Tank Storage Magazine v16 i01


Volume: 16
Issue: 1
Date Published: March 3, 2020



A new energies era

As new forms of energy continue to thrive and grow on the back of the global energy transition, storage giant Vopak explains how its adaptive and flexible approach ensures it remains relevant in this new energy era THE EMERGENCE of new energies on the back of the growing momentum behind the energy transition is creating opportunities for storage operators to play a key role in carving out new supply chains.The popularity of more environmentally friendly and carbon neutral forms of energy such as hydrogen, solar and electricity is driving demand for logistical infrastructure to supply these new value chains. And storage operator Vopak is one of the midstream players realigning its business strategy to support the growth of these new energies with itsextensive experience in developing & managing infrastructure.Recently, the company has announced a series of investments focused on new energies, including a new innovativehydrogen carrier technology and a new solar park in the Netherlands as well as being involved in the Rotterdam hydrogen project H-vision.In an interview with Tank Storage Magazine Marcel van de Kar, director, new energies at Vopak explains how thecompany is leveraging its expertise in infrastructure as part of this energy shift.

Balancing the oil market between traditional and new regulatory political risk

ANALYSIS of markets, energy markets no less than others, often begins with a look at the fundamentals. In energy markets these analyses tend to change, move and require constant updating. International politics, on the other hand, while widely regarded as chronically fickle, have rarely required a deeper analysis of its fundamentals.The fundamentals of the global economy and politics have, for many decades, proved to be fairly stable. Yet for several years it has become widely appreciated that global politics are becoming increasingly unstable and that the values and conventions steering international relations in the past decades are under pressure.One can argue about the key causes, but one way of looking at it is that the set of main actors and their internal weighing has changed, making some feel constricted by the old space allocated to them within the system. Others have shrunk and look for new means through which to attain their goals. This all leaves us with a global system in which competition and aggressive positioning is playing an increasingly important role. Nowhere has that been as clear as in the Middle East, where the US’ efforts to pivot away over the past decade hasgiven rise to a number of conflicts-by proxy and raised traditional political risk for the oil market to levels not seen for long during 2019.

US energy production transform global trade

Before January ended, two major events struck the oil market that speak volumes in how global trade has been transformed by US energy production PRICE risk in 2020 is now skewed to the downside as global economic growth and oil demand are under pressure from an outbreak of coronavirus.Oil futures surged in reaction to the US targeted killing of Iranian General Qasem Soleimani on January 2 but sold off less than a week later as Iran took steps to avoid war with the US, quickly unwinding an escalated geopolitical risk premium in global oil prices. Ten years earlier, global oil prices would have spiked $20 bbl in response to the attack instead of the $5.50 realised in early 2020, and the price increase would have been more enduring. Four months earlier, an attack on Saudi Arabia’s largest oil processing facility had a larger price impact amid lost supply and fear of war in the Middle East. A quick response by Saudi Arabia in meeting customer obligations alleviated market concerns, with oil prices retracing the advance in less than two weeks.Abundant supply due chiefly to record high oil production in the US has adjusted the trajectory for global oil prices inresponse to geopolitical events that would previously have pushed oil prices over $100 bbl. For now, those days are in the history books with plenty of oil available in the market. What the world currently lacks is a strong sustained economic expansion, especially in manufacturing activity, which generates robust growth in oil demand when factories are humming and trucks, ships and rail are transporting goods to consumers.

Preparing for a decade of change

As the sector enters a new decade, Channoil Consulting’s Chris Reveliotis, examines some of the key challenges facing the storage sector including shifting global trade patterns and the electrification of transport. STORAGE in the oil business is about more than just warehousing and logistics. The oil storage industry, and in particular the European one, is more dynamic and different because it intrinsically includes the operations of blending new products and trading them (both locally and internationally). The oil storage industry performs a hybrid role encompassing both traditional logistics and manufacturing functions. Seen in this dual role (manufacturing/trading hubs and logistics hubs), the oil storage sector is driven by two main sets of dynamics:1. The trading dynamics of the international markets that it services through its blending, storage and subsequent import/export activities.2. The changes in the demand of the internal European market it services through its purely logistics function. As we enter a new decade, the sector is facing formidable challenges, some of which may develop into existential threats. Disrupting changes are present in both trading dynamics and demand, affecting the underlying parameters that have shaped the sector for the past decades and have underpinned its profitability and growth. Some of these are already happening and will continue to impact in the next ten years. Others are just beginning to emerge but may prove existential.

The death and transformation of fuel oil

The global fuel oil market is still adapting to the momentous changes forced upon it by the IMO 2020 spec change. JBC ENERGY expects, as it did in 2017, that fuel oil will remain the primary bunker fuel at least throughout the new decade. That said, the two million b/d shift from high sulphur fuel oil (HSFO) to 0.5% very low sulphur fuel oil (VLSFO) completed in recent weeks has irreversibly fragmented the fuel oil market. This fragmentation is transforming business dynamics by ushering in a new three tier fuel oil market consisting of VLSFO, High Sulphur Straight Run fuel oil (HSSR), and cracked high sulphur fuel oil (cracked HSFO).The fact that we are now past the most acute phase of HSFO-to-VLSFO bunker fuel transition, and the HSFO market structure is not only not in deep contango, but actually backwardated, (throughout the whole of 2020 no less) is a clear sign of this fuel oil fragmentation.The industry can no longer talk about a unified fuel oil market even within the HSFO sub market. This is because HSFO demand is now split between three competing end-user sectors, namely:1) utilities, where mostly cracked HSFO is burned for power generation;2) bunkering, where cracked and straight run HSFO is blended together for use as a fuel for scrubber-fitted ships; and 3) sophisticated refineries, where HSFO (straight-run and/or cracked) is either blended with crude to create a cheapersynthetic heavy-sour crude, or used as a non-crude feedstock to fill secondary units. It would then be convertedinto higher value products such as gasoil and gasoline via coking and cracking processes.

Storage: Linking Europe's supply chain

THE FEDERATION of European Tank Storage Associations (FETSA), represents European national tank storage associations and independent private storage companies operating bulk liquid storage terminals. In total, FETSArepresents more than 140 companies operating 692 terminals across Europe. But what do these figures actually mean in concrete terms?We believe that when we dig deeper, these figures show that our sector actually energises the EU economy.This is because the terminals run by the companies represented through FETSA, and its national associations, providean essential interface between sea, road, rail, inland waterway and pipeline logistics. They are a critical component in the supply chain for liquid energy sources, chemicals, animal feeds and fats, oils and other substances for human consumption. They help to balance out supply and demand to ensure everybody has critical liquids at the time they need them, and in the quantity required.

Geared for future growth

In the last two years, HES Botlek Tank Terminal has more than doubled its storage capacity. General manager Coen Janssen reveals more about the company’s projected growth strategy amid a changing energy environment HES BOTLEK Tank Terminal is strengthening its role in a changing energy environment to serve growing product markets as a result of the energy transition.Nestled in the heart of the Port of Rotterdam’s chemical cluster – the Botlek – the terminal offers flexible storage for clean petroleum products and renewable fuels such as biodiesel. In the last two years, the facility has more than doubled its storage capacity with highly automated and efficient tankage, allowing its customers to fully maximisethe utilisation of its capacity.In 2017, the terminal more than doubled its capacity to 490,000 m3 with the addition of 14 flexible storage tanks for clean petroleum products. The tanks are equipped with internal floating roofs, sump suction (no deadstock) and allowcustomers to switch products with very limited notice.To accommodate a new customer, the terminal also added three barge berths, giving customers access to two positions for seagoing vessels and seven positions for barges.

Supporting the energy evolution

The UK’s bulk liquid storage sector knowledge, innovation & evolutionary capabilities are fundamental to ensuring a viable and successful energy transition. Tank Storage Association’s Peter Davidson reports THE UK has set ambitious targets to reduce emissions. Under the Climate Change Act 2008 and the fifth carbon budget, covering 2028-32, the UK government has set a target for a 57% reduction in greenhouse gas emissions (GHGs) by 2030 against a 1990 baseline.By 2050, all GHG emissions are to be brought to net zero from 1990 levels. In practical terms, this means changes inenergy generation, industrial processes, transport, buildings and heat. The Tank Storage Association has recentlypublished a new report ‘Enabling the energy transition – The role of the bulk liquid storage sector’. The report explores the role and potential of the UK’s bulk liquid storage sector, and associated logistics, in the energy transition and in supporting the achievement of the UK’s decarbonisation targets.The UK’s bulk liquid storage sector supports growth and prosperity by moving, storing and blending the modern products, feeds and chemicals that are integral to citizens’ daily lives. Similarly, and most crucially, the sector will havea key role to play in unlocking future opportunities.Undoubtedly, reducing emissions will require partnership, significant investment and coordinated efforts by government, supply chains, businesses, consumers and other stakeholders alike. Meeting the UK’s future ambitions will also require a broad mix of solutions. As essential partners in the energy transition, through our report, we emphasise our commitment to the innovation and evolution that will be necessary to succeed going forward. The report also identifies the barriers to be overcome and the opportunities that will unlock solutions for change.

An innovative spirit

As the winner of the Global Tank Storage Terminal Efficiency Award, VTTI’s Euro Tank Terminal is a recognised industry leader in ensuring efficient terminal operations whilst tapping into the needs of its customers and looking to future market innovations. General manager Jaap Koomen reveals more... RUNNING a terminal as safely and as efficiently as possible is one of the fundamental business principles for anystorage operator.VTTI’s Euro Tank Terminal, located in the heart of the Port of Rotterdam, has been recognised for achievingmaximum efficiency in its terminal operations. Its focus on quick vessel and railcar turnaround times, developingand operating a facility that meets the specific requirements of its customers, and investing in its workforce securedit the 2019 Global Tank Storage Awards Terminal Efficiency Award.The terminal’s efficiency is reflected in its statistics. It can easily handle 500 vessels, more than 2,300 barges, andover 1,100 rail cars per annum and VLCC’s can be loaded at rates of 6,000 m3/h.In an interview with Tank Storage Magazine, general manager Jaap Koomen explains how important people are inensuring a terminal’s success.

Preparing for an uncertain future

As oil markets balance between a series of evolving challenges including the coronavirus, Brexit, IMO 2020 and the ongoing energy transition, storage operators are continuing to invest in preparation for an unknown future. Amy Mclellan reports. AT THE time of writing, analysts, traders and investors around the world were on a crash course in epidemiology. The coronavirus epidemic has led to a sudden contraction in Chinese oil demand and a sharp drop in oil prices. The public health emergency is a timely reminder of how suddenly market dynamics can shift, not to mention the extent to which China’s vast economy buoys economic activity around the world.In early February, oil prices tumbled as analysts hurriedly updated models to reflect the fast-changing crisis, whichsaw the introduction of strict travel restrictions and factories shuttered across China in a bid to contain the outbreak. Hubei province, the epicentre of the epidemic, is home to 58 million people and responsible for 4.5% of ChineseGDP. Altogether the affected provinces account for around two-thirds of Chinese oil demand.‘As the world’s largest crude consumer, any reduction in Chinese demand is bearish for global oil prices,’ says JohnMorley, associate editorial director, EMEA oil at SP Global Platts. ‘In recent days we have seen drops in crude futures prices, physical crude differentials – particularly for grades purchased in large quantities by Chinese refiners – and a weakening paper market structure.’

The integral sustainability approach

BRO and ENGIE explain how they developed an approach to achieve a wide-range of significant sustainability gains for the tank terminal sector WHAT does sustainability mean? Are you looking at it from a traditional perspective? Will you work with alternative energy measures as part of the ongoing energy transition? Considering these questions is the first step to achieving truly sustainable operations.However, many in the industry are looking beyond these to achieve a real sustainability impact on their operations.BRO and ENGIE have developed an approach to maximise sustainability gains in an easy way with its IntegralSustainability Approach.Traditionally, the bulk liquid storage industry has focused on storing fossil fuels, gases and chemicals. However, asustainability transition is underway in the industry. That means the industry does not only have to think about storing alternative fuels, but also needs to look at improving the terminal and its operations.So far, this sustainability transition is only visible to a limited extent. And it can be done differently. Just like in most industries there is an urgency for the storage industry to take the next step in the field of sustainability. This urgency can come from companies own business insights and motivation, from the measures imposed by governments or through the requirements of their customers.

Simplified proof testing of radar level gauges

AnnCharlott Enberg from Emerson explains how proof testing of the latest non-contacting radar level gauges within overfill prevention systems can be performed remotely, improving worker safety and increasing tank availability. SAFETY must always be the top priority at tank terminals where hazardous, flammable or explosive materials are stored. Accidents can have catastrophic consequences.To minimise the risk of safety incidents occurring, it is essential for tanks to have in place a robust overfill prevention system (OPS), designed and implemented in compliance with the relevant industry standards. An OPS safety loop typically consists of a level sensor, a logic solver and a final control element in the form of actuated valve technology. The complete safety loop must be regularly proof tested to ensure it will work correctly when there is a safety demand.Proof tests are operational procedures, conducted in accordance with a safety manual to verify that a device fulfils its safety requirements in an OPS and achieves its required safety integrity level (SIL) for the application. A safety loop’sprobability of failure on demand (PFD) – i.e., the risk of it failing to perform its intended function – increases over time after commissioning. Performing a proof test resets the PFD to a lower value and ensures the safety loop provides the risk reduction it was designed to do.

Following the digital transformation path to prevent plant failures

THE TANK terminal industry of today faces many challenges focused on operational excellence, efficiency, and profitability. One of the key challenges is to increase production with a smaller resource base, ensuring operations are sustainable and environmentally friendly, and have a large EBIT.The solution to this challenge is digitalisation. The technological progress that is happening globally is primarily the result of the rapid development of digital techniques and their versatile applications. As a result, the so-called fourth industrial revolution, related to concepts such as the Internet of Things or Big Data, is becoming a reality. It givesthe opportunity to implement effective programmes for technical maintenance of machinery and equipment. Artificialintelligence solutions can achieve long-term financial benefits by minimising the costs of technical maintenance andproduction as well as maximising the productivity of industrial installations.However, does the industry know how to maximise the potential that modern technology offers?

A revolution in asset management

A RADICAL cloud-based software system has harnessed the power of laser scanning technologies with custom cloud applications to produce a system to seamlessly and effectively manage valuable terminal assets.Drawing on its 40 years of experience in automating continuous and batch processes, A3D has developed a product that reflects an understanding of the engineering needs of the industry to ensure effective terminal operations.Working with Lizard Designs, A3D’s 4D Lizard enables the linking of its 3D technologies to clients’ management systems.

Tackling the unique challenges presented by tank outages

IN THE grand scheme of refinery and petrochemical plant turnarounds, tank outages are often seen as a lesser priority. While this may seem to make sense economically, it has led to an industry-wide mismanagement of tank assets. For many tank outages, late engineering and material ordering, delays in permitting, and a general lack of urgency among team members are regular occurrences.At some sites, the tank outage team is a subsidiary of the maintenance department. However, Asset Performance Networks (AP-Networks) has observed that, increasingly, these events are falling under the direction of the site turnaround manager. This shift has shone a spotlight on the shortcomings of tank outage planning and preparation, especially when compared to the maturity of the plant turnaround sector. While plant turnaround organisations and work processes have, to a large extent, become standardised across industry, the same cannot be said about tank outages, an area in which many sites tend towards an ad hoc methodology for planning and execution.

Harnessing innovation to achieve perfect stormwater discharge

ONE of the largest integrated midstream companies in the US implemented the latest technological innovation in stormwater discharge to improve how it operates its network of pipelines and more than 100 liquid petroleum storage terminals. THE CHALLENGEThe company’s core values include a commitment to environmental stewardship and regulatory compliance. To align his operations with these values, a regional manager decided to develop a new operational programme with thefollowing objectives:• Minimise labour costs associated with manual draining of secondary containment stormwater• Constantly filter petroleum ‘sheens’ from the stormwater• Eliminate the need to hire expensive vac trucks to pump, haul and treat ‘sheeny water’• Institute a failsafe system to prevent petroleum spills from escaping secondary containment pads

Safely and automatically draining water from product storage tanks

THE REMOVAL of water from hydrocarbon products in storage tanks has been a constant problem in the oil industry. This problem is still largely solved by nothing more advanced than an operator opening the drain valve and closing it when he sees the appearance of oil in the water.Discussions were held with operations supervisors, oil loss and environmental engineers, and off-site designers. An increase in the awareness of the problems associated with water in tankage was evident after the discussions. Growing environmental pressures, particularly in the US and EU, resulted in increased interest in the issue.It also became apparent that there are wide differences in the way tanks are managed – not only between different oil companies but also between refineries owned by the same company.Some companies are aware of the need for a consistent approach to tank management and are setting internalstandards on how tanks should be gauged for oil and water and how they should be manually drained. Some of the refineries and storage terminals surveyed are testing techniques other than the experienced eye of an operatorto determine when oil and not water is draining from the tank.

The opportunities for new eco-friendly firefighting foams

SINCE the 1970s, PFAS (per and polyfluoroalkyl substances) have been identified as toxic fluorinated chemical compounds and described as ‘forever chemicals’ meaning they stay permanently in the environment and contaminate drinking water. PFAS are used in firefighting foams in tank terminal fire protection systems.PFAS IN FIREFIGHTING FOAMS ARE CONTROVERSIALPFAS are non-biodegradable and extremely persistent in the environment and, consequently, they result in groundwater contamination. These chemical components used in firefighting foams are also bioaccumulative in human blood and toxic for animals. With an immediate and long-term effect in both humans and animals, fluorinated compounds are progressively banned.The growing health and environmental concerns regarding PFAS use are evolving fast. The EU banned PFOS in 2011. Following studies by the European Chemicals Agency (ECHA), the EU recently banned the use of PFOA and is launching a new regulation to phase-out every PFAS in firefighting foam.

Evolving maritime fire protection

At ports around the world, fire is potentially the greatest single threat to safety, therefore choosing the right fire protection is critical. In the event of a fire at ports, effective extinguishing systems and firefighting equipment are vital. THE DEVASTATING effect of these fires in maritime environments is well documented. Fatal fires on oil rigs, such as the 2010 Deepwater Horizon disaster that killed 11 people and the 1988 Piper Alpha disaster that caused 165 deaths, highlight the importance of having systems in place that minimise the risk and the devastating effects of fire in the notoriously hazardous offshore and maritime environment.It is essential that fire safety and security solutions cover all aspects of fire detection, fire extinguishing and safety services to protect the marine and offshore segments and the people who go to work every day on crane ships, storage tanks and handling sites and rigs. The health and safety of the staff depends on the installation and maintenance of new systems, the supply of approved equipment, servicing, repair and renovation, as well as foamtesting and certification. This is equally important on land, as it is at sea.

Engineering for real-world problems

Drawing on its years of experience in the oil & gas engineering sector, EngCo Group, headquartered in the Czech Republic, offers unique engineering solutions to the energy & bulk liquid storage sector as it moves towards a global energy transition. Owner and managing director Michele Villani talks to Tank Storage Magazine’s Jasmin McDermott about how the company has evolved and plans to expand its range of services… JM: Can you give me an overview of EngCo Group’s history and how it serves the tank terminal sector?MV: EngCo Group’s history dates back to 2013 when a group of entrepreneurs, who already owned engineeringcompanies, decided to use their years of real-world operational experience to provide sensible but bespoke engineering solutions and expert consultancy to the bulk liquid storage, pipeline and energy industry.As most of the EngCo Group team have previously worked for large multi-national oil companies, we really do understand the problems that our clients face, as we have experienced most of these problemsbefore.

The benefits of continuous mixing

FOR THE past ten years, the oil market has undergone significant changes, especially with the geographic evolution of supply and demand, increasing the volumes traded. Also, the increased geopolitical risks in the oil market are prompting closer monitoring of oil security. In this context, oil stocks continue to play an important role, particularly in overcoming potential disturbances.The storage of large volumes of crude oil before refining is more complicated than for other products. Oil, when it comes out of the ground, is loaded with coke, tar, sand and water, and sometimes seawater. Especially since the share of unconventional oils in production increases, these have lower quality with higher impurity rates than conventional oils. The settlement of these impurities, as well as the accumulation of water (commonly called BS&W: Bottom Sludge and Water), can seriously damage storage tanks and all transfer equipment such as pumps, valves, and instrumentation. Added to this is greater diversity in the quality of oils – extra light from the US, extra heavy from Canada, for example – requiring more frequent mixing of crudes upstream from refineries to maintain a proportion of petroleum products that meet the needs of the current market.

Choosing the right tools to maximise fire safety

DETONATION and deflagration arresters, although similar in construction, serve two very distinct purposes.A flame arrester is a safety device that is used on the pipeline or end of the line to block potential fire or explosion passages through the line. There are predominantly two types of flame arresters: detonation and deflagration. Detonation flame arresters are designed to overcome sudden explosion impacts in the pipeline, whereas deflagration flame arresters block fire flames in a particular location to stop them from traveling in the pipeline freely.The Storagetech technical team is experienced in choosing which type of flame arrester is required for a particularapplication. Even though there are many factors to consider; location, products stored, and pipeline/piping design play important roles.

New requirements for emission control strategies

AS THE product portfolio for storage terminals changes, the requirements for vapour recovery technologies is also evolving. Tank Storage Magazine speaks to Frank Kouwenberg, sales manager EMEA at Zeeco about how the company is positioning itself for future industry needs.Several fundamental changes in the operation and maintenance of storage terminals have resulted in emerging requirements for vapour recovery and emission control strategies.From stricter environmental legislation to changing energy products, the challenges facing terminals means a stronger focus on ensuring the highest degree of operational efficiency while meeting the needs of their customers.

Reaping the benefits of edge intelligence

WITHIN the oil and gas sector time is money and that is why it is crucial that high value assets are always operating efficiently. Unfortunately, at present that is not the case, and the costs associated with this unreliability are astounding. According to the US Department of Energy, there were on average 1.2 shutdowns to refineries every day. That equates to a cost of $2 million every day, with almost half of these stoppages caused by equipment failure.And that is just a top line figure. When you drill down the other costs that operators incur, they are equally as staggering. There are 43 hours of high-cost labour spent on inspection and monitoring for every $1,000 worth of equipment. When it comes to offshore exploration and production, a one-day delay because of equipment issues will add $500,000 on top of the project cost. Given this high price of failure, it would be fair to assume that decisions around maintenance are based on sophisticated and real-time information. Unfortunately, this is seldom the case. Industrial operators tend to make decisions based on experience and intuition, with more than 90% of decisions made on information from spreadsheets or memory.

'Nothing to worry about'

CHRIS MIDGLEY, head of analytics at S&P Global Platts opened this year’s European Oil Storage Conference with an update on global crude oil fundamentals.‘There is a lot less volatility in the market than you’d expect,’ Midgley explained. This is partly because strategic petroleum reserves are acting as a buffer, allowing the market to cope with up to six months of geopolitical tensions and partly because there is so much data available, so it is easier to plan ahead.Considering the ongoing geopolitical uncertainty, the oil price is lower than one might expect it to be, Midgley told theaudience. At the end of 2018, the oil price rose to $86 a barrel, triggered by factors such as the drone attack on Saudi Arabia.Now the range is back down to around $55 - $65, where Midgley expects it to stay in the longer term. ‘This shows thatmicroeconomics have a bigger impact on oil price than geopolitics.’