined by Toptech as unaccounted time. ‘Unaccounted time is that block of time that just can’t be explained with a programme,’ explains Joe Smith, director of Toptech’s enterprise solutions.

Tank heating: why it needs to be more than just an afterthought

It is well known that heavy oils and asphalt need to be heated to reduce their viscosity before pumping and transportation. However, the role tank heating plays in the terminal is often underestimated. Tank cleaning is essential for three main reasons: • Petroleum oils change density with temperature. Since supply stock measurements are taken in volume and then temperature corrections applied to determine the actual stock sold, maintaining the correct temperature directly affects profitability. • Due to drastically changing viscosity and pumping ability over changing temperatures, incorrect or non-uniform temperatures make operations difficult. • Oil blending is equally important to ensure a quick response to customer demands. Efficient blending is possible with better temperature control of the tank. There are many instances where the tank hold needs to be heated. There have also been many methods and philosophies used to design a tank heating system.

Sizing tank blanketing regulators using the latest API 2000 7th edition guidelines

In March 2014, API Standard 2000 (Venting Atmospheric and Low-Pressure Storage Tanks) was revised. This seventh edition is the latest update and this article looks at how the latest changes affect the sizing of tank blanketing regulators, including backpressure ones used for vapour recovery systems.

If you could prevent a disaster, why wouldn't you?

There are hundreds of thousands of terminals worldwide that are susceptible to loss, damage and destruction by lightning. Millions of dollars can be gone in a matter of seconds. Lightning events can halt production instantaneously, sometimes for hours, impacting a company’s bottom line. A strike can explode volatile substances, start fires, take out electrical systems, and/or destroy or degrade equipment, which was meant to last for years. In addition, lives can be lost and the environment irreparably damaged, which leads to liability, potential fines and sanctions. When lightning strikes and causes an explosion or ignites a fire, it opens the door to a host of issues that must be considered. The obvious ones are death, destruction and loss of assets. Large explosive fires, of any sort, can have a negative effect on the environment. In addition, when toxic materials catch fire, they create an added hazard for employees, firefighters and residents who live in the area. Those same toxins, once carried into the air, create a corrosive problem - similar to the effects of acid rain when they come back down out of the atmosphere. Not to mention the effects on the air we breathe and the land or water surrounding a facility. In addition to the risk of explosion or fire are the secondary effects of lightning, such as a power surge through the ground. This poses a threat to expensive technology that keeps machines and sensitive equipment running, and could result in unpredictable downtime. In some instances, a strike to the ground nearby can destroy significant amounts of electronic equipment without sparking a flame, which is called meantimebetween- failure, leading to unplanned replacement costs and impeding production. Many manufacturing facilities have downsized the number of functioning locations and increased working hours, making it imperative to operate continuously. Downtime and loss at the remaining operating facilities can now have an even more disastrous effect. All of these issues can cause additional expenditures, sometimes into the millions of dollars per day, as well as liability, regulatory fines and, in some cases, closure of a facility.