January 2012 Volume no. 8 Issue no. 1 · 2017. 12. 7. · API-653 and STI SP001 Certified and...

TANK STORAGEmagazine

January 2012 Volume no. 8 Issue no. 1

Tank storage in the Middle East

Outlook for 2012Westway, SemLogistics, CLH and Magellan share their thoughts on what this year has in store

no room for complacencyThe root cause for many of 2011’s incidents lies In human error

PaGE HEaDEr TA N K S TO R A G E • June 2008

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January 2012 • TA N K S TO R A G E COnTEnTS

COnTEnTSJanuary 2012

Volume 8 issue 1

Horseshoe Media LtdMarshall House

124 Middleton Road,Morden,

Surrey SM4 6RW, UKwww.tankstoragemag.com

manaGinG DireCTorPeter Patterson

Tel: +44(0)20 8648 [email protected]

assoCiaTe publisher & eDiTor

Margaret DunnTel: +44 (0)20 8687 4126

[email protected]

DepuTy eDiTorCarmen Allan

Tel: +44 (0)20 8687 [email protected]

sTaFF WriTerKeeley Downey


aDVerTisinG sales manaGerDavid Kelly


souTh ameriCan sales represenTaTiVe

Roberto Bieler+55 21 3268 2553+55 21 9465 2553

[email protected]

proDuCTionAlison Balmer

Tel: +44 (0) 1673 [email protected]

subsCripTion raTes£130/€185/$240 for five

issues per year.Contact: Lisa Lee

Tel: +44 (0)20 8687 4160Fax: +44 (0)20 8687 4130

[email protected]

No part of this publication may be reproduced or stored

in any form by any mechanical, electronic, photocopying, recording or other means

without the prior written consent of the publisher. Whilst the

information and articles in Tank Storage are published in good

faith and every effort is made to check accuracy, readers should

verify facts and statements direct with official sources before acting on them as the publisher

can accept no responsibility in this respect. Any opinions expressed in this magazine

should not be construed as those of the publisher.

ISSN 1750-841X

2 Comment

4 Letter to editor

6 Terminal news

23 Technology news

31 Incident report

32 no room for complacency Human error lies behind the majority of accidents at storage tanks. Here Amy

McLellan looks back at the major incidents in 2011 to see what lessons can be learnt

35 Outlook for 2012 Industry leaders share their visions on what the year ahead holds for the tank storage

sector

41 Tank Storage in the Middle East It has not been a good year for many countries in the Middle East, with protests

interrupting and threatening businesses. Despite this, tank terminal capacity is still expanding

44 Fujairah Terminal commissions first tanks Despite not yet built, phase two is already fully leased out

45 Tank terminal update – The Middle East

46 Tank terminal update – Eastern Europe

47 PetroChina’s spill simulator When an oil spill occurs, one of the primary concerns is where will

the oil will go? A new simulation model can now predict flow direction and oil spill area to help reduce environmental impacts

50 Selling strategy for smaller independents Today’s headlines are typically grabbed by the Vopaks of the world; yet

there is a growing number of smaller, independent owner/operators conducting or considering the complex process of a sale

51 Standardisation in vapour recovery

54 Fall prevention, not just protection

56 Integrating loading solutions

47 Covering up Tank blanketing regulators are needed to reduce emissions, yet there are

ways to simplify the process as well as reducing investment costs

48 a new way to dissipate electrical charge

61 Settling disputes in the uK

63 reducing environmental risk exposure

65 Tank storage show shines once more

68 Events page ad index

1

Front cover courtesy of ateco

TANK STORAGEmagazine

January 2012 Volume no. 8 Issue no. 1

Tank storage in the Middle East

Outlook for 2012Westway, SemLogistics, CLH and Magellan share their thoughts on what this year has in store

no room for complacencyThe root cause for many of 2011’s incidents lies In human error

2

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January 2012 • TA N K S TO R A G E COMMEnT

5

New year, new challenges2 011 certainly went off

with a bang for Tank Storage magazine

as we learned that our sister company StocExpo was changing hands.For those of you who haven’t heard, StocExpo, as well as the associated conferences in Canada, Asia and Turkey, have been acquired.

The company who purchased the events is EasyFairs, one of Europe’s leading tradeshow organisers, so you can be rest assured everything is in safe hands. In fact, stand numbers for StocExpo are already up from last year with two months still to go.

And Tank Storage magazine will retain a close relationship with the events, still producing the catalogues, as well as being hailed as the official event publication.

This acquisition, in a time when many industries are being decidedly cautious,

highlights the strength of the storage sector.

It also gives us a little more time to work on some other projects that have been on the back burner for a while.

We have now put together the first tank terminal directory for operators. With all the new projects and expansions happening in the market, it will be an essential tool for companies looking for experts in industries such as construction, cleaning or vapour recovery, to name just a few.

To make the directory a little more exciting (!) we have added some analysis on the top terminals in different geographical regions. Having published a map plotting the

terminals around the globe last year, we presumed little would have changed in the past few months. We couldn’t have been more wrong!

There are certainly no signs of a slowdown in construction, especially in key areas such as Malaysia, Fujairah and India.

To get a better idea of what the future holds, within this issue we spoke to some of the key terminal operators to find out their thoughts on what 2012 has in store. The resounding consensus is that, despite the economic turbulence of 2011, the fundamentals of the liquid storage market remain strong.

All in all, it looks as if 2012 will be another good year so we wish you every success. More importantly, we look forward to catching up with you for a drink or two at this year’s illustrious StocExpo!

Best wishes,Margaret

Margaret Dunn

stocexpo is not the only one looking to bigger things in 2012

letter to the editor TA N K S TO R A G E • January 2012

4

Dear Editor

Re: API 650 Monogram programme

There have been many questions regarding the requirements for acquiring permission to use the API monogram on the tanks that are built in accordance to the API 650 Storage Tank Design Standard.

Background:1) First, there are no requirements for a company (fabricator) to obtain this monogram license from

API to allow them to build (fabricate) tanks in accordance to / with said API standards.

2) The monogram programme for API 650 is relatively new and voluntary (since 2010), so this may be why only a handful of companies have chosen to obtain said monogram.

3) Under the monogram programme, API requires a method of tracking a tank back to the original manufacturers via the license number that must be present on the tank’s nameplate, located adjacent to a manhole. Be sure to understand that API only certifies a company’s capability to manufacture a storage tank in accordance with API 650 and API does not certify the tank itself. Licensed users of the API monogram programme are however required to keep records of all tanks built during the licenses cycle for a period of five years. This should allow tank owners to contact said manufactures for tank records, including but limited to drawings, calculations and so on.

4) The use of the API logo on tank nameplates without becoming a licensed monogram user is strictly prohibited.

5) The monogram user must inscribe, print or otherwise indicate on the tank nameplate their individual monogram license number in a font size not less than 4mm or 5/32” in height, in accordance with Section 10 of API 650.

Context of monogram programme:Our industry desperately needs the 650 monogram programme as developed for tanks built in accordance to and with the API 650 standard. We have personally visited tank fabrication shops located in remote areas that had no viable means of constructing a storage tank. One such fabricator was rolling shell plates to conform to the tanks radius by standing the shell plates up against two large trees and then bending them by first mounting a log to the side of a bulldozer and then pushing in the center of the plates. We were unable to observe the end result but it remains questionable. Another such example was where the fabricator had the floor plates laid out in his front lawn and there was no apparent fabrication shop nearby. The plates were being cut with a torch, by hand, with no guide. On these, and other such examples, we establish our premise that not all fabricators are able to produce the quality and resulting performance tanks that API 650 demands.

The auditing programme ensures that these types of fabrications facilities are weeded out and that the end users of the tanks are granted at least a minimum level of assurance that the tank will work as intended. Remember, the real power of this monogram programme remains in the purchaser’s hands. By simply noting that the fabricator must partake in the monogram programme, the purchaser has set into motion a complete quality assurance programme that only API can provide. There is a fee for enrolling into the monogram programme, but it is minimal.

The monogram programme is a form of ‘self-regulation’. It assures the outside world can view the petro-chemical industry through an uninhibited lens of transparency. Our fabricators and contractors must be called to join this programme and that call can only come from the purchasers and users of these tanks.

Sincerely,

John Cornell, H.I.R. Technical Services, PresidentTank and Terminal SpecialistAPI-653 and STI SP001 Certified and Licensed Tank InspectorAn Official Contractor for The American Petroleum InstituteSenior associate staff of The US Deptartment of Transportation, PHMSA

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6

US-based TransMontaigne Partners has sold its 50% interest in the Battleground Oil Specialty Terminal Company (BOSTCO) project to a unit of Kinder Morgan Energy Partners.

The BOSTCO project intends to design and develop a new oil terminal on the Houston Ship Channel.

Kinder Morgan now owns 98% of BOSTCO and has commenced construction on the new, approximately $430 million (€334 million) oil terminal.

A customer at the BOSTCO

facility will hold the remaining 2% interest in the project.

The first phase of the BOSTCO project now includes construction of 52 storage tanks and is expected to be completed by the first quarter of 2014.

The 52 storage tanks will have a total capacity of 6.6 million barrels for handling residual fuel, feedstocks, distillates and other black oils.

According to TransMontaigne, terminal service agreements and letters of intent have been executed with customers for almost all of the capacity. n

TransMontaigne sells stake in BOSTCO

UAE-based Fujairah Petroleum Company (FPC) has signed an agreement with Gulf Petrochem, a leading player in the regional oil sector, to buy a 12% stake in its upcoming storage terminal project in Fujairah.

FPC, a subsidiary of the Government of Fujairah, says the 412,000m3 storage terminal project is due for completion in September.

Gulf Petrochem is a specialist in oil trading and bunkering, oil refining, grease manufacturing, oil storage terminals, bitumen manufacturing,

and shipping and logistics.Headquartered in Hamriyah,

Sharjah, Gulf Petrochem operates globally with offices in India, Singapore and Europe. The group recently opened a new Dubai office in line with regional growth plans.

The new Jumeirah Lake Towers address was opened to strategically position the group within the region’s business hub.

It operates a 60,000m3 facility in Hamriyah capable of storing various grades of oils and owns three vessels with a combined capacity of 17,000m3 to service bulk shipments. n

Fujairah buys key stake in petchem project

Blackwater Maryland, a wholly owned subsidiary of Blackwater Midstream, has finalised the acquisition of a storage terminal facility in Salisbury, Maryland, US for $1.6 million (€1.2 million). The closing date of the acquisition was 22 December 2011 and was 100% financed by Blackwater Midstream’s existing senior lender.

The Salisbury site consists of 177,000 barrels of storage capacity on 26 acres of property located on the Wicomico River. The site is accessible by inland barges and tanktrucks. There is

space available within the existing facility to build an additional 100,000 barrels of capacity at the site.

Mike Suder, Blackwater Midstream’s CEO states: ‘Adding this site is a continuation of our strategic plan to acquire underutilised terminal assets and expanding the capabilities to meet our customer’s product distribution requirements. This is the same model that we have very successfully implemented at our two previous acquisitions in Westwego, Louisiana and Brunswick, Georgia. In fact, we are currently in the planning process for additional tank capacity at both of those locations.’ n

Blackwater Maryland acquires Salisbury Maryland terminal facility

Shanghai Fuel to build more tanks in 2012Shanghai Fuel plans to build 100,000-150,000m3 more of petrol and gasoil tanks at its Bailian Oil Tank Farm, to start construction in 2012 at the earliest.

With these new tanks online, Bailian Oil Tank Farm will have altogether about 200,000m3 of storage capacity for gasoil and petrol.

The tank farm has 200,000m3 of storage capacity at present, including around 70,000m3 for gasoil and petrol in combination. It uses 50,000m3 of oil product storage capacity for national reserves and the rest is for captive use by Shanghai Fuel or for rent.

Bailian Oil Tank Farm is located in the Shanghai Chemical Industry Park. The tank farm began operation in May 2009.

Puma energy taking over Chevron in Puerto rico, and Virgin islandsPuma energy Caribe says it has agreed to buy all of Chevron’s petrol stations and underground storage tank facilities in Puerto Rico and the US Virgin Islands.

The Swiss oil company says it will sign an undisclosed multimillion dollar agreement with Chevron after regulators approve the deal.

Puma said it would buy 185 Texaco-branded petrol stations in Puerto Rico and seven stations in the US Virgin Islands.

Last year, the company bought the old Caribbean Petroleum fuel storage facility along with 147 service stations through a court-ordered bankruptcy sale.

Gull develops new 10 million litre fuel tankindependent oil company Gull New Zealand is increasing its storage capacity with the construction of a 10 million litre fuel tank.

The new tank will be located at Gull’s storage facility in Mt. Maunganui, making it one of New Zealand’s largest.

Terminals Limited, a member of the Gull group of companies, operates the storage facility and the new tank will bring its total storage capacity to 88 million litres.

Construction on the new tank will start in January 2012, when it will create jobs for 15 skilled workers. Page and Macrae has been chosen as the project’s engineers.

news in brief


7

Cargill and Rubis Terminals have signed a lease agreement with the Port of Rotterdam for the expansion of their site by 2.8 and 4.4 hectares, respectively. The site, on Welplaatweg, is currently leased by their joint neighbour Evonik. This company will have ceased all operations by the end of 2012 and will hand over the (cleaned-up) site afterwards in 2013.

In addition to the site expansion, agreement was also reached on deepening Cargill’s sea jetty by 3.5m to +/-15.20m NAP (New Amsterdam Water Level). This is possible by moving various mooring facilities ‘outside’. This project will be completed in the final quarter of 2012. For the time being, Rubis is looking into expanding its jetty capacity for both ocean and inland shipping.

The Botlek area, built in the 1950s, is virtually full. It is becoming more cramped on the water too, due to the increased size of ocean-going ships and inland vessels. At the same time, the Port Authority wants to facilitate economic growth by creating more handling capacity. It is therefore continually redeveloping and investing through:• Re-allocation following

business discontinuation as now with the Evonik site, also (earlier) to neighbour Rubis that replaced HRT/Matrans, BTT tank storage in place of dry bulk silos and so on

• Construction of space-saving quays such as for Odfjell, and the filling in of ports, such as for BTT

• Filling up open (option) sites, such as Bertschi and EBS

• Modification of the infrastructure, such as laying and rerouting pipelines, roads and railway lines.

Since the takeover of the refinery of margarine manufacturer Brinkers in 1984, Cargill has been operating from the Botlek area. The plant refines, fractionates and hardens tropical vegetable oils.

Since the start, production capacity has been increased sevenfold to over a million tonnes. The expansion on the Evonik site will enable Rubis to almost double its storage capacity to a total capacity of 350,000m3. n

Rubis and Cargill expand in Rotterdam

US-based Buckeye Partners has announced the arrival of the first vessel to call at the newly constructed offshore jetty at BORCO, Buckeye’s marine terminal in the Bahamas. The new jetty can handle a range of vessels up to VLCC size.

The jetty has two berths (berth 5 and

6) that are capable of loading and offloading fuel oil, clean petroleum products and crude oil. BORCO’s terminal tank farm, inland dock berths and two other offshore jetties are connected to the new jetty, allowing the jetty to perform transshipment operations. The commissioning of this jetty provides BORCO with six fully functioning offshore berths.

‘The completion of this new jetty

represents a major milestone for Buckeye as we continue with the previously announced expansion project at our BORCO marine terminal facility. In addition, consistent with the terminal expansion at BORCO, this new jetty has been designed with upgraded structural and technological features to allow significant improvements in load and discharge rates, says Clark Smith, Buckeye’s CEO. n

BORCO’s newly installed offshore jetty is operational

Cargill and rubis terminal are to expand their sites at the Port of rotterdam

JTC launched a two-stage request for proposal (RFP) on 16 December 2011 to engage an operator to manage and operate the first phase of the Jurong Rock Caverns, Singapore’s first underground hydrocarbon storage facility.

Located at Jurong Island, phase one of the caverns will be completed in stages between 2013 and 2014. The operatorship contract is scheduled to commence in 2013, for a period of 15 years.

The applications for the first stage of the RFP will be evaluated based on criteria such as financial stability, experience, capability and track record. The deadline for applications was 13 January.

Shortlisted participants from the first stage will be invited to submit their business proposals within two months. All submissions will be evaluated based on individual merits, with emphasis placed on factors which include fees, technical propositions and proposed commercial activities.

The target is to get an operator on board by the second half 2012. n

JTC launches tender to engage operator for Jurong Rock Caverns


8

Shell Oman has signed a 10 year agreement with Sohar Industrial Port-based Oiltanking Odfjell Terminals (OOT) to receive and store lubricant raw materials known as base oils for Shell’s Mina Al Fahal lubricants blending plant.

The agreement was signed at the Oiltanking’s office at Sohar by Shell Oman marketing managing director Adil bin Ismail Al Raisi and Zeger Van Asch Van Wijck, CEO of OOT.

Shell Oman’s lubricant blending plant is a state-of-the-art ISO 9001:2008 certified plant producing over 60 million litres of different types and grades of lubricants for various uses ranging from consumer

cars to aviation, marine and industrial products.

The plant produces various product for the local market and 70% is exported to over 22 countries in the Middle East and Asia.

OOT is located in the Port of Sohar with a tank capacity of 1,267,500m3 ideally

positioned to support trade and cargo flows within the Middle East region as well as flows from the Gulf to other continents and regions.

Multiple deep water berths combined with a line system with high pump capacities assure customers of a quick and efficient

vessel turn around at the Sohar Industrial Port.

The upcoming additional storage tanks for Shell, Oman-based oil products are part of a bigger expansion project adding more chemical capacities to OOT’s current operations.

Speaking on the occasion, Ahmed Hilal, Shell Oman lubricants plant manager said: ‘This agreement will enhance our operational efficiency by having raw material always available within three hours drive from the plant, avoiding major capital investment and terminal management.’

Shell Oman is exploring more export opportunities as this agreement will make it able to meet local growing demands and increase the plant capacity to produce up to 100 million litres of lubricants a year. n

Shell Oman to store lubricants with Oiltanking Odfjell Terminals

Baltic Terminal (BT) interim report shows that turnover for the six months to end June reached £6.04 million (€7.19 million), down from £7.62 million in the same period of 2010, while pre-tax profits climbed from £2.77 million a year earlier to £2.86 million.

However, the group’s net profits dropped from £2.86 million to £2.6 million, which it said was due to the costs of Russian court cases, the costs of audit and costs associated with

the acquisition and restructuring of oil storage company Petroval Bunker International (Petrobunker).

BT, which had £3 million in the bank at the end of September, decided against declaring a dividend.

After the end of the period, BT acquired Haahr Tank, which operates a 160,000m3 refined oils terminal located at Aabenraa in Denmark for $9.9 million (€7.6 million), while a new build cost for this facility has been estimated at $42 million.

Under the terms of the deal, the vendor will retain the use of 35,000m3 for the next five years.

‘The acquisitions of Haahr Tank and Petrobunker represent significant developments for the future of Baltic,’ BT said in the report.

‘Our portfolio of terminals businesses has been significantly strengthened and the risk profile of the business substantially improved, as the business is much less dependent on Kaliningrad, notwithstanding the very significant assets that these represent.’

The full year report for 2010, which has also been released, showed revenues of £6.02 million and a pre-tax profit of £2.4 million. n

Baltic pre-tax profits rise, while revenues fall

The Arab Petroleum Investments Corporation (Apricorp), a multilateral development bank owned by the 10 member states of the Organisation of Arab Petroleum Exporting Countries (OAPEC), has announced the signing of an agreement to deliver the first tranche of a finance package in favour of Socar Aurora Fujairah Terminal (SAFT).

The financing will help fund the construction of a 641,000m3

oil terminal in Fujairah. The project, known as SAFT, is a

joint venture between Socar Trading, the international marketing, trading and development arm of the State Oil Company of the Azerbaijan Republic (SOCAR), one of the largest national oil companies in the world; Aurora Progress, the Swiss-based commodity trading house; and the government of Fujairah. The government of UAE has a 17% stake in Apricorp.

In May this year, Apricorp was mandated the sole arranger by SAFT for a $110 million (€86 million) term

loan facility, consisting of two tranches, to finance the phased development of the project. Apricorp won the mandate against competition from international banks, following SAFT’s detailed and rigorous selection process. This is the first financing deal to be completed in 2011 for a terminal project in the GCC region.

Under its mandate for the project, Apricorp has been working closely with SAFT and various independent advisors to structure an optimal finance package with funding for Tranche 1, worth $61 million from Apricorp and the National Bank of Fujairah. n

Apicorp gives $61m loan for construction of Fujairah oil terminal

Shell oman and Sohar will store lubricant raw materials at the Mina Al Fahal plant


9

Independent tank terminal operator Vopak has started building a crude oil storage terminal in China’s Hainan province in Yangpu.

Work on the project started at the end of November 2011 and is slated for completion by 2015.

In April 2009 Vopak joined forced with the State Investment and Development Corp (SIDC) to develop the project, which required a CNY7 billion (€820 million) investment. SIDC is the terminal’s majority stakeholder with 51%, while Vopak holds a 49% stake.

The completion of phase one will see 1.32 million m3 of storage capacity installed at Yangpu port, in addition to two oil docks.

When the project is fully complete it will be able to store 5.2 million m3 of crude and refined oil, and chemical products. It is expected to serve all of South China and ASEAN countries as well. n

Vopak and SIDC join forces for storage terminal in China

Vopak and SidC are developing a crude oil storage terminal in hainan province

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China’s largest refiner Sinopec has started operations at a new 1.45 million m3 commercial crude storage facility at Cezi Island in east China’s Zhejiang province, its state-owned parent China Petrochemical, or Sinopec.

Prior to the new tanks being built, Sinopec already had 600,000m3 in storage capacity at the terminal in Zhoushan city.

The storage expansion project, completed at a cost of Y13 billion (€1.5 billion), comprised adding two new tanks of 100,000m3 each at the

existing site, and constructing 12 tanks of 100,000m3 each and one tank of 50,000m3 at a new site.

The new storage facilities will greatly boost Sinopec’s capability to meet rising crude oil demand in the eastern region.

The tanks at Cezi Island are one of the two transmission starting points of the 634km Zhejiang-Shanghai-Nanjing crude pipeline network in the eastern part of the country.

The pipeline is used by Sinopec to deliver up to 43 million tonnes/year of imported crude to its five refineries in east China.

The other starting point of the pipeline

network is from crude tanks at Daxie Island in Ningbo, Zhejiang province.

Sinopec operates five refineries in the east with a total processing capacity of 70 million tonnes/year.

This includes the country’s largest 23 million tonnes/year (461,890bpd) Zhenhai refinery in Zhejiang province; the 13.5 million tonnes/year (271,110bpd) Jinling and 8 million tonnes/year (160,658bpd) Yangzi refineries in Jiangsu province; the 14 million tonnes/year (281,151bpd) Shanghai refinery; and 11.5 million tonnes/year (230,945bpd) Gaoqiao refinery in Shanghai city. n

Sinopec starts operating 1.45 million m3 oil storage in Zhejiang province


10

Magellan Midstream Partners has entered into a joint venture agreement with Copano Energy to deliver condensates from the Eagle Ford shale prospect in south Texas to Magellan’s Corpus Christi, Texas terminal.

Under the 50/50 joint venture agreement, dubbed Double Eagle Pipeline, the two companies will build a new 140 mile pipeline that will connect to Copano’s existing 50 mile line and deliver 100,000 barrels per day of condesantes to Corpus Christi by the first quarter of 2013.

Magellan and Copano will also build a truck-loading facility near Three Rivers, Texas, as part of the project.

The companies will split the total cost of the project, which they says could reach $150 million (€114 million).

Tulsa, Oklahoma-based Magellan also says it will build 500,000 barrels of new condensate storage capacity and a dock delivery pipeline at the Corpus Christi terminal.

Eagle Ford producers like Talisman Energy and Statoil have entered into long-term commitments to ship on the pipeline.

The joint venture will be Magellan’s sole project within the Eagle Ford prospect. The company, which had announced ongoing negotiations with Copano in November, scrapped earlier plans to build a 180,000bpd crude line to Corpus Christi with another partner, Momentum.

Houston-based Copano will convert the 50 mile pipeline, which currently ships natural gas, to carry condensates.

The companies expect to start limited deliveries on the pipeline by the end of 2012.

Corpus Christi emerged as a major destination for Eagle Ford crude oil and condensates as output from the south Texas prospect skyrocketed over the past year.

Crude oil and condensate shipments out of the Corpus Christi port to other regions of the US could reach 80,000bpd by 2015, according to port administrators. n

Magellan, Copano to build Eagle Ford condensate line

Guangsha has started the construction of its Huangzeshan crude oil transportation and storage project in the Zhoushan Islands in eastern China’s Zhejiang province.

This is the first time a private enterprise in China has carried out a crude oil transportation and storage project.

The Huangzeshan project will include a 300,000-tonne-class berth for crude oil transfer, an 80,000-tonne-class berth for petroleum products transfer, two 10,000-tonne-class berths for petroleum products

transfer, crude oil storage tanks with a combined capacity of 1 million m3, petroleum product storage tanks with a combined capacity of 510,000m3 and supporting facilities.

According to preliminary estimation, the project will cost about 12 billion yuan. The Huangzeshan Island where the project is located is under the jurisdiction of Daishan county of Zhoushan city, and has a land area of more than 2.5km2 with a coastline of over 15.7km.

The island is located at the Yangtze estuary. With smooth and deep waterways, the Huangzeshan Island is a good place for developing crude oil transportation and storage. n

First private firm engages in crude oil storage in China

Guangsha has broken ground on its storage facility in China

A number of employees working at the Bahamas Oil Refining Company (BORCO) will be affected after the company announced some reorganisation to its structure.

According to BORCO’s management team, the move has come about following changes to the market. It is thought restructuring the company will help it meet new market needs.

Those who have been affected by the restructuring of BORCO received retirement and severance packages.

A press release issued

by the company said: ‘We are investing more than ever in our employees’ development through our newly established technical training programmes, team development training, customer service training and leadership training.’

And while BORCO may be making some of its staff redundant, it says that its various ongoing construction projects are providing construction jobs for around 340 locals. This is in addition to some 174 jobs that have been created in terminal operations.

BORCO also goes on to say it anticipates hiring technical and operational workers in 2012. n

BORCO cuts back on workers after company restructure


11

A lack of pipeline capacity has forced oil companies to turn to railroads to move their product to market.

Domestic oil production is surging due to technological advances that have allowed producers to unlock vast new reserves. That, in turn, has made it more difficult for companies to get their product to market because of a lack of pipeline capacity.

‘More US crude oil is being shipped by rail, especially from North Dakota, where a lack of pipelines has companies relying on tank cars to bring the state’s soaring oil production to market,’ says a recent US EIA report. ‘Pipelines remain the most popular transport option, carrying about two-thirds of US oil and petroleum products, but rail is on the rise.’

Continental Resources president Jeff Hume says the Enid-based company is relying on train cars to move about 35% of the oil it produces in North Dakota’s Bakken Shale.

‘All the pipes are full now,’ he says.Continental ships about 30,000

barrels of oil a day by rail, but he expects that figure to rise as the company continues to ramp up production in the state.

Companies there are working to beef up infrastructure for loading oil onto rail cars.

Most of Continental’s production goes to St. James, Louisiana, because there is a receiving point there, but it also can be sent to refineries on the east and west coasts.

Rick Muncrief, Continental’s senior VP of operations, says transporting oil by rail is not as cheap or efficient as using pipelines, but the rail system does provide more flexibility.

Continental has been able to send its product to premium markets and avoid adding to the storage glut in Cushing by using rail cars.

Like North Dakota, Oklahoma is taking steps to bolster its ability to move crude oil to market, with production expected to grow by more than 200,000 barrels of oil per day over the next few years.

There are eight short-line railroads involved in moving oil by rail in Oklahoma due to the growth of the energy sector in the state.

The agency has applied for an $8.4 million (€6.3 million) federal grant to improve a state-owned rail line between Sayre and Clinton, says David Streb, the agency’s director of engineering.

Streb says the project would increase that line’s capacity by 20 times up to as many as 120 rail cars, while allowing trains to travel 25mph along that stretch instead of only 10mph.

The line has been leased to Stillwater Central Railroad, which doubled its movements from 2010 to 2011 based on the amount of oil it is transporting by rail. The state makes more money on the lease when there is additional traffic on the line.

Five businesses in Sayre are in the process of adding operations to move oil by rail. There already is a new facility in Stroud, another stop on Stillwater Central’s rail line.

‘We are probably standing on the verge of becoming the second biggest movement-of-oil-by-rail state,’ Bridgwater says.

Officials expect to find out whether Oklahoma has won the US Department of Transportation grant early this year, Streb adds. n

Companies looking for rail options to move oil

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A leading petrochemical storage and logistics company in China, Sinopec Kantons Holdings, has signed an acquisition agreement with its parent company, China Petroleum & Chemical (Sinopec) to acquire the equity interest in five joint ventures including Ningbo Shihua, Qingdao Shihua, Tianjin Port Shihua, Rizhao Shihua and Tangshan Caofeidian Shihua from Sinopec (five joint ventures), involving a total amount of RMB1.8 billion (€218 million).

The company believes the acquisition will further strengthen competitive

advantages of the company’s core business and increase profitability of earnings, which will position the company as the largest independent crude oil terminal business player in China and one of the largest in Asia.

According to the agreement, Kantons will acquire Sinopec’s 50% equity interest in Ningbo Shihua, Qingdao Shihua, Tianjin Port Shihua and Rizhao Shihua and 90% in Tangshan Caofeidian Shihua.

Upon completion of the acquisition, the number of crude oil terminal companies controlled or jointly owned by the group will increase from two to seven, with the number of berths increasing from 14 to 24, of which nine berths will have the capacity to accept VLCC vessels.

The annual design capacity of the group’s controlled or

jointly controlled crude oil terminals will increase 165% from approximately 85 million tonnes to approximately 225 million tonnes.

Meanwhile, the group will have a jointly-controlled interest in each of China’s top three coastal ports for crude oil loading and unloading. In addition, with only a limited number of deepwater terminals in China, and as the size of international oil carriers continues to rise, it will become increasingly important to own deepwater terminals that have the facilities to accommodate VLCC size vessels and larger, which grants Kantons a notable advantage and makes the company a unique investment opportunity.

The acquisition is expected to increase profitability and stability of earnings of the

company. In 2010, the five joint ventures recorded total net profit of approximately RMB364 million and revenues of approximately RMB682 million.

Moreover, as Caofeidian Shihua was founded in April 2011, Ningbo Shihua’s second phase terminal and Rizhao Shihua’s terminal are currently still in trial operation stage, the future revenue and profitability of the five joint ventures is expected to benefit from the earnings contribution of these terminals once they become fully operational. As a direct result of the acquisition, the group will substantially increase its fixed assets as well as the scale and stability of its earnings and cash flows whilst still enjoying the continued support from its major shareholder and customer, Sinopec. n

Sinopec Kantons acquires five oil terminal operators from its parent company

India-based oil and gas storage provider East India Petroleum has been put up for sale by US company Global Infrastructure Partners (GIP).

A 74% holding in the company will cost Rs5 billion (€746,000). A local firm holds the remaining stake.

Kotak Mahindra Capital is responsible for the auction and has already received interest from international and domestic parties.

It is thought local company Indian Oiltanking, a joint venture between Indian Oil and Oiltanking, and the Netherlands-based Vopak could be two of the companies battling it out to acquire the storage firm. n

GIP puts East India Petroleum up for sale

UAE-based Gulf Petrochem plans to spend $250 million (€190 million) on the construction of new storage terminals and the purchase of new ships over the next three years, company CEO Sanjeev Sisaudia says.

The investment includes construction of a 412,000m3 storage terminal in Fujairah, UAE, a 218,000m3 storage terminal in Pipavav, India, and a 150,000m3 storage terminal in Port Klang, Malaysia.

Construction of the terminals in Fujairah and Pipavav has begun, and the company is in the process of acquiring land at Port Klang.

The Fujairah terminal is due for completion by mid-2012 and the Pipavav terminal by end-2012.

The company has traded in crude products to date but plans to enter the petrochemicals sector in future, although it has no specific stream of products in mind.

‘We are keeping all our options open and are looking into new investment opportunities,’ Sisaudia says. ‘We expect the company to touch an annual turnover of $1 billion by 2014 from about $500 million now.’

The company currently operates a 500mt/day refinery at the Hamriyah Free Zone in the UAE and trades in oil products in the Middle East and India. Construction of two new 12” pipelines from the refinery to the port of Hamriyah will expand its capacity for receiving and loading vessels

with capacity of 3,500 tonnes currently to vessels of up to 20,000 tonnes.

The company is also in the process of acquiring three new vessels with capacities of 4,000 tonnes, 6,900 tonnes and 7,200 tonnes. n

UAE’s Gulf Petrochem to spend $250 million on storage terminals

Gulf Petrochem will build new storage terminals in the UAe, india and Malaysia


13

Shtandart plans to build a crude storage terminal at the tank terminal europort West in the Port of rotterdam

The Port of Rotterdam and Shtandart TT signed a long-term agreement for a new major crude and products oil terminal at an area exceeding 55 hectares at the Tank Terminal Europoort West (TEW).

Shtandart is owned by the Russian Summa Group (75%) and Dutch VTTI (25%).

Shtandart TT will build 3 million m3 of storage facilities allocated for Urals crude oil and oil products.

Investments are expected to total $1 billion (€750 million). The new terminal will operate as an open hub terminal creating a trading platform for Urals crude oil.

Construction is expected to begin in 2013 resulting in an operational start-up in 2015.

VTTI is a 50/50 joint venture owned by Vitol Holding in the Netherlands, and MISC Berhad of Malaysia.

It owns and operates 11 petroleum product terminals with a gross combined capacity of nearly 6 million m3. n

VTTI and Summa to build $1 billion oil terminal in Rotterdam

Green Plains Renewable Energy’s wholly owned subsidiary, BlendStar, will build, own and operate a new ethanol unit train terminal in Birmingham, Alabama, on the BNSF Railway.

The new terminal will have 160,000 barrels of storage, and will receive full 96-car unit trains of ethanol, which can be offloaded within 24 hours.

The terminal is expected to be completed in the third quarter of 2012

and served exclusively by the BNSF Railway.

‘We believe Birmingham is a significant growth market, and development of this unit train terminal is a part of our ongoing effort to expand and diversify our business platform along the value chain,’ says Todd Becker, CEO of Green Plains. ‘Operation of this new terminal will provide better transportation economics to shippers, as it will be the eastern most point for direct ship on the railroad to receive ethanol from the midwest. This will

result in improved ethanol distribution through one of the most modern and efficient ethanol terminals in the US when it is completed.’

When complete, the terminal will provide a fully-automated rail unloading system with the initial capacity to distribute approximately 385,000 barrels of ethanol per month with 24-hour truck loading service.

Development and operation of the new terminal is expected to bring a number of other economic benefits to

the local Birmingham market, including additional jobs, tax revenues and local commerce.

More than 60% of project construction costs will be spent with local suppliers. BlendStar is in final negotiations with customers for multi-year terminaling agreements for the capacity of the facility.

BlendStar’s current Birmingham terminal will be retrofitted to handle other biofuels and liquid products when construction of the new unit train terminal facility is complete. n

BlendStar to build 96-car unit train terminal

In an abrupt decision, the Westwego City Council has decided to ban the construction of new chemical storage tanks in the city for at least six months. In October 2011, terminal operator Blackwater New Orleans had presented preliminary plans for an expansion of its Westwego facility.Councilman Larry Warino asked for the moratorium after the council briefly discussed Blackwater’s proposal to get permission for an open-ended expansion of its facility.

Last month, Francis Marrocco, the company’s CEO, told the council that Blackwater would like to build a dozen new tanks at its site in the next three years.

Warino said that given Blackwater’s public bashing of Westwego, its poor safety record, and the company’s failure

to honor promises it made in 2010 when officials first sought to expand, the city should not be concerned with helping Blackwater. He added that Blackwater needs to prove it is a good corporate citizen before Westwego allows any expansions that could cause more problems for city residents.

‘I just think that they need to do a lot of revamping,’ Warino says.

Blackwater’s proposal last month came under fire because company officials were vague about what would be stored in the tanks and when they would be constructed. City officials informed Marrocco that the city does not issue open-ended permits any longer, and each tank expansion would require its own blueprints and approval.

That deal was vehemently opposed by residents because of safety concerns and would have required a variance to city zoning ordinances. After the deal, which would have resulted in millions

in revenue for Blackwater, collapsed despite the company’s decision to offer financial incentives to the city, Suder was understandably livid, said Marrocco. He said that in that haze of hurt feelings, Suder lashed out at the city and made a mistake.

Now, Blackwater wants to move forward and believes that if the city considers its proposal on its merits, it will find that the new tanks meet all applicable codes. Marrocco says he heard about the moratorium and admitted it was not exactly surprising considering the frigid relationship between the city and company. But he said Blackwater is happy to let the council take its time to consider the company’s proposal and has no deal imminent.

‘Certainly [the moratorium] may add a little time to the timetable, but we’re going to continue to work with the city,’ Marrocco says. n

Westwego Council bans Blackwater chemical tanks


14

UTI’s private equity arm, UTI Capital, has bought 4% stake in Indian Oiltanking, a joint venture between state-run Indian Oil and Germany’s Oiltanking for Rs100 crore (€20 million).

Indian Oiltanking, which builds operating terminals and storage facilities for petroleum products, will use the proceeds to fund its upcoming storage terminal in Paradip and for its overseas EPC projects, says Jayanta Bhuyan, MD at Indian Oiltanking.

‘We have been looking at raising funds from private equity players primarily to fund our expansion plans.’ The Mumbai-based unlisted joint venture company, founded in 1997, has raised cash from the private equity (PE) investor after it dropped plans for an initial public offering due to choppy market conditions. It filed for a $160 million (€123 million) public issue in 2010.

The company reported a turnover

of Rs1,750 crore during the last financial year. Sensex was down a fifth this year, prompting many companies to either postpone or look at other fundraising options.

UTI Capital’s decision to buy into the company underscores the growing number of private equity investments. PE investments in India jumped 31% to $7.89 billion in the first three quarters of 2011, according to data from auditing and consultancy firm KPMG.

PE investment in infrastructure in India has risen from about $1 billion in 2006 to $4 billion last year, said a recent Bain & Co report. It also predicted that the PE activity could grow 25-50% a year over the next three years.

‘Investments in infrastructure and infrastructure services have not slowed down despite choppy economic environment. This is a sector which can boost GDP growth,’ says Bala Deshpande, senior managing director of US-based PE firm NEA India. n

UTI Capital buys 4% stake in Indian Oiltanking for Rs100 crore

SemGroup continues to rebuff takeover bidtulsa-based SemGroup reiterated its rejection of a bid by a Houston company to acquire all outstanding SemGroup shares.

Plains All American Pipeline submitted the proposal on 6 October, seeking to purchase the company’s outstanding shares at $24 (€18) per share.

The company again sent a proposal on 16 November.

The SemGroup Board carefully reviewed Plains’ unsolicited proposal with the assistance of its financial and legal advisors and determined that it substantially undervalues SemGroup and its future prospects.

The company says its board believes the current proposal is ‘opportunistic and fails to adequately reflect SemGroup’s bright prospects for stockholder value creation’. The company will consider any bona fide acquisition proposal, but contends the current bid is inadequate.

SemGroup emerged from bankruptcy in 2009 after losing $2.4 billion in the oil futures market a year earlier. n

Baltic Oil Terminals has entered into an agreement for the acquisition of Haahr Tank-Lager for $9.9 million (€7.3 million) in cash.

Haahr Tank operates a 160,000m3 refined oils terminal, located at Aabenraa in Denmark.

The acquisition is being financed through the issue by Dan-Balt Terminals, a 100% subsidiary of the company, of Secured Fixed Rate Loan Notes to the value of $11 million.

A valuation report, commissioned by Baltic, gives a new build cost of $42m. The purchase price reflects that, under the terms of the acquisition, the vendor Haahr Group will retain the use of 35,000m3 of capacity at the terminal for the next five years.

The Board of Baltic believes the acquisition of Haahr Tank represents a substantial step forward in the fulfilment of its strategy.

Its location, roughly midway between Baltic’s Kaliningrad and Europort businesses, will provide enormous flexibility

to Baltic’s customer base.Haahr Tank’s two berths

and ability to host larger oil tankers than in Kaliningrad will facilitate large volumes through the terminal, as customers seek to bulk up shipments.

Haahr Tank’s existing facilitie require little or no capital expenditure.

Longer term, there is space on the site for the expansion of capacity by approximately 20%.

The Haahr Tank terminal, which will operate as Dan-Balt Tank Lager, has heated and non-heated product tanks with a total capacity of 160,000m3 of storage and two berths, capable of accommodating ships up to Panamax and facilitating the discharging and loading of oil products on a simultaneous basis.

The terminal also has two road tanker loading and mixing bays and currently supplies heating oil loading and mixing services to several large operators as well as a heated molasses tank for product delivered in by vessel and taken out by road tanker. n

Baltic Oil Terminals acquires Haahr Tank

Blue Sun to sell biodiesel at Cummins terminal in KnoxvilleBlue Sun Biodiesel will sell its biodiesel at the Cummins Terminal located in Knoxville, Tennessee.

‘We’re glad to be bringing our biodiesel, and our way of doing business to Knoxville and the Cummins Terminal,’ says Blue Sun CEO Leigh Freeman. ‘Locating at the Cummins Terminal will give our customers a very convenient and efficient way to meet their biodiesel blending needs, and to do so with Blue Sun’s highly reliable, high quality biodiesel.’

Blue Sun will deliver mechanically-blended biodiesel from a heated 546,000 gallon biodiesel tank through three of the six lanes at Cummins Terminal’s truck loading rack. This rack will benefit Blue Sun customers through shorter wait times and more efficient loading.

Current economics allow biodiesel to be sold at prices below conventional diesel fuel. ‘Over the past year we’ve seen prices for B2 and B5 blends below diesel,’ says Randy Rutherford of Blue Sun. With higher level blends such as B10 or B20 the discount to diesel can be even greater, the company notes. n


15

Mercuria Energy Trading, a wholly-owned Singapore trading company owned by Geneva-based Mercuria Energy, has secured a $755 million (€570 million) one-year and three-year syndicated revolving credit facility, 57% or 1.6 times oversubscribed than its original launch at $480 million.

Commitments from 29 international banks were strong despite ongoing concerns about the eurozone crisis and possible global recession. Mercuria Energy Trading, incorporated in Singapore in 2004, is the regional headquarters for principal trading and providing key marketing support and services to the entire group. Mercuria Energy is trading a diversified base of crude oil, petroleum products, coal and dry freight. It also provides storage, blending, transport and distribution services. Currently, the company has more than 160 staff headcount as well as offices in Singapore, Beijing,

China, Dubai, UAE, Jakarta Indonesia and Mumbai, India. The company also has a joint venture arrangement with a local marketing company in Bangkok, Thailand. Proceeds of the facility will be used to refinance existing debt and to finance general corporate and working capital requirements of the company. The facility has tenors of one and three years. ‘Our Singapore regional hub Mercuria Energy Trading has successfully closed its third fundraising exercise in Asia for a final amount of $755 million. The facility has been largely oversubscribed (1.6 times), attracting more and more Asian banks,’ says Mercuria Energy Group CFO Guillaume Vermersch. With a 2011 turnover of around $70-$80 billion, Mercuria is one of the world’s largest independent energy merchants. Underpinning the group’s market activities is a significant portfolio of strategic physical assets. Mercuria’s infrastructure capabilities include oil and petroleum products storage terminals in North and South America, Europe, Africa and Asia. n

Mercuria secures 57% more credit than planned in Asia

In Malaysia, investment holding company Benalec Holdings Berhad and EPC service provider Rotary Engineering have signed a memorandum of understanding (MoU) to build a deepwater storage terminal in Tanjung Piai.

Speaking about the storage terminal’s location, Vincent Leaw, managing director of Benalec Holdings Berhad, says: ‘Tanjung Piai is very well positioned to complement the region’s growth in the oil and gas industry, and to tap into the growing demand for the storage and distribution of petroleum and petrochemical products in Asia.’

The facility, to be built on 250 acres of land, will be able to store 3 million m3 of crude oil and other petroleum products when construction is completed. Phase 1 of the development includes the construction of 1 million m3 initial capacity.

In addition to storage, the terminal will also blend and distribute crude oil and its derivatives.

The integrated, independent storage facility will also feature a deepwater jetty facility, capable of handling very large crude carriers (VLCCs).

Following the completion of a technical feasibility study, both companies will develop a joint venture firm. n

Benelec Holdings Berhad and Rotary Engineering sign MoU

In Shanghai, China, merchant energy company Louis Dreyfus Highbridge Energy and Zhejiang Zhong Ao Energy have set up a joint venture company, Louis Dreyfus Zhong Ao Energy.

Throughout two phases the new company will build a terminal for the import and export of oil and petrochemicals, and a storage facility in Zhoushan City, Liuheng Island.

Phase 1 will see Louis Dreyfus Zhong Ao Energy construct a storage facility with a 1.4 million barrel capacity and a deepwater

port with a 75-foot draft.Phase II of the project

will include the construction of an additional 7.5 million barrels of storage capacity for crude oil and petroleum products.

Energy trading firm LDH Energy is a minority partner in the JV and will bring its knowledge of commercial development to the project. Zhong Ao will manage day-to-day operations.

This terminal in Shanghai is ‘the first of several initiatives to expand our presence in the Asia Pacific Region’, says William Reed, president and CEO of LDH Energy.

The joint venture was fully formed at the end of 2011. n

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Indianapolis-based Calumet Specialty Products Partners has completed the acquisition of TruSouth Oil in Louisiana, US. The oil refinery company says the deal will expand its warehouse space and tank storage capacity.

Calumet Specialty Products Partners’ wholly owned subsidiary, Calumet Lubricants, acquired all of the outstanding membership interests of TruSouth Oil, a specialty petroleum packaging and distribution company located in Shreveport, Louisiana.

TruSouth, formed in 2006, manufactures and markets a variety of specialty products including motor oils, gear oils, engine oils, automotive fluids and specialty engineered fuel and oil mix products. TruSouth’s assets include an 85,000 square foot production and warehouse facility with state-of-the-art blending and packaging equipment and bulk tank storage capacity of approximately 1.5 million gallons.

Calumet is a master limited partnership and is a lproducer of high-quality, specialty hydrocarbon products in North America. Calumet processes crude oil and other feedstocks into customised lubricating oils, solvents and waxes used in consumer, industrial and automotive products. Calumet also produces fuel products including petrol, diesel and jet fuel. Calumet is based in Indianapolis, Indiana and has eight facilities located in northwest Louisiana, northwest Wisconsin, western Pennsylvania, southeastern Texas and eastern Missouri. n

Oil refinery completes acquisition

Norway’s Statoil ASA chartered a supertanker to transport crude from the North Sea to Asia, increasing planned European oil shipments to the region to 6 million barrels.

Statoil booked the DHT Eagle to load at Hound Point, the terminal for Forties-blend crude, for 12 February, according to reports from three shipbrokers, including Optima Shipbrokers. The tanker is a very large crude carrier (VLCC), which is able to transport more than 2 million barrels of oil.

DHT Eagle is the second VLCC Statoil has planned recently to send from Europe to Asia. The company scheduled the VLCC Front Champion to load at its Mongstad terminal on 21 January and then go to South Korea, Optima data showed.

Statoil leases crude storage tanks in South Korea from Korea National Oil. Vitol fixed the tanker Great Lady from Hound Point, the loading point for Forties crude, to Asia, according to a report from Optima Shipbrokers.

Oil from the North Sea is being sent east as prices between the two regions have narrowed, making it economical to ship supplies from Europe and west Africa. n

Odfjell’s subsidiary Odfjell Terminals Asia (Singapore) is to develop a terminal together with marine facilities at Nangang (Tianjin).

This will be achieved through forming a joint venture with Tianjin Economic-Technology Development Area (TEDA), via its subsidiary Nangang Port.The terminal will handle bulk liquid chemicals, petroleum products and gases in China’s Nangang Industrial Zone.

The initial phase of the joint venture will comprise three deepsea berths and a storage capacity of about 150,000m3 and is scheduled to come on stream during the second quarter of 2014.

Called Odfjell Terminals Nangang, Odfjell will hold a 49% stake in the venture and conduct the operational management.

Nangang Industrial Zone is located about 120km from Beijing and will become the major petrochemical complex in the Western Bohai Bay area. n

A new oil pipeline will replace the old oil pipeline carrying oil from Colombo Port to Kolonnawa, and preliminary work has now started by the Storage Terminal under the guidance of Petroleum Industries Minister Susil Premajayantha.

Storage Terminal chairman MRW de Soysa has launched the project with the Defence Ministry

as the main collaborator.All arrangements have been made

to demolish illegal settlements on both sides of the pipeline, and to provide temporary homes for these squatters.

All unauthorised settlements within 6m on either side of the pipeline are to be demolished.

The Petroleum Industries Ministry is to build two oil pipelines form Colombo Port to Kolonnawa, costing $30 million (€23 million). The ministry hopes to have this money through loans.n

Norway’s Statoil to send second tanker from Europe to Asia

Odfjell in Chinese terminal venture

New oil pipeline for Sri Lanka


17

oiltanking plans fuel terminal in Port of Gdanskin Gdansk, PERN Przyjaźń and Oiltanking are planning to build a fuel terminal with a capacity of 800,000m3 on the premises of the Port Północny, which handles bulk cargo in the Port of Gdańsk. The zl.800 million (€178 million) project will be carried out by Oiltanking PERN Gdańsk, a company set up for this purpose. The tanks will be built on a site of 27.5 hectares.

iran buys crude oil from sanctions-hit Syriairan has lifted crude from sanctions-hit Syria, the country’s first export since late September 2011, and more exports could follow from the country as buyers from India, Russia and China line up vessels.

An Iranian-owned entity lifted 80,000 tonnes (586,400 barrels) of Syrian crude, consisting 50,000 tonnes of heavy Souedie and 30,000 tonnes of Syrian Light, at Baniyas, the report said, citing trading and shipping sources.

Sanctions aimed at crude oil exports have warded off normal buyers of Syrian crude, which mainly flowed to Europe, causing storage tanks to brim and forcing cuts.

Syria produced around 350,000bpd before the unrest, of which about a third was exported.

Westway to expand houston terminalsWestway Group is to further expand two of its bulk liquid storage terminals in Houston, Texas, in response to growing demand.

At Houston 1, Phase 7 of the expansion project will see Westway build six tanks with a 1 million gallon capacity, as well as three dock lines and the accompanying infrastructure.

Westway will also further expand its Houston 2 facility with the addition of four 630,000-gallon tanks, which will be Phase 6 of the terminal’s expansion project.

Following completion of the expansion programmes at Houston 1 and Houston 2, Westway’s storage capacity will reach around 113 million gallons.

news in brief

Phase one of Botlek Tank Terminal’s (BTT) construction project, which began in April 2010, has been commissioned.

On 4 December 2011, BTT sent out a tanker from tankpit 20, which was carrying 4,000 tonnes of biodiesel. In addition, BTT has since discharged an additional 3,000 tonnes of biodiesel from a cargo ship that was stored in tankpit 20 also.

Polimex-Mostostal of Warsaw, Poland constructed

the €70 million project.The terminal comprises 34 storage

tanks with a total storage capacity of 200,000m3; 130,000m3 of this will be used to store clean fuels, while the remaining 70,000m3 is earmarked for biodiesel and edible oils.

The new terminal is operational 24/7 and also comprises deepwater berths and a 420m jetty that can handle two seagoing vessels with a draught of up to 115,000dwt and two barges simultaneously. n

First cargos of biodiesel dispatched from BTT

operations have commenced at Botlek tank terminal

Qatar Petroleum’s Mesaieed Terminal and Export Department has celebrated the 11,000th export shipment of Qatar Land Crude Oil from its terminal facility at the industrial city.

The 11,000th shipment of Qatar Land Crude was loaded to the tanker ‘Towada’ on 12 December. The loading operation was inaugurated by Said Mubarak al-Mohannadi, QP director of operations from the multi product berth control room at the Mesaieed Terminal.

The first ever crude oil shipment from Qatar was made from the same terminal on 31 December 1949 on the tanker President Meny. The tanker carried about 94,000 barrels, which took approximately 72 hours to load.

In contrast, the 11,000th shipment of approximately 653,000 barrels was loaded in just about 12 hours.

Over the past 62 years of continuous development, Mesaieed has become one of the major export terminals in the Middle East. As part of its ongoing development, a new multi product berth jetty has been constructed, thus making it possible to load crude oil and refinery naphtha at the same time from the control room.

Simultaneously, the terminal’s storage and export facilities have undergone comprehensive modernisation and upgrade. All these would now enable Qatar Petroleum to accommodate higher-capacity tankers, bigger parcel sizes and export multiple products in much less time than before. n

Qatar Petroleum celebrates 11,000th export shipment


18

US-based Kinder Morgan will spend $210 million (€156 million) to add seven oil storage tanks capable of holding 2.4 million barrels of crude and condensate at its Edmonton terminal. Construction is expected to start early next year and be complete by late 2013.

Located just east of the city limits in Strathcona County, the terminal is adjacent to the Imperial and Suncor refineries and tank farms and serves as the base for the Trans Mountain Pipeline, Alberta’s only current link to the Pacific, which runs west through Jasper and then south through British Columbia to Kamloops and Vancouver.

Much of the crude goes by pipeline to Washington state’s Puget Sound refineries, while the rest is loaded onto tankers for export. The line also carries refined petroleum and supplies the Vancouver International Airport with jet fuel.

Kinder Morgan already has approval from the National Energy Board for

the new tanks, the first phase of a three-phase project that would have a total capacity of 6 million barrels. Each phase will be built according to market demand and the firm said it has begun seeking commercial support for the second phase of tank expansion.

‘This project was originally proposed in 2007, and after the market recession, was put on hold until the economic conditions improved. This project is not being pursued as part of the plans for Trans Mountain expansion,’ says spokesman Andrew Galarnyk.

The current Trans Mountain line can now handle up to 300,000bpd and a planned expansion could add 200,000bpd or more of new capacity by 2017.

‘The new [Edmonton] tankage will provide Alberta producers, marketers and refiners additional crude oil and condensate storage options as oilsands production increases and crude oil prices remain volatile,’ says Bill Henderson, VP of Kinder Morgan Canada Terminals.

He added that the new tanks allow for unparalleled upstream feeder pipeline connectivity and access to all downstream market

outlets, including direct connections into Trans Mountain Pipeline.

Ian Anderson, president of Kinder Morgan Canada, says the new tanks add a very important component to Trans Mountain Pipeline’s expansion plans and will provide existing and potential customers with significant crude staging flexibility.

‘Customers have indicated that there is a need for merchant storage in the Edmonton area that would permit these customers to access the Trans Mountain system as well as provide volumes to other refineries and pipelines in the Edmonton area,’ Galarnyk says.

With volatile prices in the marketplace, dedicated tankage allows customers to manage where or when their oil will flow.

‘Should markets/prices change or pipeline issues occur, customers can take more volumes into storage or release volumes to market to mitigate adverse events or take advantage of opportunities,’ says Galarnyk.

And with oilsands production set to increase over the next few years, producers, marketers and refiners will continue to require additional storage. n

Switzerland-based refiner Petroplus Holdings is struggling to avoid bankruptcy, after credit lines have been gradually withdrawn since late December.

With three out of five refineries already idle and the two others working at minimum levels and no indication banks are ready to extend lending, the company’s situation seems to only be worsening.

The crisis at Petroplus, Europe’s largest independent refiner, started when it disclosed that its lenders, a group of 13 international banks, had refused to renew a $1 billion (€800 million) credit facility. After several quarters of losses, the company badly needed this financing to supply its refineries with crude oil.

Since then, the company has been negotiating with its banks, which include Societe Generale, ING Groep, BNP Paribas, Rabobank and Natixis, to open the credit tap to little avail, according to the CEO.

‘Our main concern is for

the 2,500 employees of the group, which is why we want to make everything possible to avoid filing for bankruptcy,’ CEO Jean-Paul Vettier said after a meeting with top French government officials.

French Industry Minister Eric Besson said banks had eventually agreed to finance the company for a few days to allow the acquisition of crude.

The company is in the process of idling its refineries located in Petit-Couronne in France, in Cressier in Switzerland and in Antwerp in Belgium, while the other two in Caryton in the UK and Ingolstadt in Germany are still operating, though at a slower rate than usual.

A few hours after the CEO’s comments, Petroplus, which has reported a $415 million net loss during the first nine months of 2011, said other credit lines worth $1 billion were also blocked. According to traders and analysts estimates, the company might be running out of cash.

Petroplus’ woes highlight the situation of the industry

in Europe, where refiners are already grappling with weak demand, high crude prices, thin margins and rising competition from refiners in Asia and the Middle East.

During the same press conference, Vettier said the company was seeking other alternatives such as support from an oil producing company he would not name that could bring crude and financing.

An oil company could bring a temporary support, said Roy Jordon, downstream consultant at Facts Global Energy, as a way to secure supply chain for its petrol stations.

Oil majors have been divesting from the oil refining business for several years after they found out that oil drilling gave better returns on capital and are unlikely to expose themselves to that business again, he said.

Still, Petroplus might eventually be rescued, though probably after being downsized significantly.

Banks may eventually agree to refinance Petroplus,

if only to recover some of the money they still are owed, Jordan said. Banks might ask Petroplus to close the loss-making plants and focus on the few competitive ones. A last minute support might come from politicians. The Petit-Couronne refinery was visited by French presidential candidates, who promised support to the 550 workers, and Industry Minister Besson has met with unions. The government’s priority is to maintain activity at the refinery, he said.

Petit-Couronne would be the fourth refinery to close in France since 2010 and the government would surely prefer avoiding a nasty conflict with heavily unionised petrochemical workers.

However, so far the French government has been timid. French Finance Minister Francois Baroin said the government was mediating between the company and the banks, though refused to answer when asked whether the government would put money on the table. n

$210 million expansion at Kinder Morgan’s Edmonton oil tank farm

Petroplus runs out of cash, crude and time


19

Indonesia’s state-owned oil and gas company Pertamina plans to build a fuel storage facility with a capacity of 300,000kl on Sambu Island in Sumatra’s Riau province.

The project will require an investment of $50 million (€38 million) and is expected to be completed by 2013.Pertamina will store fuel oil and petrol at the facility, which will be initially used by Pertamina Energy Services. An agreement to this effect was signed on 22 December.

Pertamina Energy Services is wholly owned by Petral, the trading arm of oil and gas company Pertamina.Pertamina also plans to build infrastructure related to the oil products storage on Sambu Island, including three jetties that can accommodate 100,000dwt ships.

Besides building up the country’s stockpiles, the project is also expected to optimise Sambu Island as the region’s fuel business centre. It will also help Pertamina Energy Services grow as a fuel trading company in Southeast Asia. n

Pertamina plan oil products storage facility on Sambu island

Sambu island will be home to Pertamina’s 300,000kl storage facility

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A Trafigura subsidiary has acquired rail and dock terminals in Corpus Christi, Texas, and also announced an alliance with Energy Transfer Partners (ETP) to jointly coordinate transportation and storage of crude oil and condensate for Eagle Ford shale producers.

The Texas Dock & Rail terminal is an 85 acre industrial site that features 600,000bbl of storage for crude oil, fuel and condensate. The terminal has a 1,200 foot long deepwater dock with a 45 foot draft and space for expansion. The cost of the acquisition was not disclosed.

Dallas-based ETP will provide pipeline services for Eagle Ford producers to Corpus Christi. Currently, crude and condensate is being shipped to the terminal by truck, for movement by barge.

Depending on market demand and the location of specific producers, Trafigura

said ETP expects to transport crude and condensate by pipeline, using some existing assets in the ground as well as making new pipeline connections to the field.

‘We expect the pipeline to be operational as early as third-quarter 2012,’ a spokeswoman says.

Brian Beebe, ETP senior vice-president, says: ‘The combination of expertise and assets will directly meet the needs of the Eagle Ford’s unique product mix and offer superior market access to our producers through the deepwater dock in Corpus Christi.’

ETP owns an intrastate pipeline system in Texas that includes the Eagle Ford play, and ETP holds 70% interest in Lone Star NGL, a joint venture that owns and operates LNG storage, fractionation and transportation assets in Texas, Louisiana and Mississippi.Trafigura, a wholly owned subsidiary of Trafigura Beheer BV, is an international commodity trader. n

Trafigura and ETP to direct Eagle Ford liquids storage


20

State-run Indian Oil Corporation (IOC) may set up its next refinery, a 15 million tonnes per annum (mtpa) unit, on the western coast in Gujarat at an investment of Rs30,000 crore (€4.36 billion).

According to a senior IOC official, the country’s biggest oil refining and marketing company, favoured Gujarat over Maharashtra, given its crude oil and product pipeline infrastructure.

Raj Kumar Ghosh, director of refineries at IOC, had earlier said the proposed unit may also have a petrochemical plant along the lines of the Paradip refinery.

‘We plan to double our crude refining installed capacity from 61.7mtpa to 123mtpa in the next decade. And given our existing pipeline infrastructure in Gujarat, it seems a good location for the new refinery,’ said a senior IOC official. ‘The modes of financing the project are being worked out,’ he said.

IOC’s Koyali refinery in Gujarat has a capacity of 13.7mtpa. The company operates a 1,870km long Salaya-Mathura pipeline from Salaya (near Vadinar) in the Jamnagar district on the coast of Gujarat to bring crude oil to its refineries at Koyali, Mathura (Uttar Pradesh) and Panipat (Haryana).

At Vadinar, it has a crude oil tank farm of 13 tanks with a total capacity of 0.773mtpa. It also has a crude oil storage tank farm at Viramgam with a total capacity of 0.331mtpa. Another storage tank farm at Chaksu has six tanks with a total capacity of 0.219mtpa.

The 74km long pipeline from Mundra to Kandla was hooked up to the existing system of Kandla-Panipat section of the Kandla-Bhatinda Pipeline near Gandhidham.

Indian Oil controls 10 of India’s 20 refineries with 34.8% share of the national refining capacity. The company lists on its website a growth plan for its refineries with an outlay of Rs55,000 crore for capacity augmentation, de-bottlenecking, bottom upgradation and quality upgradation. Major projects under implementation include a 15mtpa grassroots refinery at Paradip, Orissa, Naphtha Cracker and Polymer Complex in Panipat.

The Panipat refinery’s capacity would be expanded from 12mtpa to 15mtpa. Gujarat is also home to Reliance Industries’ 1.24 million barrels per day of crude processing capacity refinery at Jamnagar and Essar Energy’s refinery at Vadinar with a capacity of 14 million tonnes. The refinery is being expanded to 20mtpa by September 2012. n

IOC considers Indian refinery

A joint venture between Royal Dutch Shell’s China units and Tianjin State Farms Agribusiness will build a 200,000m3 oil products storage facility in the northern city of Tianjin.

Tianjin Nangang Industrial Zone, a government-run industrial projects developer, said the facility, with expected annual throughput of 3 million tonnes, would cost 550 million yuan (€68 million) and construction is due to start in June, taking a year.

The Administrative Commission of Tianjin Nangang Industrial Zone and the joint venture, Shell North China Oil, signed an investment agreement on 31 December.

The facility will add to Shell’s exposure in the world’s second-largest fuel market, in which foreign participation is tightly regulated by the central government.

The joint venture has already built and is operating fuel stations in Tianjin.

Tianjin Nangang Industrial Zone, which houses PetroChina’s 100,000bpd Dagang refinery and a 1 million m3 crude oil storage facility, has earmarked space for a 3.2 million m3 state crude reserve base and a similar-size commercial storage, expected to be built by China Petroleum & Chemical (Sinopec).

It has also allotted land for a proposed 260,000bpd China National Petroleum-Rosneft joint refinery. n

Johor’s Pengerang is expected to see a step up in activities this year, with Malaysian companies led by Petronas committed to investing tens of billions of ringgit there.

A RM5 billion (€1.24 billion) independent deepwater petroleum terminal (IDPT) project by a Dialog-Royal Vopak joint venture has already gotten off the ground, 5% of the first phase completed as at December.

It will deliver an initial 1.3 million m3 of storage with seven vessel berths when commissioned in 2014. The IDPT will offer 5 million m3 storage when fully completed in around 10 years.

Dialog has a 60-year exclusive mandate to develop the IDPT by the Johor state government which also has a stake in the project. Petronas is expected to be the terminal’s main client.

Pengerang has distinct advantages as an IDPT because its 24m deepwater jetty facilities can accommodate VLCCs and ULCCs, allowing tankers to collect or deliver crude oil without a costly buoy mooring system.

Moreover, its sheltered harbour next to international sea lanes provides ‘captive demand’ for tank storage facilities. Other developments are brewing, too.

Integrated marine construction specialist firm Benalec has received an in-principle approval from the state government to reclaim 1,760 acres in the Pengerang area at the southern tip of Malaysia.

Over the coming 10 years, it plans to sell the reclaimed land to fabricators and shipyards in outright land sales or enter into joint ventures with foreign oil and gas companies wanting to set up there. n

Plains All American Pipeline has completed its acquisition of the Yorktown Terminal and Jal Pipeline in the US from Western Refining for about $220 million (€172 million).

The acquisition includes substantially all of Western Refining’s Yorktown assets, including both the terminal and idled refinery, and an 82 mile segment of a 424

mile crude oil pipeline in the US state of New Mexico.

US-based Western Refining said it will retain its East Coast wholesale business and continue to market products in the Mid-Atlantic region.

Plains All American Pipeline is engaged in the transportation, storage, terminalling and marketing of crude oil, refined products and liquefied petroleum gas and other natural gas-related petroleum products. n

Shell’s China venture to build Tianjin fuel storage

Pengerang gearing up to become regional oil storage hub

Plains All American acquires Western Refining assets in US


21

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VTT Vasiliko, the company that aims to build a private oil storage terminal in Cyprus with an investment of €220 million, says it would take a positive view if the state wished to use its facilities.

According to the company, this would save up to €50 million in investment for the Republic of Cyprus, a saving which could be passed onto the Cyprus tax payer.

It also said the VTT Vasiliko terminal could be expanded easily to provide the capacity to store Cyprus’ strategic stocks, which would save Cyprus more than €17 million per year, ‘which to date the Republic of Cyprus is obliged, based on the European acquis, to spend renting storage space abroad’.

It added that the state could be involved in the expansion with little or no contribution, through the Cyprus Organisation for Storage and Management of Oil Stocks (COSMOS-KODAP) and/or the Electricity Authority of Cyprus (EAC).

‘Involvement in this way will give Cyprus control of its compulsory stocks and fully complies with Cyprus’ obligations as provided for all member-states,’ VTT says.

‘With these proposals, the problems of space for developments in the wider Vassilikos area can be negated. The space saved could then be made available for the future infrastructure of LNG,’ it says.

It is estimated the construction of the VTT terminal will create over 1,000 jobs, while upon its completion 60 people will be employed from Cyprus to manage its operation. Initially, the terminal will have the capacity to store 345,000m3 of oil (petrol, diesel, jet fuel, fuel oil) and upon completion of the second phase, by the end of 2013, storage capacity will rise to 640,000m3.

VTT also responded to reports suggesting there was a conflict of interest from the potential participation of the company in the construction and management of the oil storage terminal at the Vassilikos Energy Centre.

VTT said that oil storage terminals,

by nature, do not affect competition in a market as the owner/operating company of the terminal is in control of the storage infrastructure rather than the oil stored within it.

‘The aim and priority of VTT Vasiliko (a subsidiary of VTTI) is the development and operation of its private terminal that will be erected in Vassilikos and not any other similar project in Cyprus,’ a statement said.

The main activity of the private terminal of VTT Vasiliko, which will be constructed in the Vassilikos area, will be storing fuels for companies, the majority from abroad, which do not have commercial operations in Cyprus and are competitors to each other.

‘This demonstrates that there is no issue of monopoly or “conflict of interest” if VTTI is selected to participate in the oil storage terminal at the Vassilikos Energy Centre,’ the company says.

However, if requested, the company says it would view positively the use of infrastructure from their oil terminal by the Energy Centre. n

State could save millions by using Cyprus private oil storage facility

teChNoloGy TA N K S TO R A G E • January 2012

22

Automation solutions provider Diamond Key International (DKI) has upgraded its terminal automation software.

The Omega 5000 system shares operational capabilities similar to that of the Omega 3000 and Omega MI, but includes updated software tools and resources, providing the user the ability to search, filter, report and view in any location.

The Omega 5000 system includes a range of features that provide the basic operational capability for a terminal, such as scheduling, reporting, recipe management and stocks management. However, for terminals requiring extended functionality, the capability of the Omega 5000 can be further extended with optional functions. These are categorised in two groups: interfaces and functions.

Interfaces provide a variety of tank gauging, host, weighbridge and SCADA communication protocols, and the

functional group provides extended functionality such as nomination bay, multi language and rail loading. A site may choose one or more of these options depending on operational requirements.

DKI has worked to ensure a smooth transition to the Omega 5000 for its customers currently using the Omega 3000. An Omega 3000 database can be imported meaning a significant reduction in data entry time; only passwords require re-entry. Depending on server hardware, the Omega 5000 can potentially be installed on existing server hardware.

There are many usage similarities between the Omega 3000 and 5000: the menu structure and organisation, for example, are alike. A more simplified version of the software is currently in the works and DKI hopes future versions of this technology will adopt graphical drop and drag in areas such as ‘equipment’ and ‘reporting’.

In a move that will benefit the many oil companies that have locked

IT user terminals but still require the ability to view anywhere, DKI adopted web interface. This gives the user clear savings, as there is no need for dedicated TAS PCs for the user interface. Provided the user is authorised and has a username and password for Omega 5000, screens can be accessed anywhere.

One significant change to the Omega 5000 is that of ‘reporting’. All data is logged to the database and is available to the user in real time. Data is stored and online for up to one year. Although provided with 25 pre-formatted reports, a user can now create their own report templates for dedicated site reports. The extensive search and filter capability means the user can utilise the entire database, the output of which may be used in a variety of standard industry formats.

A number of Omega 5000s have already been installed in fuel terminals throughout the Asia Pacific region.

The STT250 features TUV SIL2 safety certification. n

DKI releases updated version of automation software

Hunton & Williams and Penman Consulting launched a new website on 7 December to help companies and stakeholders understand processes, regulations and guidelines for the EU’s REACH (Registration, Evaluation Authorization and restriction Chemicals) Regulation.

The REACH Product Stewardship Forum was designed by legal and consulting experts involved in the development of the regulation since its implementation.

To aid with understanding, the website includes a comprehensive calendar of milestones; a checklist on how to prepare for registration; an up-to-date overview of legal proceedings, such as cases involving the Candidate

List, classification and labelling; and a snapshot of compliance requirements and bodies involved.

‘Our intent is to make understanding REACH as simple as possible by providing a concise overview of the regulations,’ says Lucas Bergkamp, head of the European regulatory practice of Hunton & Williams. ‘This portal is a key resource ahead of the 2013 registration deadline, comprising critical advice for a smooth submission of dossiers.’

The REACH regulation was introduced in the EU in 2006 and is one of the most complex chemical regulations in the world, addressing over 30,000 substances. It impacts the entire chemical supply chain ranging from producers to importers and suppliers, and affects the vast majority of business sectors including constructive, automotive and agriculture. n

New REACH website simplifies navigation of EU chemical regulation

January 2012 • TA N K S TO R A G E teChNoloGy

23

Technology company Honeywell has made changes to one of its temperature transmitters, which is suitable for control and safety temperature measurement applications.

The STT250 now features advanced diagnostics that enable plant operators to prevent field device failures before they occur, while at the same time reducing plant downtime due to unscheduled repairs.

Maintenance teams can also use the advanced diagnostic information stored on the transmitter to allocate maintenance resources more effectively, while plant engineers can use on-board transmitter and sensor information for more accurate process analysis, leading to greater plant efficiency.

All HART variants of the STT250 are compatible with the HART 6 open standard, allowing for an increased amount of device health monitoring.

The new transmitter also supports other open standards such as the Electronic Device Description Language (EDDL) or certified Device Type Manager files.

The STT250 features TUV SIL2 safety certification. n

Honeywell enhances temperature transmitter

Cleveland Process Designs (CPD), a UK-based technology solutions company for the oil, gas, petrochemical and process industries, has developed a series of modelling applications to assist emergency response teams with their emergency management.

CPD’s thermal modelling software – iResponse Thermal – and its dispersion modelling software – iResponse Dispersion – assists professionals such as fire fighters, Hazmat teams, HSE managers, engineers, consultants and police with their emergency management plans.

iResponse Thermal enables the modelling of tank fires, jet fires, pool fires and bund fires. Thermal heat radiation contours are displayed following the input of atmospheric conditions such as wind speed, wind direction and temperature. Additionally, iResponse Thermal includes a Burn Down Calculator, which gives the length of time a given product will burn until incinerated.

iResponse Dispersion follows short sequences similar to those of the iResponse Thermal, with the result being both plan and profile views of a product as it disperses into the atmosphere. This provides the user with distances and area covered by a release. iResponse Dispersion can model instantaneous and continuous releases, and CPD plans to release a heavy gas capability in mid-2012. n

CPD’s software assists with emergency response

honeywell’s improved Stt250 now comes with advanced diagnostics

Inspection, testing, certification and quality control company Applus+ is expanding into the US market with the acquisition of US firm Kiefner & Associates.

Kiefner & Associates provides engineering services primarily associated with the oil and gas pipeline industry, focussing on the safe and reliable operation of pipelines and facilities.

Applus+ CEO Fernando Basabe describes the acquisition as ‘a new breakthrough for Applus+ RTD’ – the company’s non-destructive testing division – and says the US market is an ‘extremely strategic’ one.

The integration of the US company into Applus+ will help drive forward its expansion plans of both the group and its Applus+ RTD division, adding to its range of services in integrity analysis management. n

Applus+ expands into US market

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Instrumentation manufacturer Marsh Bellofram completed its acquisition of Michigan, US-based engineering firm King Engineering’s product line assets on 5 December 2011.

King Engineering is the manufacturer of the King-Gage brand of liquid level measurement and inventory tank gauging systems, which includes related air filtration components for new installations, upgrades and retrofits of storage

and processing vessels. The company’s product

portfolio includes tank level indicators, digital processors, and single and multiple tank operator interfaces, which support PLC and LAN protocols.

As part of the contract, King Engineering’s manufacturing operations have been relocated from Ann Arbor in Michigan to Marsh Bellofram’s headquarters in Newall, Virginia. Both standard and custom products will continue to be offered under the King-Gage brand, with customer service and sales support also transferred to Newell. n

Marsh Bellofram acquires King Engineering

Mixer Technologies has launched its self-actuating mixer that allows for improved in tank mixing and blending of large volumes of petrochemicals.

The SA-400 Rotary Mixer provides efficient in tank blending and homogenisation. The main features of the new mixer include: • Variable speed – the rotational speed can be adjusted

depending on system outputs and material composition• Flexibility – the SA-400 can be configured and

customised to fit various tank sizes, product flow rates and material composition

• Multiple applications – the new mixer can be used with a wide variety of materials, including crude oil, biodiesel, petrol, diluted bitumen and HFO. n

Mixer Technologies launches new product for petrochemical industry

Metallized Carbon (Metcar), a manufacturer of oil-free, self lubricating, carbon-graphite materials for severe service lubrication applications, has announced the availability of its custom vanes, rotors and end plates for use in rotary vane pumps handling both liquid and gases.

The carbon-graphite components provide lubrication in most environments, and are suitable for pumping petrol vapours and combustion products, in addition to liquids with poor lubricating qualities and strong chemicals that attack metals.

Metcar’s carbon-graphite

vanes, rotors and end plates are used in dry running applications such as petrol vapour pick up pumps. In-

liquid applications include fuel and liquid chemical pumps.

The company supplies the carbon graphite vanes, rotors

and end plates to rotary pump and compressor manufactures and rebuilders. The materials are chemically resistant and have a low wear rate running in both gas atmospheres and low viscosity liquids.

Carbon graphite vanes can withstand the rubbing of the vane tip against the housing bore and the rubbing of the side of the vane against the slots in the rotor. Lightweight carbon graphite rotors save energy and withstand the rubbing against the vane and the end plates. Carbon graphite end plates are pressure tight and dimensionally stable so they can make a close clearance seal with the rotor and vanes. They also withstand the rubbing of both the vanes and rotor. n

Metcar announces availability of custom vanes, rotors and end plates

Verwater Group and Transfield Services have formed a long-term partnership to develop business opportunities in the Australian petrochemical and tank terminal market.

Together the two companies will peruse a number of opportunities, including the design, construction, maintenance and repair of bulk liquid storage tanks, tank terminals and related auxiliary equipment.

The joint venture will allow both companies to combine their strengths in industrial practices: both Verwater and Transfield have a history of working within the oil and gas production, refining, petrochemical, infrastructure

and industrial sectors. Verwater deals in

storage tank maintenance and construction, while Transfield is a provider of operations, maintenance, asset and project management services. n

Verwater and Transfield Services form partnership

end plates from Metcar are now available for use in rotary vane pumps

teChNoloGy TA N K S TO R A G E • January 2012

26

Bekaert CEB Technologies is the supplier of vapour and gas treatment solutions for tank parks, load/unload applications, (petro-)chemical industry, up-and midstream oil & gas e.g.We offer integrated solutions from point of emission to thermal treatment and energy recuperation, based on our advanced pre-mix / metal fibre thermal technology. If required, we can supply complementary technologies from our partners, such as VRU, RTO and TO.

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Storage tank solutions provider Enviro Vault Canada has launched an alternative to fire tube/burner assemblies for aboveground storage tank heating.

The ThermoVaultT is ideal for use in hazardous areas such as light oil applications where fire tubes may not be allowed. It has been developed to improve the safety and performance of oil storage tanks in field operations.

The patented ‘internal chamber’ enhances environmental performance, safety and operations by containing fluid spills from the tank’s inlet and outlet valves, and by providing secure, ground level access to valves and instruments.

This recess chamber is installed inside the tank with an access door through the

tank wall. All valves, sample taps, electronic control, and heater (if required) are mounted in the Enviro Vault. Enviro Vaults can be fitted in any size or shape of new tank or in-service tank for a number of applications, including heavy oil and light oil production tanks and any other application where a tank is required.

Alberta Innovates – Technology Futures conducted an R&D analysis of the ThermoVaultT’s use of a catalytic heater mounted within a chamber recessed to the inside of the tank shell, testing its ability to raise and maintain fluid temperatures in aboveground storage tanks. The testing revealed reductions in nitrous oxide and carbon monoxide, while meeting the same heating requirements as conventional fire tube burner assemblies. n

New tank heater provides a safe alternative for heating fluids in hazardous areas

US-based aboveground storage tank constructor HMT has acquired Nayler Petroseals – a business formerly owned by engineering firm Motherwell Bridge, based in Lanarkshire, UK.

Nayler Petroseals provides seals to prevent evaporation and emissions leaking from storage tanks.

Financial details of the acquisition have not been released, but Motherwell Bridge will still be able to access Nayler Petroseal’s product range. It is also now able to offer HMT’s entire product portfolio to its clients. n

Motherwell Bridge sells petroseals business to HMT

Coatings supplier PPG Industries has introduced a new coating for use in a number of applications.

Suitable for the petrochemical industry, in addition to inland marine, water and wastewater industries, the PSX One coating offers a durable, lower volatile organic compound (VOC) formulation that can be applied by brush, roller or spraying.

‘In addition to its single-component formulation, PSX One coating has unlimited re-coatability, making touch-up and maintenance easier while being able to be tinted in the same colour range as PSX 700 coating,’ says Steve Feldman, PPG sales director.

PSX One is also abrasion resistant and has wide cure-temperature flexibility and surface tension to minimise rust or dirt streaking. n

Siloxane coating reduces rust and dirt streaking


27

UK-based electric actuator manufacturer AUMA Actuators has supplied 100 of its explosion-proof, non-intrusive actuators to the Haramidere loading terminal in Istanbul, Turkey.

At the Haramidere terminal, AUMA’s modular actuation technology for

the automation of gate valves is currently being utilised. The installation includes adoption of the company’s actuators on over 60 manifold gate valves and on 30 valves at tank outlets.

Profibus DP technology has been incorporated into the automation solution for an enhanced communication solution that offers on site design flexibility. n

AUMA supplies Turkish terminal with actuators

Oiltanking replaces swivel joints

one hundred AUMA actuators are installed at the haramidere tank in turkey

oiltanking Singapore is installing Niigata swivel joints at 17 of its tanks

tokyo Boeki Machinery’s Niigata swivel joints are designed to prevent major leakages

Oiltanking Singapore is to replace swivel joints that were installed on 17 of its tanks in 1990.

The upgrade will feature Tokyo Boeki Machinery’s Niigata swivel joints, which have a unique structure that prevents major leakage of fluid, such as crude oil or petrol in the event of a failure.

Features of the joint include a 360°

rotary pipe joint with double row ball bearings. Each rotating part has high mechanical strength against load (including thrust and distortion) during use. The double seal structure enables the joint to withstand external pressure, while stainless steel cladding makes surfaces corrosion-resistant.

Swivel joints are a key component of a tank, and are used to drain away the rainwater so that the floating roof does not sink. n

Pump Solution has designed a new seal-less pump that is ideal for the safe handling of both thin and hard-to-seal viscous liquids.

The EnviroGear is a durable displacement gear, which comprises seven primary components: a magnet housing, containment canister, casing, rotor magnet assembly, idler gear, eccentric spindle and head. This design eliminates leakage and reduces maintenance and environment costs.

The EnviroGear supports the rotor and idler gears at three crucial locations, while traditional internal gear pumps support the rotor and idler gears with a one-sided support common to cantilevered load design. The latter has been found to inhibit performance.

Ideal for a range of industries and fluid types including petrochemicals, biofuels and coatings, the new pump uses magnets mounted directly onto the rotor. This helps eliminate the adaptor plate and allows for a single fluid chamber. The design means the pump can handle fluids with high viscosities up to 5000cp.

Specialist engineers company AxFlow is now distributing this new design from Pump Solutions, which is available in ductile iron, carbon steel and stainless steel. The range can accommodate temperatures between -40°C and 260°C, flow rates up to 45.5m3/hr and pressures up to 14 Bar. n

Seal-less pump suitable for petrochemicals and biofuels


28

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29

Allerion Oilfield Services, one of the leading tank storage companies in Canada, has launched a new self-actuated, gearless-drive mixer, through its spin-off company, Mixer Technologies.

The SA–400, launched in October, was developed at the request of a number of Canadian terminal operators.

‘They were having issues with product stratification,’

says Jeff Heath, CEO of Allerion Oilfield Services. Mixer Technologies offers an existing mixer used to control sludge accumulation, but Heath felt this was not the most effective option for blending.

‘The new mixer works without the need for an internal gearing mechanism,’ says Heath. The problem with this is that the gears can become inefficient or clogged from viscous products, which prevents

them from working properly. ‘We were inspired to create

this new design by watching lawn sprinklers in action. The force of the water and the unique design of the discharge outlet are enough to make the mixer rotate.’

Once installed, terminals are able to adjust the rate of rotation of the mixer, depending on the available pump capacity and the properties of the product being stored.

The mixer benefits from

very few moving parts, and can be installed either in the centre of the tank or on a manway.

‘We’ve had a huge amount of interest in the product at Tank Storage Canada Expo & Conference,’ says Heath. ‘A lot of this has come from companies storing biofuels, such as canola oil.’

Now the product has been officially launched, Mixer Technologies is looking for partners to distribute the product worldwide. n

International distributer of steel pipes, valves and fittings Van Leeuwen Pipe and Tube Group has acquired Jean Wauters-acier speciaux and its subsidiary, IPM Acier.

Brussels-based Jean Wauters supplies bar steel, while the subsidiary IPM concentrates on the French market with branches in Lyon and Paris.

The acquisition will see Van Leeuwen add bar steel to its product portfolio,

therefore increasing its range in the metal processing and metal cutting industries.

‘The addition of Jean Wauters and IPM to the Van Leeuwen Pipe and Tube Group European network will enable us to further

expand our range for different market segments,’ says Peter Rietberg, chairman of the Board of the Van Leeuwen Pipe and Tube Group. ‘We will be focusing on the entire European engineering industry and hydraulics market.’ n

Self-actuated rotary blending mixer launched at Tank Storage Canada Expo & Conference

Van Leeuwen Pipe and Tube Group acquires Jean Wauters and IPM

Bekaert CEB Technologies, a provider of vapour/waste gas treatment solutions, is expanding its services into the petrochemical, oil and gas, and synthetic gas industries.

With this announcement come three innovations and product improvements: 1. Bekaert Heat Recovery

Module – all Bekaert CEB units can now be (retro)fitted with a dedicated Bekaert heat recovery module. With overall efficiencies of up to 70%, the heat energy is available for local processes. This enables operators to recuperate energy from waste flows and use it to reduce the fuel consumption of the boiler burner.

2. Bekaert Peak Shaving Solution – the introduction of this means (part of) the high calorific value waste vapour flow can be stored and used in a later stage

as support vapour or gas during periods when no new waste vapours are generated. This results in a more continuous heat production and the possibility to reduce the already low consumption of fuel/support gas during the

processing of inert vapour flows. This solution also results in the requirement for a lower installed thermal processing capacity, which reduces capital investment and operational costs.

3. Burner Access and Exchange system – Bekaert CEB has

also introduced its Burner Access and Exchange system for its burner decks. This unique feature allows easy and quick access to the burner deck for inspection without the need to dissemble the stack, for example. n

Bekaert CEB Technologies penetrates new markets

Bekaert’s Burner Access and exchange systemAll Bekaert CeB units can be now (retro)fitted with a heat recovery module


30

EMPOWERED BY TECHNOLOGY

OPTIMIZE.For maximum effectiveness, tank inspections should be scheduled regularly.

ROSEN’s risk-based integrity plan combined with our rugged, high-speedTank Bottom Inspection Tool (TBIT) guarantees reliable, high-precision data

and makes tank inspection planning simple and safe.www.roseninspection.net

January 2012 • TA N K S TO R A G E iNCideNt rePort

31

Providing terminals with up-to-date information on fires, leaks, spills and accidents in the oil and petrochemical industry

date location Company incident information

30/11/11 California, US Alon USA Bakersfield Refinery

25/11/11 Nunavut, Canada

21/11/11 Texas, US Kinder Morgan Energy Partners

20/11/11 Dublin, Ireland Dublin Port

14/11/11 Scotland, UK BP

08/11/11 Calbuco, Chile Copec

A 2.5 million gallon storage tank exploded at the California-based refinery but luckily no one was injured. According to Kern County Fire Department spokesman Sean Collins, the tank was in the process of being cleaned and a small amount of diesel sludge in the tank somehow caught on fire.Firefighters used water to protect equipment near the damaged tank. They extinguished the remaining fire at the bottom of the tank with foam.The refinery continues to operate and no evacuations took place at the plant or surrounding area.Druten said the area around the tank was shut down and secured, and that an investigation has been launched to determine what caused the accident.The 103-employee plant processes vacuum gas oil, a by-product of Paramount Petroleum’s Long Beach area refining operations.The Bakersfield refinery was scheduled to cease production for two weeks in December 2011 while it underwent routine maintenance.The refinery sat idle for about 28 months until Alon reopened it in June 2011. The refinery processes more than 10,000 barrels of gas oil a day, turning it into roughly 300,000 gallons of diesel and 140,000 gallons or more of petrol. It also makes smaller amounts of propane, butane and other petroleum products.

Investigations into the cause of the Resolute Bay fuel spill on 27 October 2011 are still underway. It is thought the valves on the tanks were tampered with, causing 87,000 litres of fuel to leak. However, locals claim the spill, which occurred overnight, was less significant and that around 80,000 litres of the leaked fuel has ‘gone missing’.

Kinder Morgan Energy Partners reported a fire at its petroleum coke terminal in Port Arthur, in a filing with the US National Response Centre.In the filing, the company said an emergency response team was onsite, but the cause of the fire had not been determined.Kinder Morgan runs the facility that handles petcoke from Total’s Port Arthur refinery - which produces more than 1 million tonnes a year of the byproduct of oil refining.

Several fire engine crews from Dublin Fire Brigade rushed to Dublin Port after a highly dangerous chemical began leaking from a giant storage tank.The emergency incident was reported at 9pm when ammonium nitrate was detected to be leaking from a tank at the port terminal at Breakwater Road South.A large number of tenders went to the area and the district was cordoned off as terminal staff and fire fighters worked to make the area safe and stop the leak. The cordon was lifted later when the leak was successfully fixed.

In the Firth of Forth estuary in Scotland, a pipe that transports effluent water from oil major BP’s Hound Point Terminal to the Dalmeny oil storage tank started leaking at around 1.30pm. According to BP, the escaped water was mostly rainwater and seawater, with a small level of impurities. BP owns and operates this terminal, which is made up of two jetties that can handle loading vessels of up to 300,000dwt and it is Scotland’s biggest North Sea oil exporting facility.Despite complaints of the strong smell of sulphur, the leak posed no risk to public health and no one was evacuated from the site.

The Electricity and Fuel Superintendent (SEC), a government oversight office, has fined Chile fuel provider Copec 279 million pesos (€406,000) for leaking more than 7,000 gallons of fuel at its newly inaugurated Pureo plant in Calbuco, south of Puerto Montt.SEC spokesperson Luis Avila Bravo said the hefty fine was necessary to keep accidents like this from reoccurring. ‘When a company violates safety norms, we have to take action,’ says Avila. According to Avila, the new storage facility had four design errors that resulted in the leaked fuel.The oil spill occurred on 6 September, the day the new plant opened for business. The spill created considerable concern among the local fishing community. A local court shut down two of the seven storage tanks, pending an investigation by authorities. Petitioners had asked to shut down all seven holding tanks, each with a capacity of 5.3 million gallons.The new Pureo oil storage facility was strongly opposed by local fish and mollusk farmers when first announced by government and company authorities two years ago.But after repeated promises by Copec that the new facility would be ‘state-of-the-art’ and after satisfying all environmental reviews imposed by the state, the storage facility was finally inaugurated in late August.Of the 7,000 gallons reportedly spilled by COPEC, 6,000 were either recuperated or removed from the environment.

EMPOWERED BY TECHNOLOGY

OPTIMIZE.For maximum effectiveness, tank inspections should be scheduled regularly.

ROSEN’s risk-based integrity plan combined with our rugged, high-speedTank Bottom Inspection Tool (TBIT) guarantees reliable, high-precision data

and makes tank inspection planning simple and safe.www.roseninspection.net

32

safety TA N K S TO R A G E • January 2012

Human error lies behind the majority of accidents at storage tanks.

Here amy McLellan looks back at the major incidents in 2011 to

see what lessons can be learnt

No room for complacencyOver the last few years

whenever safety has been mentioned at

conferences, the Buncefield explosion in 2005 has been used as the example of the most recent, major incident.

Worryingly, this is no longer the case as a growing number of other incidents are sharing the limelight.

In the last six months alone there have been more than 10 large fires or explosions involving storage tanks.

Notably, in June 2011 an explosion at the Chevron refinery in Pembroke, south Wales, killed four workers and seriously injured another.

This is one of western Europe’s largest and most complex refineries, with a throughput capacity of 270,000bpd, of which 220,000bpd is crude capacity.

Despite its fatal nature, the explosion barely interrupted service at the facility. The explosion occurred while a storage tank was being taken out of service, affecting that tank and the one next to it in what a company spokesperson said was a ‘fairly localised explosion’. There is no news yet on the cause as an investigation is underway and likely to be a ‘lengthy process’.

Since then, the refinery has changed hands after Chevron agreed to sell it and other UK downstream assets to NYSE-quoted Valero Energy in March for $730 million (€545 million).

The transaction closed in August 2011 with new owner Valero also awaiting news of the Health & Safety Executive investigation.

Not an isolated incident

Since then, in October 2011, one worker was killed and four suffered serious burns after an explosion at a crude oil storage tank at the Mangalore Refinery in India.

Although not all incidents

have led to injuries or fatalities, all of them will have led to severe financial loss of product and capacity.

The frequency of accidents at storage tanks may take the casual observer by surprise, with many unaware of just how hazardous these apparently robust and benign looking structures can be.

This was highlighted by an October 2011 study by the US Chemical Safety Board, which found there have been 26 explosions at oil and gas production sites since 1983, killing 44 members of the public and injuring 25 others under the age of 25.

These typically occur when young people socialise at unfenced oil sites in rural areas in states like Texas, Mississippi

and Oklahoma, unaware of the explosion hazards from the crude and condensate held in storage tanks.

Indeed, Roy Sanders, a Louisiana-based chemical process safety consultant, says even many people who design, construct, operate and maintain low-pressure storage tanks do not appreciate how ‘frail’ they are. He cites overfilling, vacuum damage and explosions resulting from flammable mixtures in the vapour space as the main causes of dramatic tank failure.

Risk consultant for Environmental Resources Management, Jeremy Goddard, analysed the major incidents in 2011 and identified three main causes:

lightning strikes, accidents during maintenance (as in the Pembroke and Mangalore cases), and overfilling.

Lightning may seem to be a natural event but there are steps operators can take to protect their tanks from a potentially dangerous strike. Proper grounding, streamer delaying air terminals, static control at the load outs, and industrial grade surge suppression can help reduce the likelihood of a strike or static build up.

There are no guarantees with lightning protection but having the right protection in place can greatly reduce the risks. Given that at any given moment there are 1,800 thunderstorms in progress somewhere on the Earth –

sources: Jeremy Goddard, eRM; asM Consortium; tank storage Magazine

Storage tank incidents in 2011When What CauseMarch Aviation fuel tank, Miami, US Thought to be a faulty pumpMarch Oil storage tank, Mississippi, US UnknownApril Fire in oil storage tank at Pertamina’s Under investigation Cilacap refinery, Central Java, Indonesia April Fire in ‘slop tank’ at Holly Refinery, Lightning strike West Tulsa, Oklahoma, USMay Oil tank, Kansas, US Lightning strikeMay Explosion and fire at PPMC loading Under investigation terminal, Warri, Nigeria May Explosion at oil storage tank, port of Gibralter MaintenanceJune Refinery explosion, Pembroke, UK Under investigationJune Fire at ExxonMobil refinery in Beaumont, Maintenance Texas, USJune Fire at Zubair oil storage facility, southern Iraq SabotageJune Fire in boiler spread to storage tanks at Umm Unknown Al Nar refinery in Abu Dhabi July Explosion at oil depot belonging to Huizhou Unknown Refinery Company of China National Offshore Oil Corp, Daya Bay, China September Fire in pump house and pipes in tank farm at Under investigation Shell’s Pulau Bukom refinery, Singapore September Fire at tank farm, Beaumont, Texas, US Under investigationOctober Oil storage explosion at Mangalore refinery, India MaintenanceOctober Fire at oil storage facility, Aktau in Kazakhstan MaintenanceNovember Oil spill at Aloha Petroleum’s bulk fuel storage Operator error facility, Hilo, Hawaii

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January 2012 • TA N K S TO R A G E safety

that is 16 million storms each year – operators neglect these precautions at their peril.

The human factor

Most safety experts agree there is one underlying cause of accidents – human error. Research by the Abnormal Situation Management (ASM) Consortium, led by NYSE-quoted technology company Honeywell Process Solutions, found that 40% of incidents were down to human error, 40% down to equipment problems and 20% from other causes. Further research has found 76% of equipment problems are due to mal-operation, either people following the wrong procedure or using it outside its normal operating envelope.

A 2006 study of 242 storage tank accidents over the last 40 years, published in the Journal of Loss Prevention in the Process Industries, found 80 accidents (33%) were caused by lightning and 72 (30%) by human errors including poor operations and maintenance.

Other causes were equipment failure, sabotage, crack and rupture, leak and line rupture, static electricity and open flames. The authors, James I Chang of National Kaohsiung First University of Science and Technology in Taiwan and Cheng-Chung Lin of Chinese Petroleum in Taiwan, concluded that most of those accidents would have been avoided if good engineering had been practiced.

This is why the work of the ASM Consortium, which comprises Honeywell, BP, Chevron, Exxon, Shell, NOVA Chemicals and Texaco, is increasingly focused on competency and training, says Andrew Ogden Swift, director of technology strategy of Honeywell Process Solutions.

‘It’s largely about the human/machine interface but also the human to human interface, making sure there’s effective communication between shifts and between groups of workers in different parts of the plant,’ he says.

Safety guru Trevor Kletz, author of the seminal What Went Wrong? Case Studies Of Process Plant Disasters, now in its fifth edition, is very clear on why accidents happen: human error. He highlights

the industry’s macho culture, with workers keen to ‘get stuck in and get the job done, not fill in forms. In time this macho approach becomes the local custom and practice’.

Kletz also points to corporate amnesia, which sees organisations repeat the same accidents every 10 years or so as lessons learnt from past accidents get lost. (At Chevron’s Pembroke refinery, for example, there was an explosion and fire in 1994 that injured 26 workers and damaged local homes – although there is no evidence the incidents were in any way similar.)

‘People forget things,’ says Kletz. ‘They are busy, they may be doing three things at once because of demanning in industry, and they prioritise the wrong things.’

But it is not just people who forget, says Kletz. So do companies. ‘People move jobs, they leave the organisation and there’s a culture these days that anything old is not valuable so the old knowledge is dismissed in favour of the new.

‘When I was in industry and there was an accident, I used to feel like saying to the manager responsible, you don’t need to write the report because I have it in my file already,’ recalls Kletz, who spent almost 40 years at ICI before becoming a leading author on safety. ‘The little things may be different but in the basics it will be the same.’

Learning lessons

Industry is trying to learn from past mistakes, with the UK in particular making an effort to overhaul its approach in the wake of the Buncefield incident. The accident was caused by the overfilling of a fuel storage tank, which led to the formation of a cloud of flammable vapour that subsequently ignited, causing a powerful explosion.

‘What happened at Buncefield was not considered a credible scenario and that was an important lesson in how we think about safety now,’ says Peter Davidson, newly appointed director of safety at UK Petroleum Industry Association, the trade body for the UK’s downstream companies. ‘Through the Process Safety Forum we look

at other industries, such as nuclear, rail and the energy networks, to learn lessons from their experiences.’

This approach has seen the PSF examine diverse incidents from many disparate industries, even one as apparently unrelated as the armed forces. ‘Following the report into the 2006 Nimrod disaster in Afghanistan [in which 14 RAF crewmen were killed when their aircraft blew up after leaking fuel made contact with a hot air pipe] we took lessons on where we could improve regarding competence, especially competence within the supply chain,’ says Davidson. ‘UKPIA worked with Cogent [the industry’s sector skills council] and issued good practice for competency management. It’s an example of how we can learn from a sector that seems to be different from us. The process is different but how you manage the risks associated with that process is the same.’

If Buncefield was a tipping point for how industry works with the regulator in the UK, leading to much closer collaboration, then the US, with its much more proscriptive regulatory system – described by one commentator as a ‘tick box mentality’ – appears to be undergoing its own regulatory shift in the wake of the Macondo blowout in the Gulf of Mexico. ‘There’s definitely been quite a change in the US approach in the past 18 months,’ says Goddard.

Acknowledging human error is behind the vast majority of incidents is not a defeatist position. Much can be done to counter the human tendency to forget or make mistakes. As James Reason, the renowned workplace psychologist and author, puts it, ‘We cannot change the human condition, but we can change the conditions under which humans work.’ Reason argues that ‘high reliability organisations’, those that undertake complex and exacting tasks yet rarely suffer accidents, anticipate the worst and equip themselves to deal with it at all levels of the organisation.

‘It is hard, even unnatural, for individuals to remain chronically uneasy, so their organisational culture takes on a profound significance. Individuals may forget to be afraid, but the culture of a high reliability organisation provides them with both the reminders and the tools to help them remember,’ Reason argues. ‘High reliability organisations are not immune to adverse events, but they have learnt the knack of converting these occasional setbacks into enhanced resilience of the system.’

This is echoed by Peter Davidson of UKPIA. ‘No operator should be complacent when managing their risks,’ he says. ‘There always needs to be a sense of unease that something could go wrong.’

When it comes to storage tanks, there is no room for complacency. n

!

Lightning33%

Maintenance/hot work13%

Operational error12%

Equipment failure8%

Runaway reaction2%

Nature disaster3%

Open flame3%

Static electricity5%

Leaks and line rupture

6%Crack/rupture7%

Sabotage8%

source: Journal of Loss Prevention in the Process Industries

Common causes of storage tank accidents

PaGe HeaDeR TA N K S TO R A G E • January 2012

34

Industry leaders share their visions on what the year ahead holds for

the tank storage sector

Outlook for 2012It is safe to say 2011 has proved to be more economically turbulent than most expected.

Moving into the New Year, sovereign debt issues and the prospects of another world recession continue to dominate headlines and permeate debates at both the corporate and personal levels.

The industry as a whole continues to produce incredibly robust results despite a challenging year, and we expect 2012 to be no less demanding. We strongly believe the fundamentals of liquid bulk storage as a whole are unaltered – the industry remains as crucial as ever to helping producers, suppliers, traders and end-users in managing their overall supply chains. Globalisation continues to be a key driver as global production and consumption patterns continue to evolve, requiring the use of liquid bulk storage to stabilise these imbalances.

In 2011, we saw a spur of divestments by oil majors – a trend that we expect to continue into 2012. However, the changing economic landscape has also led many industrial corporations to re-evaluate their asset portfolios and the potential divestment

of non-core industrial assets, particularly in developed economies like North America and Europe. Along the same lines, a rebalancing in assets is typically accompanied by a shift or consolidation in production capabilities. The foreseeable effect of these initiatives is perhaps a combination of additional niche storage facilities for sale on the market and a further consolidation of storage requirements into major established hubs.

For Westway, we see the development of current and new storage hubs as core to the long term success of our business. At the end of 2010, we announced the construction of 40,000m3 and 16,000m3 of additional storage capacity at our Houston and Amsterdam terminals respectively – two areas which we consider to be strategic hubs serving important markets. We are pleased these infill expansions have now successfully come on stream and are generating revenue. With our Amsterdam land bank fully utilised, we continue into 2012 with our infill strategy as we recently announced a further 60,000m3 capacity expansion in Houston where we seek to solidify our position as the leading

non-hazardous storage provider in the region.

Overall, I believe the industry will maintain the consistent performance we have come to be known for, which is perhaps reflected by the high valuations placed on the industry by investors.

I am confident innovation and sound operating fundamentals will pave the way forward for improved efficiencies and expansions that will support the next round of global economic growth.

Gene McClain

Gene McClain, president, Westway Group

the challenge of restructuring logistic systems

for private and public sectors between 2012 and 2020 needs expertise and a proven

track record. Over the past few years, the world has been facing some of the most extreme economic challenges,

especially in developed countries. The oil industry has been adapting to this delicate situation. As a result, the major factors contributing to a slow down of the oil industry development necessary to solve energy needs have emerged from the financial system’s limited access to

credit resources coupled with a general decline in oil consumption by developed countries. According to the OPEC 2011 World Oil Outlook, the oil demand in the OECD countries will slightly decrease at a compound average annual growth of -0.2% until 2020. However,

the developing countries’ oil demand will significantly increase at a compound average annual growth of 2.8% in the same period.

Furthermore, European refineries are threatened by the high efficiency of oriental refineries that are currently provoking

andres suarez, strategy and business development manager, CLH

January 2012 • TA N K S TO R A G E OutLOOk

35

OutLOOk TA N K S TO R A G E • January 2012

36

European shutdowns and/or reconversions into storage facilities. These types of changes the European refining industry is suffering will eventually cause modifications in the oil and refined product flows. In addition, the emerging oriental refineries may benefit from a complete overhaul of their logistic infrastructures to adequately modernise their system in order to efficiently distribute their production.

Considering this overall picture, the oil industry needs to be prepared for efficient logistic systems in order to maximise the return on investments, currently limited by the financial situation, and to guarantee the supply of oil products to the different industries and to the population. The most developed countries will need to readapt their infrastructures according to the new product flows. Emerging economies will need to construct new facilities to both supply the local demand and efficiently export their products.

What are the different criteria to be considered when restructuring or developing logistic systems? To identify the main objectives to meet the demand in both emerging economies and developed countries, the following should be addressed:• Optimise investments in

logistics assets, ensuring the optimal location of storage facilities and the correct dimension of the transport capacity, including pipelines,

waterways, trucks and rail• Optimise commercial

policies, establishing a pricing policy in order to maximise the profitability of the overall system both for clients and shareholders

• Define an optimised product movement flow and adapt the design of each element of the logistic system, based on a calculated movement flow that minimises global costs and considers clients’ overall costs, including those occurring outside the logistic system

• Define the system’s profitability, calculating the revenue and cost model of the future system and the profitability obtained from the asset investments.

The design of efficient logistic systems could be considered an easy task at first glance, however that is nothing further from reality. The following factors should be taken into account in order to obtain a competitive logistics system, in such a way that clients, shareholders and governments alike maximise their profitability with efficient use and strategic investments:• High investment decisions

based on sound guidance in the design phase to prevent high costs if modifications in the future are necessary, strengthening investment return on profitability

• High complexity designs to ensure cost efficiency that require advanced support tools with a systematic, structured and verified study approach

andres suarez

Robb Barnes, VP, Magellan’s Marine terminals

While 10% of our growth capital was directed to crude oil projects in 2011, we expect to direct over

60% of our growth capital in 2012 towards crude oil related projects. Magellan has taken several key steps to grow in the domestic crude oil transportation and storage sector, while keeping our commitment to deliver excellent service in our base business of refined products transportation, storage and distribution. With over $575 million

(€444 million) of expansion projects underway, Magellan is seizing opportunities to grow its infrastructure.

With over 12 million barrels of capacity, Magellan is the third largest crude storage provider in Cushing, Oklahoma, and Magellan officials say they are currently considering the construction of additional storage in Cushing to meet the needs of their customers.

Magellan’s first investment in the crude oil transportation business was through purchasing a 50% interest

of the Osage Pipeline system which originates in Cushing and has the capacity to transport over 160,000bpd to refineries in Kansas. In 2009, Magellan acquired 7.8 million barrels of storage in Cushing from BP and over 300 miles of crude oil and refined product pipelines in Texas. With the BP acquisition complete, our customers were willing to underpin the construction of 4.25 million barrels of new storage in Cushing. All of Magellan’s storage in Cushing is backed with multi-year customer agreements.

While several companies are working on crude oil pipeline projects in Oklahoma and Texas, Magellan is planning to offer Permian Basin producers a new option – pipeline transportation from the Permian Basin to Houston-area refineries. The project, which will make the new capability a reality, involves the conversion and reversal of an existing pipeline system and should be operational in early 2013.

The Houston-to-El Paso segment of the Magellan Pipeline system is currently being used to transport

• High management skills to avoid intuitive decisions based on simplifications, which can decrease efficiency even in highly modern logistic systems.

Logistic systems are capital intensive businesses that require a high level of system utilisation to compensate for high investments. In addition, the pricing policy has a strong

effect on customers’ use of the system as they are price sensitive and will try to reduce overall costs, modifying therefore the use of the system. Furthermore, to make it more complex, the initial configuration of the assets will determine the pricing policy, and therefore the overall profitability of the system.

January 2012 • TA N K S TO R A G E OutLOOk

37

refined petroleum products from Houston to El Paso. In response to customer demand, Magellan will reverse flow and use part of the Houston-to-El Paso route to transport crude oil from Texas production regions. The Crane, Texas-to-Houston segment will have an initial capability to transport 135,000bpd of crude oil. With additional pumping facilities, Magellan can increase the capacity to 225,000bpd. Based on current feedback from shippers, we are

optimistic we will be able to secure commitments to transport 225,000bpd.

The price spread between West Texas Intermediate (WTI) and Brent crude oil has been significant. There are many factors that are responsible for the WTI discount, including one major contributor – the lack of pipeline takeaway in Cushing. While crude oil is aggregated in Cushing from production in Canada, the northern tier of the US and the Midwest,

approximately 350,000bpd of crude produced in the Permian basin of Texas is transported via pipeline to Cushing. Forecasts indicate production in the Permian basin could increase 600,000bpd above current levels which gives us another great reason to move forward with our reversal project.

To continue to deliver reliable service for customers of refined products in West Texas, Magellan will expand another existing pipeline route that connects Magellan’s Texas infrastructure from Frost (approximately 50 miles south of Dallas) to Midland and Odessa. Magellan will continue to use its existing

pipeline to safely transport refined products westbound from Crane to El Paso. The current project scope of the westbound segment of Magellan’s pipeline system will have a capacity of 58,000bpd into El Paso.

Once crude oil arrives in Magellan’s East Houston crude storage terminal via the newly reversed system, it can be delivered via current and potential pipeline connections to all refineries on the ship channel and Texas City. Magellan is planning to construct 1.25 million barrels of new crude oil storage in Crane and at its East Houston terminal.

Robb Barnes

Despite the current economic situation, our forecasts are that the global product imbalance between

oil producing regions and oil consuming regions will continue to grow, and this varied regional demand growth for oil products is driving trade patterns and increased business opportunities for independent storage operators, especially those geographically situated to service numerous markets, such as SemLogistics.

For example, as consumers

in Europe increasingly prefer diesel fuel to unleaded petrol, the region has seen an increasingly large diesel deficit, notwithstanding investments on the part of European refineries to increase their diesel yield per barrel. Russia and the former Soviet states currently fill the vast majority of this diesel deficit, although imports from the Middle and Far East are expected to increase in the long term.

Similar to Europe’s reliance on diesel, the US’ heavy reliance on petrol means

imports are necessary to meet the demand US refineries are unable to entirely satisfy. This benefits import terminals on the east coast of the US as well as European refineries and terminals that are able to service US petrol demand. In addition to Northern Europe and the US, regions such as South America, West Africa, China and Singapore are generating increased demand for various refined petroleum products. These geographic imbalances greatly increase the demand for strategically located storage

capacity and have allowed SemLogistics and other European storage operators to generate growing margins.

SemLogistics is situated in Milford Haven on the west coast of Wales and is strategically located to access the UK market and to service numerous global markets such as Europe, the east coast of the US and the west coast of Africa. SemLogistics has a commercial storage capacity of 1.4 million m³, approximately two-thirds of which is comprised of multi-product or dual purpose

Nigel Passmore, MD, semLogistics Milford Haven

Corpus Christi prospects look brightMagellan is working with another company on a project to transport condensate via pipeline from the Eagle Ford basin to Magellan’s marine terminal in Corpus Christi. The project is in the late phase of development and Magellan’s terminal in Corpus Christi currently has 3 million barrels of storage, with room to double its storage capacity. The terminal is connected via pipeline to three local refineries and petrochemical plants and has dock capacity to load water cargos for export to other domestic refineries and plants.

Magellan believes its competitive advantage lies in the fact that it is an independent transportation and storage provider. Magellan does not directly compete against the companies who use its crude services, since it does not have a crude trading group or take ownership of the crude stored in its facilities.

Earlier this year, Oklahoma-based Magellan Midstream Partners celebrated its 10 year anniversary as a Master Limited Partnership. Magellan’s financial and operational success has been largely attributable to the management of the company’s core business which includes approximately 10,000 miles of refined products pipeline and 85 petroleum distribution terminals in 22 states.

OutLOOk TA N K S TO R A G E • January 2012

38

tankage, while the remaining tanks are primarily dedicated to store crude oil and specific refined petroleum products. The terminal has two deep water berths with a maximum capacity of 165,000dwt.

The continued increase for environmental and safety regulations from the UK authorities is an area of concern. However, at SemLogistics the investment in the terminal over the last five years in respect of full tank refurbishments including underfloor secondary containment for over 50% of the tanks, has the company well placed for the future. Another successful project during 2011 was the installation of an automated shutdown system on all the Class 1 tanks by our in-house engineering teams.

Since being acquired by SemGroup in 2006, the SemLogistics terminal has

seen significant capital investment to become one of the most advanced independent terminals in the UK, representing over 23% of the total UK independent storage capacity.

Since the acquisition, SemLogistics has invested over $50 million of capital to maintain, refurbish, and upgrade tanks and equipment, and planning permission is in place for a future expansion project to provide approximately 240,000m³ of additional commercial capacity. This project will bring the terminal’s commercial capacity to approximately 1.6 million m³ and leaves us well placed to satisfy the ever growing demands of storage customers and to provide flexible, value adding storage opportunities in an ever changing market.Nigel Passmore

Cashco, Inc.P.O. Box 6, Ellsworth, KS 67439-0006

Ph. (785) 472-4461, Fax: (785) 472-3539

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CAS-190M.indd 1 1/27/11 4:56 PM

January 2012 • TA N K S TO R A G E PaGe HeaDeR

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PaGe HeaDeR TA N K S TO R A G E • January 2012

44

Tank STorage DirecTory

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It has not been a good year for many countries in the Middle East,

with protests interrupting and threatening businesses. Despite this,

tank terminal capacity is still expanding

Tank storage in the

tank terminal capacity is being expanded at a number of sites in

the Arabian Gulf region in response to growing demand for liquid fuel storage, an important share of which is being built by third party tank terminal operators.

Some chemical storage capacity is also being built, a new development as until now most chemical production has been exported direct to end users or to chemical terminal distribution hubs outside the Gulf region in Asia and Europe.

The expansion in storage capacity is largest in the UAE, where major industrial sectors reliant on tank storage continue to grow, including petrochemicals, refining and marine fuel bunkering.

Planned developments in refining and petrochemicals production are also expected to boost development of the tank storage market in Oman, while Saudi Arabia’s petrochemicals industry growth will also create a need for more storage capacity.

Several strategic storage locations have developed already, although more could emerge in future as land-based petroleum and chemical cargo transport facilities, including new cross-border railway networks, are constructed along the Arabian Gulf coastline.

International third party tank terminal operators with an important presence in the UAE include Vopak, Oiltanking, Odfjell and Chemoil.

Fujairah: still leading the way

Tank terminal operators in Fujairah continue to expand their storage facilities in

response to client requests for larger storage capacity. Fujairah’s development as a logistics hub for petroleum and chemical distribution throughout the Gulf region is supported by the UAE government as part of national plans to expand petrochemical production.

The various tank terminals in Fujairah offer about 4 million m3 of third party petroleum storage capacity, and this is expected to double over the next two to three years.

‘Fujairah is unique in the Arabian Gulf for storage. There is little third party storage elsewhere in the region and Fujairah is located right at the edge of the Gulf. Most other tank storage in the Arabian Gulf belongs to oil production companies,’ explains Christopher Bake, MD of Vitol UAE.

In 2007 Vitol bought a 90% shareholding in Fujairah Refinery (FR), which owns an 80,000bpd refinery and a petroleum storage terminal. The government of Fujairah holds the remaining 10% stake.

Vitol has built an additional 560,000m3 of storage capacity since taking over FR, boosting the terminal capacity to 1.17 million m3 provided by 47 storage tanks. Land is available at the terminal for further expansion. Vitol leases additional storage capacity in other terminals in Fujairah to support its trading activities.

‘There is plenty of scope to expand storage at FR depending on market opportunities,’ says Bake. ‘The physical market is tight at present but the front end of the market is strong.’

Fujairah’s growth as one of

the world’s leading bunkering ports is due to its strategic geographical location at the mouth of the Arabian Gulf. Fujairah offers the closest convenient and safe anchorage before entering the Straits of Hormuz where ship insurance rates climb rapidly.

Almost all cargos stored at Fujairah are refined products. Bunker fuel is thought to account for around 70% of petroleum products stored.

Bake believes there is potential to expand tank terminal activities at Fujairah from heavy reliance on bunkering to blending fuel oils due to changing trade flows through the Straits of Hormuz. Blending is already a growing business at several terminals in Fujairah as more international oil traders enter the Middle East fuel oil market.

BP has been reported as contracting about 200,000m3 of storage capacity at the joint venture Vopak Horizon terminal, to begin trading fuel oil in the Middle East. Analysts say this will allow BP more flexibility in its global fuel oil business while enabling the company to sell into the Fujairah bunker market and to supply Pakistan’s growing power generation fuel oil market.

BP joins other international oil traders including Shell and Singapore-listed Chemoil Energy that already have a presence in the Middle East fuel oil market. More companies are expected to contract storage capacity in Fujairah for trading, including Russian traders and Chinese oil major PetroChina.

Growing demand for storage capacity for trading is prompting a number

of terminal companies to carry out or plan expansion schemes.

Chemoil, the global marine fuel supplier, is conducting a major expansion scheme at its joint venture terminal with Gulf Petrol Supplies in Fujairah. The phase 2 construction scheme involves adding 585,000m3 of storage capacity, boosting the existing 90,000m3 terminal to 685,000m3 capacity when work is completed in the third quarter of 2012.

Emirates National Oil (ENO), meanwhile, owns 200,000m3 of oil product storage capacity in Fujairah Port and 2 million m3 of storage tanks in Jebel Ali in Dubai to support its recently expanded Jebel Ali oil refinery. ENO plans to build a further 250,000m3 of new terminal facilities to expand its refined products storage capacity.

Vopak owns a 33.3% stake in the Vopak Horizon Fujiarah terminal, and other shareholders include ENO subsidiary Horizon Terminals; the government of Fujairah and the Independent Petroleum Group of Kuwait.

Vopak Horizon Fujiarah is carrying out its sixth expansion scheme since opening in 1999 with a capacity of 400,000m3. At present the terminal provides 1.5 million m3 of storage in 48 mild steel tanks ranging in size from 6,000 to 60,000m3.

‘To meet growing demand for storage and transshipment services our terminal is being expanded by 606,000m3 for fuel oil and clean petroleum products,’ says Vopak corporate communications manager, Arno Schikker. ‘In the first quarter of 2012 the total storage capacity will reach 2.1 million m3. Twenty new

MIDDLe east

January 2012 • TA N K S TO R A G E taNk stORaGe IN tHe MIDDLe east

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taNk stORaGe IN tHe MIDDLe east TA N K S TO R A G E • January 2012

42

tanks are being constructed. Tank sizes range from 20,000 to 40,000m3 each.’

The terminal handles a full spectrum of petroleum products including mogas, reformate, naphtha, gas oil, MTBE, condensate, fuel oil, jet oil, kerosene and biofuels such as ethanol.

‘Our current expansion project involves onshore and offshore elements. Onshore work includes construction of the new tank farm and installation of associated equipment,’ Schikker says. ‘Offshore work includes installation of new jetty lines and loading arms to increase jetty capacity.

‘One of the innovations that will be introduced to enhance operational efficiency is the introduction of allocated time slots at the jetty. This enables customers to pre-book an arrival time at the jetty. In most cases the principle of first-come, first-served is being applied at terminals which can result in queuing to load or unload.’

Horizon is also involved in four other storage terminals in the UAE. The company, together with service station operator EPPCO, runs two terminals in Fujairah and Jebel Ali Port, Dubai, totalling 883,000m3 that handles clean petroleum products, condensate, fuel oil and asphalt.

Also in Fujairah, Horizon is involved in the 205,000m3 capacity IRM terminal that handles mogas, naphtha, jet fuel and gas oil. In Jebel Ali the company owns the Horizon Jebel Ali Terminals with 51,550m3 of chemical storage capacity.

The Port of Fujairah is also preparing to handle crude oil exports in future. The second phase of the port’s northern expansion will be completed soon allowing VLCC tankers to use the port.

New pipeline and storage tank facilities are also being built by the government of Abu Dhabi to store crude oil in Fujairah for export.

The crude oil will be transported to Fujairah through a new 1.8 million barrels per day pipeline which Abu Dhabi’s investment arm, International Petroleum Investment, is building. The crude will be stored in eight 1 million barrel

capacity crude storage tanks ready for export.

Oil production in the UAE is running at about 2.3 million bpd at present, almost all being produced in Abu Dhabi. The pipeline is designed to carry up to around 70% of the UAE’s current oil exports.

Oman

Oman is set to develop into an important liquid fuel and chemical storage market in future as the government draws up plans to develop a number of major ports to serve growing liquid and other cargo traffic.

In May 2011, Oiltanking Odfjell Terminals (OOT) completed work on the latest expansion phase at its terminal in the industrial port of Sohar in Oman. The company added 450,000m3 of petroleum storage capacity, boosting the capacity 50%, up from 850,000m3.

‘Business is doing very well. We have 1.3 million m3 capacity, mostly storing clean petroleum products,’ says Zeger van Asch van Wijck, GM of OOT. ‘We have just commissioned 450,000m3. Now we are expanding our chemical storage facilities. We have had a lot of requests for this.’

OOT is building chemical storage facilities totalling 27,000m3, which will lift total chemical storage capacity to 31,000m3.

‘These will be mostly 2,000m3 tanks. Chemicals have a higher throughput than petroleum,’ explains van Asch van Wijck. ‘Also, products change and we should be flexible as we have to clean our facilities.’

OOT will monitor demand for chemical storage before deciding whether to build more capacity. The government owned Oman Industrial Refinery is located next to the OOT terminal and is an important client. The Omani government has approved plans to build a second refinery nearby in five year’s time.

The second refinery will be bigger than the existing one. It will produce petroleum, bitumen and feedstock for aromatics.

The new chemical tanks are being constructed close to the Sohar terminal’s jetty facilities to ensure fast turnaround. The chemical tanks are due

for completion in mid-2012 and are expected to initially handle imported base oils.

‘Third party chemical tanks are new in the Middle East. If we have more requests we will build more tanks,’ van Asch van Wijck says. ‘Our capacity depends on customers. We have enough land here.’

At the moment most third party tank storage in the Gulf region is for crude oil and petroleum. Only a small number of terminals provide third party chemical storage capacity in the Middle East.

‘Sohar is outside the Gulf. We think there is a good potential for chemicals storage,’ van Asch van Wijck adds. ‘In the past it was only oil products. Then Oman built a refinery next to here and now Sohar is developing a free zone under Sohar Port Authority.

‘We see more interest in downstream activities such as chemicals. It’s a little like the chicken and egg situation; if there is no chemical storage then no one asks. Major chemical players have been signing up for our new chemical tanks.’

Opened in 2008 and offering a 16m draft, OOT’s terminal has facilities to handle six tankers at one time. Tankers from 70,000-110,000dwt can berth at the three jetties and three other berths.

Van Asch van Wijck revealed the company is planning to build a seventh jetty, this time to handle bitumen produced by the second planned refinery in Sohar. Sohar Port Authority has already approved the jetty project. OOT will make a final decision on the scheme in 2012.

‘We need the jetty, superstructure and pipes. We could do this by the end of 2013,’ van Asch van Wijck says. ‘We are discussing building a minimum of two 4,000m3 or 5,000m3 tanks for bitumen. The bitumen from the new refinery will be partly for local use and partly for export. The maximum number of tanks we build depends on exports.’

OOT’s Sohar terminal offers various storage tank sizes. Most are 10,000m3 while other sizes are 2,000m3, 20,000m3, 40,000m3 and 55,000m3 sizes.

‘When we started up our terminal we began with long term contracts up to 10 years for petroleum but chemical

tanks are different. They have shorter contracts of one to three years,’ van Asch van Wijck explains. ‘It depends on the market. Chemical clients are not sure of the market in two or three years’ time while the petroleum market is more steady. Also, we have the refinery located behind our terminal.’

Petroleum products stored at Sohar are produced at the nearby refinery and come from other refineries in the Gulf region.

‘Some customers sell to other customers using our terminal and we blend gas oil and petrol for them. More cargos here are imported than come from the nearby refinery,’ van Asch van Wijck notes. ‘Products from our terminal are exported to India and China. They are going through the oil majors.

‘Our biggest competitor is Fujairah. We compete on performance and service. There is almost no demuerage here as we have six berths available. All the time we look to improve our turnaround time. Having automated systems helps. Also we work ahead with the customs department before our client’s ship arrives.’

OOT is 25% held by Oman Oil, 5% by Seven Seasons and 70% by Odfjell, Oiltanking and Star Energy.

Sufficient land is available at Sohar for OOT to construct another 400,000m3 of storage that would expand the terminal to 1.7 million m3.

OOT is also looking at other opportunities in Oman where the government is considering various plans to expand the country’s transport infrastructure.

The government has plans to build an oil refinery and a new port at Dugm. Elsewhere the government is considering adding liquid storage at Salalah Port, which currently handles mostly container traffic.

Other developments include the Kuwait to Salalah trans-Gulf railway, which will carry passengers and cargo freight.

‘This will be good for us as customers can then send liquid cargos by rail,’ van Asch van Wijck notes. ‘Cargos can be consolidated at Salalah Port in future with containers and liquids going by rail to Saudi Arabia.’ n


47

The official magazine for the National

Petroleum Management Association (NPMA)

Targeted at every individual involved

in fuel management, operations and

maintenance, including airlines, storage

terminal operators, fixed base operators,

servicing companies and oil majors.

For advertising information contact Anisha Patel at [email protected] +44 (0)208 687 4143.

For editorial enquiries contact Margaret Garn at [email protected] +44 (0)208 687 4126

Each issue will contain information on • Expansionprojects• Regulatory&legislationupdates• Incidentreports• Technicalarticles• Regionalfocus

Published 4 times a year and distributed to over 3,000 named individuals.

www.thefuelhandler.com

PROfILe TA N K S TO R A G E • January 2012

44

sOCaR auRORa

fuJaIRaH teRMINaL commissions first tankssOCAR AURORA

Fujairah Terminal has completed phase one

of its 641,000m3 terminal and the first cargo from SOCAR Trading, Geneva is expected shortly.

Commercial operation of three tanks, consisting of 115,000m3 capacity, will begin on 30 January.

The partnership between SOCAR (the State Oil Company of Azerbaijan Republic) and Aurora Progress, the Swiss based commodity trading house, was established in May 2010.

All the infrastructure for the facility has been built and the company will now start on phase two of the project.

In December, SOCAR AURORA secured a $110 million (€86 million) loan from The Arab Petroleum Investments Corporation (APICORP) to continue with the terminal development.

Phase two, which is expected to take around 15 months, will up the storage capacity to 350,000m3 with an additional nine tanks.

Despite not yet being built, these tanks are already fully leased with five year contracts. Phase three will begin once

customer demand has been secured. ‘We’re looking forward to making full use of the terminal,’ says Ammar Kutait, SOCAR AURORA’s CEO. ‘We are already commencing discussions over the rental of phase three and we would expect to be able to make a decision on the go ahead of it in Q1 2012, but we don’t see any reason to wait.’

Once complete the terminal will consist of 20 tanks and each will be fitted with internal floating roofs, aluminium domes, jet blending systems and coatings.

Nine out of the 20 tanks will be heated, and three tanks

will have additional coatings to enable jet fuel storage.

Although the terminal is not located on the shore, as land is scarce, the terminal will be connected to the port with 1.8km pipelines and customers will have use of the Port of Fujairah’s jetty facilities.

The first oil terminal in Fujairah (OT1) has three berths, and is able to accommodate three large or five smaller vessels of up to 100,000dwt. The newly constructed second terminal (OT2) will have four berths, with the ability to accommodate four large or eight smaller vessels

and up to 180,000dwt.The port is in the process of

designing and developing two further berths which will be capable of taking fully laden VLCCs. Kutait expects this to be complete within two years.

When embarking on this project, SOCAR AURORA chose a different business model from many terminal operators in the Middle East.

‘Rather than choosing one EPC contractor, which then uses its own sub-contractors, we chose different contractors for each stage of the build,’ he explains.

Fujairah National Construction & Transport did the civil works, Italy-based Bellelli Engineering built the tanks, Sweden-based Consilium installed the electrical, instrumentation and fire fighting equipment and Al Banna Engineering of Dubai, the pipelines to the jetty.

‘This makes the project more complicated, but we have a team managing the different contractors, and we are also using a local consultancy firm, MUC Oil & Gas, to supervise everything,’ Kutait says.

By taking this approach the terminal is able to keep a tight control on costs. n

Despite not yet built, phase two of this Fujairah joint venture is

already fully leased out. The terminal’s CEO discusses its plans for

phase three and beyond

January 2012 • TA N K S TO R A G E taNk teRMINaL uPDate

45

tank terminal update – The Middle East

Location Southern coast of CyprusConstruction/expansion/ Constructionacquisition Capacity 300,000m3 Products Oil Project start March 2011Investment €100 million Comments The terminal will be operated jointly

by the Cypriot government and a private investor for 25 years

Cypriot government

Location Dubai, UAEConstruction/expansion/ Constructionacquisition Capacity 141,000m3 Designer/ Builder Punj LloydProducts Jet fuel Project start October 2011 (announced)Project end 2013Investment $127 million (€92 million)

emirates National Oil

Location Fujairah, UAEConstruction/expansion/ Constructionacquisition Capacity 412,000m3 Products Crude products and petrochemicals Project start 2011Project end September 2012Investment $250 million (€190 million)

Gulf Petrochem

Location Vassilikos, CyprusConstruction/expansion/ Constructionacquisition Project start April 2011 (submitted bid). Due to

breakground in 2012Comments The plans include a fuel terminal, an

LNG facility and an LPG terminal

eilat ashkelon Pipeline

Location Faw peninsula, Basra, Iraq Construction/expansion/ Expansionacquisition Designer/ Builder Leighton Offshore Products Crude Project start October 2011 (announced)Project end 2011-2013Investment $1.3 billion (€900 million)Comments Leighton Offshore’s contract is worth

$518 million. The project will see the construction of two marine pipelines and one onshore pipeline, as well as the installation of four single point moorings for loading oil tankers. Foster Wheeler is handling the project management consultancy services

Iraqi government

Location Fujairah, UAE Construction/expansion/ Constructionacquisition Capacity 600,000m3

Products Oil and oil products Designer/ Builders IL&FS Engineering & Construction Comment IL&FS Engineering & Construction was

awarded the contract, worth $110 million (€72.5 million), in May 2011

Prime start energy

Location Port of Fujairah, UAE Construction/expansion/ Constructionacquisition Products Fuel oil, petrol, kerosene and middle

distillates such as diesel, petrol and jet kerosene

Project start December 2011 (phases 2 and 3) Project end End of 2011 (phase 1)

Mid-2012 (phases 2 and 3)

sOCaR

Location Fujairah, UAE Construction/expansion/ Constructionacquisition Capacity 641,000m3

Project start December 2011 (agreement signed for first tranche of funding)

Investment $61 million (€48 million)Comment SAFT is a joint venture between Socar

Trading, Aurora Progress and the government of Fujairah

socar aurora fujairah terminal (saft)

Location Port of Fujairah, UAE Construction/expansion/ Constructionacquisition Capacity 1 million m3

Products Oil Project start March 2011 (began talks)

PetroChina

Location Vassilikos, Cyprus Construction/expansion/ Construction acquisition Capacity Phase 1: 340,000m3

Phase 2: 550,000m3

Products Petrol, diesel and jet fuel Designer/ Builder Joannou & Paraskevaides Project start January 2011 (broke ground)Project end End of 2012 (phase 1) Investment €200 million

VttI

This list is based on information made available to Tank Storage magazine at the time of printing. If you would like to update the list with any additional terminal information for future issues, please email [email protected]

taNk teRMINaL uPDate TA N K S TO R A G E • January 2012

46

tank terminal update – Eastern Europe

Location Ust-Luga Crude Terminal, Russia Construction/expansion/ Constructionacquisition Capacity 451,000bpdProducts Crude Project start Q1 2012Comments In November 2011 the oil terminal

was badly damaged following three landslides

Gunvor Group

Location Omišalj Terminal, Croatia Construction/expansion/ Construction acquisition Products Crude oil and oil products Capacity The project involves the construction

of eight new crude oil storage tanks with a capacity of 80,000m3 each

Project start July 2011 (contract signed)Project end 2015Investment 218 million kunas (€29 million)

Janaf and Duro Dakovic Holding

Location Lithuania Construction/expansion/ Expansionacquisition Products Vacuum gas, fuel, diesel and crude oil Capacity Phase 1: 5-7 million litres

Phase 2: 15-23 million litres Project start Phase 1 is due to start in early 2012.

The tender for phase 2 began at the beginning of 2011. Phase 2 will see the construction of two 32,250m2 storage tanks

klaipedos Nafta

Location Port of Polnocny, Gdansk, Poland Construction/expansion/ Constructionacquisition Capacity 800,000m3

Products Petrochemicals Project start September 2011 (JV formed)Comments The port can also hold tankers of

up to 300,000dwt for petrochemical transportation

Oiltanking and Pern Przyjan

Location Nikolayev, Ukraine Construction/expansion/ Expansionacquisition Capacity An increase from 70,000 m3 to

110,000m3

Products Vegetable oils Project start 2011 (announced)

terminal-ukrpischesbytsyre

Location Port of Tallinn, Estonia Construction/expansion/ Expansion at Muunga Harbour in theacquisition Port of TallinnCapacity 400,000m3, which will see an

additional 5 million tonnes of oil products handled annually

Products Liquid bulk Project start March 2011 (Vopak’s plans approved)

Vopak

Location Yalova, Turkey Construction/expansion/ Construction acquisition Capacity Fifteen tanks that will store more than

7,700m3 each Products Petrochemicals

Vopak

Location Port of Constana, Romania Construction/expansion/ Construction acquisition Products Petrochemicals Project start September 2011 (announced)

Vopak

This list is based on information made available to Tank Storage magazine at the time of printing. If you would like to update the list with any additional terminal information for future issues, please email [email protected]

Many eastern European countries may well be pleased to be out of

the Euro this year, as Euro Zone woes deepen. The question now is

whether policy makers can shield the region’s economic growth, so that

investors keep persevering and the storage sector continues to boom

January 2012 • TA N K S TO R A G E sPILL CONtROL

47

When an oil spill occurs, one of the primary concerns is where will

the oil will go? A new simulation model can now predict flow direction

and oil spill area to help reduce environmental impacts

PetroChina’s spill simulatorPetroChina Pipeline R&D

Centre has developed a GIS-based oil-flow

model for rapid predictions of the movement of spilled oil and environmental sensitivity analysis.

This simulation model has been used to analyse the environmental impact of a tank farm in Qinhuangdao Wharf in 2D and 3D. The results show the potential oil leak areas for each tank, taking into account factors such as oil density and viscosity, and allow operators to adjust response times accordingly in their contingency plans.

Methodology

The target of the study is to calculate spill areas in simulation scenarios, identify the rivers or ponds influenced by oil leaks, and suggest reasonable response times. Loss of containment can be divided into three types:

According to site investigation, the tanks at Qinhuangdao tank farm are most likely to fail with continuous release mode. The diameter of the release

hole is estimated at 10mm.Based on the digital

elevation model (DEM), the oil-flow model is used to calculate the oil spill area. Firstly, the initial oil spill velocity is determined, based upon Bernoulli’s equation. It can be formalised as follows:

Where, Q0 = liquid leakage rate, kg/sCd = discharge coefficient A = orifice area, m2

r = density of oil, kg/m3

p = the pressure in tanks , PaP0 = atmospheric pressure, Pag = gravitational constant, 9.8m/s2h = centre line head, m.In the oil spread process, four oil flow patterns may occur: path flow, sheet flow, flat flow and overflow.

Path flow and sheet flow

are mainly driven by gravity, whereas flat flow and overflow are affected by the friction between oil and land surface.

Oil always flows from topographically high sites to topographically low sites. In this example the oil-flow model considers a gravity-driven terrain effect.

The termination of oil flow has two conditions: the velocity of oil flow is zero; and the oil volume including oil loss volume in spill area achieves the

total cut off volume. If one of the conditions is met, the flow will terminate.

Study area

The analysed tank farm is located in the suburbs of Qinhuangdao City, and occupies an area of 45,000m2. It has seven floating roof crude oil tanks, each of which has a maximum capacity of 100,000m3.

Based on the DEM, the elevation profile of ‘A-A’ has been obtained.

The tank field is an average of 30m higher than the pond and the valve chamber. So once the tanks rupture and crude oil leaks into the ground, the surrounding environment will be seriously affected. Thus the oil flow area and direction are important for the operators.

A pond of 35,500m2 is located outside the tank farm.

Results

Because it is being contained by the same dike, tank 1 and tank 2 are taken as one unit, and tank 4 and tank 5 is also taken as one unit.

The graphics show the simulated oil flow area and direction after a leak in 15 minutes, half an hour and one hour.

The dark red shaded region represents the oil flow area, and the red pentacle indicates the simulated leak point. This shows the oil leak can be controlled within 15 minutes.

2

Bernoulli's equation. It can be formalised as follows:

Q0 =CdA!2( p! p0 )

!+ 2gh

(1)

Where, 0Q = liquid leakage rate, kg/s;

dC = discharge coefficient;

A = orifice area, m2;

ρ = density of oil, kg/m3 ;

p = the pressure in tanks , Pa;

0p = atmospheric pressure, Pa;

g = gravitational constant, 9.8 m/s2;

h = center line head, m.

In the oil spread process, four oil flow patterns may occur: path flow, sheet flow, flat flow, and overflow. Path flow and sheet flow are mainly driven by gravity, whereas flat flow and overflow are affected by the friction between oil and land surface. Oil always flows from topographically high sites to topographically low sites. In this example the Oil-Flow Model considers a gravity-driven terrain effect. The termination of oil flow has two conditions: (1) the velocity of oil flow is zero; (2) the oil volume including oil loss volume in spill area achieves the total spill volume. If one of the conditions is met, the flow will terminate.

No. Failure modes

1 Instantaneous release of the complete inventory

2 Continuous release of the complete inventory in 10 mins at a constant rate of release

3 Continuous release from a hole with an effective diameter of 10mm.

Leak types

Numbers in each grid denote elevation value. the number 67 represents the leak point. the shaded grids represent oil leak areas at different time. In this example, the cell size of DeM is 3.6m×3.6m

The properties of crude oil Properties Value

Density 830~860kg/m3

Freezing point 25˚C~30˚C

Interfacial shear viscosity 0.1 rad/s

Surface tension of water 27.65~16.44Mn/m

sPILL CONtROL TA N K S TO R A G E • January 2012

48

Within half an hour, however, except for tank 2, the oil spilling from each tank flows across the dikes. A crude oil leak in tank 7 will affect the nearby pond.

After one hour of leakage, the severity of the oil spill would be catastrophic. It is important to note that oil spilling from one tank would affect another tank. The oil spilling from tank 3 would affect tank 5 and 6, the oil spilling from tank 5 would affect tank 6, and the oil spilling from tank 6 would affect tank 7. It would result in comprehensive and complex disastrous consequences.

To avoid these consequences, the oil spill response time is shortened to half an hour.

In this example, the absorption and infiltration into the ground have not been considered because most of the ground is concrete in the tank farm.

However, ground absorption and infiltration are important to environmental sensitivity analysis. If soil is loose in the leak area, the spill can infiltrate into underground water below the soil, and underground water may be polluted. In this case, cleanup and rehabilitation becomes more difficult. n

for more information:This article was written by Shaohui Jia from PetroChina Pipeline R&D Centre, [email protected].

the simulated oil flow area and direction for each tank in one hour

the simulated oil flow area and direction for each tank in half an hour

the simulated oil flow area and direction for each tank in fifteen minutes

the Qinhuangdao tank farm with numbered tanks and line a-a labelled

the elevation profile of a-a

Data preperation & simulation scene

Spill volume and initial spill velocity calculation

Ground absorptivity, product viscosity and evaporation

Terrain effects

Potential tanks affecting river/pond/sea

Potential oil leak path spill into river/pond/sea

Incorporating intocontingency plans


53

Combined pressure and vacuum relief valve

Pressure and vacuum relief valve (deflagration proof)

Self closing emergency relief valve

Steam jacketed vent for solidifying vapors

Pressure and vacuum diaphragm valve for polymerizing / sticky vapor service

Detonation flame arrester

Bidirectional detonation flame arrester

Deflagration flame arrester with an eccentric housing design

PROTEGO® Head OfficeIndustriestrasse 1138110 BraunschweigGermanyphone: +49 (0) 5307 / 809-0fax: +49 (0) 5307 / 78 24email: [email protected]: www.protego.de

11 Daughter Companies: Austria, Brasil, China,France, Hungary, India, Middle East, Spain,Switzerland, UK, USA

120 Sales & Service PartnersDetails at www.protego.com

StocExpo

The Ahoy Rotterdam

March 13 th – 15 th 2012

Booth No: 21 & 35

stockexpo rotterdam2012_130x185quer.indd 1 11.01.12 12:55

ATECO TANK DOME-ROOF-SEALUnder the name of Aktek Companies in Kocaeli- TURKEY, Ateco Company presently moved to its new manufacturing hole which is 2000m2 closed area and within this hole it manufactures Aluminium Floating Roofs, Seal Systems and Dome Roofs with fully automatic CNC controlled machines. Thus it could do more competitive, more economical and more quickly product delivery. As a new global player the Ateco is growing very quickly and getting global references. The company by expanding its product range in March 2012 it would give a start the manufacturing of Honeycomb Panel in its third 2000m2 closed facility. Thanks to its third facility it would increase its manufacturing capacity 300%. That third facility would manufacture not only full contact roof but also honeycomb panel which is the basic component for full contact roof. Considering all those improvement the company would manufacture all components by itself and that would provide at least 40-60% economic cost.

THE BIGGEST DOME AND IFR MANUFACTURING FACILITY IN THE WORLD IS UNDER CONSTRUCTION IN TURKEYAteco Company which is one of the Aktek Companies started to construct its new internal floating roof and dome manufacturing facility which is 25000 m2 closed area and completely 45000 m2 in Kütahya Industrial Zone. It would consist of 16 holes with high quality technological capabilities and that would enable to manufacture high quality products and quick delivery. With 20.000.000 US$ investment, in new facility 300 workers would be employed. With full contact manufacturing lines, Aluminium extrusion lines, casting holes and also intermediate products would be manufactured in that new facility, thus it would return as a serious economical and competitive profit to customers. The company which has agressive marketing, quick delivery and quality design says to its competitors ‘Toss my hat into the ring within the global market!’

ATECO TANK TECHNOLOGIES AND

ENGINEERING COMPANY

Yazlik Yeni Mah. Basogretmen Cad. No:46 41650 Gölcük,

KOCAELI / TURKEY

Tel: 0090 262 335 15 98 - 99Fax: 0090 262 335 15 67

www.atecotank.com

50

Mergers & acquisitions TA N K S TO R A G E • January 2012

Today’s headlines are typically grabbed by the Vopaks of the world;

yet there is a growing number of smaller, independent owner/operators

conducting or considering the complex process of a sale

Selling strategy for smaller independentsownership of storage

and terminalling assets by independent third

party operators continues to rise. This select group now controls approximately 15-17% of total global capacity.

This trend, which began around 2005, is expected to increase notably over the next 10 years.

This shift in asset ownership is overwhelmingly driven by major oil and gas producers divesting their storage and terminalling assets, particularly in more mature markets such as the US and Europe.

While a significant number of these independent owners are large commercial operators, there is an important and growing number of smaller scale, family-owned players, ranging from the banks of the Mississippi River in the US to the rapidly growing markets in Vietnam and India.

Typical of other industries that have experienced similar trends, many of these smaller operators are facing, or will shortly face, the issue of a business sale. Many will discover that the ultimate sale of their business is a far more complex and time consuming process than initially thought.

A successful sale (i.e., one that closes and generates an acceptable return to its owners) does not just happen on its own. It is typically the result of a systematic approach that involves thoughtful understanding of the issues driving a potential sale, careful planning, detailed analysis of alternatives and solid execution.

There are several factors that motivate owners of storage and terminalling assets to put their company in the market:

Internal factors

• Owner fatigue (burnout): An owner loves his business and although it represents a lifetime of trials, tribulations and (ideally) successes, it is simply time to do something else. It is often a predominant factor in the decision to sell, particularly amongst family-owned companies

• Succession: Business owners often find themselves with succession uncertainties as their heir apparent (sons, daughters, close relatives) often have successful careers in industries outside of storage and have no desire to assume management and direct ownership of the business either for personal or professional reasons

• Growth opportunities: Though the business may be well-positioned for success, taking it to the next level may require substantial capital and resources. Generally speaking, pursuing capacity expansions for most storage and terminalling facilities in the more mature markets is a fairly expensive proposition. Furthermore, developing greenfield capacity is arguably a much more demanding, arduous and costly process. Following either strategy may place too much current capital at risk

• Other: Internal disagreement amongst owners, health, liquidity, estate planning issues, among others, are important factors as well.

External factors

• Unsolicited offer: Owners were not looking to sell, but have been contacted by an up-and-coming Master Limited Partnership (MLP),

a private equity group or competitor. These parties may be looking to pick up strategic storage assets to complement an existing storage platform (bolt on acquisition) or establish a new initiative in storage and terminalling which may or may not be part of a larger energy play. An example of this is the recent example of GE Energy Financial Services’ expansion into petroleum product terminals

• Increased complexity of the industry: With larger and more demanding clients, the need to offer multi-modal ability to receive and deliver product, expanding blending capabilities and ever changing local and federal regulations, managing a fleet of assets requires a multidisciplinary approach. Additionally, competition is stronger as a result of industry consolidation over the past decade

• Improved economic outlook: The value a buyer is willing to pay for terminalling assets and its willingness to buy them are greatly influenced by the outlook of the local/regional markets. While the US and western Europe continue to recover from their general economic woes, there are many regional markets within these economies that have done well, primarily those that have been able to capitalise on increased commerce, changing petrol blending regulations and global trade flows

• Increased availability of capital: By any measure or historical comparison, there is a tremendous amount of capital available

for acquisitions. Even after adjusting for inflation, with an estimated $2 trillion (€1.5 trillion) on their balance sheets, non-financial corporations in the US are sitting on more cash than ever before. Private equity is in a similar historically unprecedented position with $0.4 trillion in committed but uninvested capital available

• Higher multiples: Increased focus on storage and terminalling as a desirable asset class by MLPs and financial players, paired with an improved economic outlook and increased availability of capital to fund these purchases, has resulted in a general price increase, particularly for assets in strategic markets. Since 2000, the average EBITDA multiple in 59 industry transactions (where data was available) was approximately 10.8 times versus 8.3 times in 2005. It is not uncommon in today’s market to see the major players pay in excess of 12 times for higher well-positioned assets in desirable markets.

The sale process can be quite complex and all-consuming. Understanding the underlying reasons for selling the business significantly impacts the seller’s strategy and forms the foundation for a sales process. But, that is only the beginning. Preparing the company for the actual event, tapping the universe of buyers with the right strategic imperative and executing the deal pose their own challenges. n

For more information:This article was written by Miguel Pachicano, from investment bank Jordan, Knauff & Company, +1 312.254.5903.

51

January 2012 • TA N K S TO R A G E Vapour recoVery

Vapour recovery units used in truck distribution depots tend

to be highly standardised, related directly to the size of the depot. The number of loading bays and the daily throughput are key design parameters in determining an appropriately sized system.

There are a number of key parameters and factors necessary to correctly size a vapour recovery unit. Should these be not readily available, it is often possible with experience and the knowledge of some basic data about the depot, to develop an acceptable loading profile for the depot. The basic information required would include the following points:• Number of loading bays that

can be used simultaneously• Number of loading arms

that can simultaneously be used per loading bay

• Maximum filling rate per loading arm

• Maximum size of the trucks/railcars loaded at the depot

• The depot’s daily throughput.

In order to maintain the size of the vapour recovery unit at a reasonable level, yet adequate for the depot throughput, it is accepted practice to take into account the varying flow patterns at the loading rack, in terms of

the number of trucks loaded simultaneously, the products loaded, for example the split between petrol and diesel loaded, and comparing busy periods of the day versus quiet periods. It has therefore become the accepted norm to consider, for design purposes, a utilisation factor of some percentage of the total loading capacity of the depot.

Emission standards throughout the world vary somewhat, although they are typically based on European or US EPA standards, these market areas having well developed vapour recovery installed bases.

In the EU, the minimum requirements are that VOC emissions do not exceed 35grams/Nm3 measured in the vent of the VRU (European parliament and council directive 94/63/EC of 20 December 1994).

Member countries, however, have varying emission standards generally falling into the following categories:

in Germany and parts of the Netherlands it is 50mg/Nm3; in Denmark and other countries, 150mg/Nm3 is accepted. 10g/Nm3 and 35g/Nm3 are, however, the most commonly accepted emission standards. In the US, emission standards are, typically either 35g/m3 or 10g/m3. Unlike in Europe, emissions from the vapour recovery unit in the US are measured relative to the product volumes being loaded.

To address the standardising of vapour recovery units to relatively modularised truck loading operations, Denmark-based Aker Cool Sorption, a division of the oil and gas services company Aker Solutions, has developed a range of highly standardised pre-engineered systems for a range of loading profiles that can be matched to numbers of loading bays, conveniently covering most truck loading vapour recovery applications.

The advantage of offering a pre-engineered solution is that:• Detailed engineering is

Pre-engineered vapour

recovery solutions offer early

payback on investment and

ensure quick delivery

standardisation in vapour recovery

Emissions standards vary throughout the world,

although they are typically based on European or US EPA

standards

Vapour recoVery TA N K S TO R A G E • January 2012

52

available at an early phase of the project, usually during the tendering stages. This allows the depot engineers to complete their engineering integration at a very early stage of the delivery process

• Deliveries of the equipment are quite reasonable at between 20 and 25 weeks

• High system reliability, always an important factor for any depot, arising from the repeatability of using proven pre-engineered designs

• Early payback on investment. Vapour recovery systems in almost any depot application provide for more than environmental pollution

control; they also provide a valuable means for the control of inventory losses. Significant and valuable volumes of product are recovered and returned to storage, typically between 1-2 litres per 1,000 litres of product loaded. Payback based on the value of the recovered product and recoverable duty is possible

over the course of one to two years. This is improved further as a result of the lower investment costs in the vapour recovery unit resulting from the pre-engineered approach.

The range covers seven standard sizes, from the DS080 to the largest DS850. Each system is based on the use of a rotary

vane vacuum pump. Rotary vane vacuum pumps

offer many advantages over the conventional liquid ring vacuum pump designs and the rotary screw vacuum pumps, durability being one of the most ardent benefits over the screw pump. The rotary vane pump design is robust and has good resistance to particulate contaminants. In contrast, screw dry vacuum pumps have very tight tolerances and are extremely sensitive to particulate contaminants.

In determining a suitable selection for a depot, an operator simply selects the model required based on the loading profile and the required emissions. If an exact match in terms of loading profile is not available, a company can simply select the next available DS model for budgetary purposes.

The basis for the selection of each Depot Series model:• Truck loading of petrol,

diesel, etc. (continuous duty flows can also be accommodated in the design).

- The profile is determined to ensure a reasonable level of utilisation based on a number of loading bays or loading arms, for example the DS450 would typically be suited to a 6 bay operation in which 24 loading arms might be connected to the system:

• Average inlet hydrocarbon concentrations

• Emissions: 10g/Nm3 or 150mg/Nm3 (other emission standards can be accommodated)

• Absorbent petrol at a maximum temperature of 32˚C (higher temperatures can be accommodated)

• Ambient temperature range: -29˚C to +40˚C. n

For more information: This article was written by Simon Shipley, sales and business development manager with Aker Solutions (Vapour Recovery Business – Cool Sorption), +45 43 45 47 45, www.akersolutions.com/VOCDs850 vapour recovery unit in thailand

Depot series model no. DS-080 DS-150 DS-300 DS-450 DS-550 DS-700 DS-850

Typical no. loading racks 1 2 4 6 8 10 12

Typical no. loading arms 4 8 16 24 32 40 48

Average consumed power 16kW 21kW 26kW 50kW 50kW 76kW 76kW

Summary of available depot series range of VRUs:

January 2012 • TA N K S TO R A G E page HeaDer

57

Rainwater Seals for Floating Roof TanksYou do not need an umbrella for your floating roof tank. You just need the right IMHOF water seal as secondary seal, and your 'White Storage Products‘ will stay free of rainwater pollution.

• Water sensitive storage products like gasoline, alcohol, ether, jet fuel, etc. will stay safely within specification.

• Corrosion of tank bottoms is drastically reduced.• Tank drainage and waste water treatment are minimised.

Our water seals with water absorbent contact elements made from polyester fibres successfully drain kilometres of tank walls since more than 25 years.

The water drainage efficiency of our water seals is 50 to 100 times better than for standard secondary seals, as tests of our customers have confirmed.

For more information about our range of floating roof seals please see our homepage and contact our specialists.

Phone: 0049 6108 – 60999 Fax: 0049 6108 – 78455E-Mail: [email protected] Homepage: www.imhof-tanktechnik.de

Ing.-Büro Imhof GmbHOtto-Hahn-Str. 1263165 Mühlheim/M. - Germany

Speed-up!

Germany | Malaysia | Switzerland | U K | USA

www.implico.com

More than automationTake time for a conversation with our competent team for more in-depth information. Together we can find the perfect solution for your needs.

We are looking forward to seeing you at the exhibition.

At the StocExpo Implico will be presenting newdevelopments in OpenTAS®, the high-end Terminal Administration & Automation Software.

The highlights:▪ OpenTAS 5.0 – first presentation of the new release▪ automated EMCS processes incl. EMCS 2.0▪ new contract management for service contracts ▪ optimized truck, railcar, ship and pipeline management▪ extensions to the Navigator planning module▪ innovative features for next generation tank farm

management

Visit us at StocExpoStand 226 / 234

loaDing arMs TA N K S TO R A G E • January 2012

54

Statistics show that around 15% of all industrial accidents are related

to working at height, and almost a third of these are caused by a fall

of over 2.5m in height. Any technology that can minimise these risks

is surely worth considering

Fall prevention, not just protectionWorking at a height

has become increasingly safer

over the past few years. One example is the

increased use of safety cages. Unlike safety belts, which protect just one individual against falling, safety cages aim to protect everyone accessing the working area. The primary goal of safety cages is to prevent someone from falling. Experience shows that in most cases it is sufficient for someone to have a support when losing their balance to prevent a fall.

This has resulted in the latest European guideline ‘Working at height’, which has the following guidelines:• Reducing the risk as

much as possible (risk analysis, education, working instructions)

• Install collective protection (safety cages, folding stairs)

• Install individual protection (safety harness, personal protection).

Folding stairs with fixed safey cages allow operators to work on top of trucks/rail cars. These safety cages provide the final link between a safe working area and full maneuverability, as they do not limit the operator in his movements.

There are numerous situations where operators have to cover the complete length of the truck/railcar to reach several manholes.

For these situations, Wiese Europe has developed safety cages up to 12m in

length which can be lowered from the roof or hinged at the platform walkways.

The safety cages are operated pneumatically or hydraulically depending on the facilities onsite. Numerous accessories are available to optimise safe working circumstances in the safety cages. There are movable doors to cover different lengths of trucks and small ‘drop-down’ fences at the side of the safety cage prevent the operator from sliding between the truck and the safety cage.

One tank cleaning and repair company situated in the port of Antwerp has installed nearly 30 safety cages this year alone.

Loading arms

Flexible hoses used to be the standard for the loading/unloading operation in refineries and chemical plants in the past. But now the focus is moving over towards loading arms.

Loading arms can be used for truck/railcar applications as well as for marine applications.

Land loading arms

Land loading arms form the most reliable alternative to flexible hoses when considering loading applications. As the main goal by liquid and gas transfers is to prevent contact between the product and the environment, land loading arms transcend

Vertical safety cage, independent

Hinged safety cage, fixed at the platform

January 2012 • TA N K S TO R A G E loaDing arMs

55

flexible hoses in terms of handling and durability.

The heart of loading arms, the swivel joint, can be adapted to virtually any loading situation with options such as FDA approved grease, heating and insulation, or PTFE-lining.

Land loading arms use a balancing system that can consist of spring cylinders or counterweights to minimise the effort to be borne by the operator. These spring cylinders and counterweights are maintenance free, and still adjustable should operating conditions change during the lifetime of the arm. These balancing systems can still be combined with a

supporting gas spring for the last length (to compensate the extra weight of breakaway coupler or ball valve), or with hydraulic or pneumatic cylinders for operation.

Loading arms can be customized to a specific loading operation with: Mechanical locking device, Suction hood, Overflow protection, Position detection, Vacuum breaker, Breakaway coupler, shut off valve, …

Marine loading arms

Because of the size and the weight, all marine loading arms are counterweight-balanced. For the larger dimensions of marine loading

arms this balancing is done by means of a pantograph system. Two pantograph systems can be distinguished by the manufacturers: the cable pantograph balancing system, or the rigid pantograph balancing system. Although both systems have their own advantages, the cable pantograph system remains the preferred model under the marine loading arm manufacturers. Its light weight construction, and lower maintenance requirements give it a considerable advantage over the rigid pantograph system, which uses more swivel joints and requires a heavier construction.

Although loading arms are constructed according the international guidelines of the OCIMF the piping construction can vary per model or application. For lighter applications/smaller sizes the product piping can be self supporting. For heavy duty applications and larger sizes there is frequently opted for a separate support structure which takes up the forces and loads, the product piping than is attached to this support structure and is only influenced by the product characteristics.

Self supporting model: this model is balanced with a single rotating counterweight and due to its efficient design this arm can easily be manipulated by hand. The arm uses a self supporting structure so when balanced in a correct way, the product piping is the only part that needs to be brought into motion.

When adding several options on this model, making it heavier and requiring more counterweights, hydraulic operation is also available for this model.

Separate support structure model: this model uses a separate support structure making it perfectly suitable for the larger sizes and heavy duty tasks. It allows maintenance without dismantling the arm. All swivel joints are easy accessible and seals can be replaced with the loading arm in maintenance position. Although hand operated models are available, most manufacturers advise this model to be operated hydraulic because of the extra weight generated by the separate support structure.

On marine loading arms a wide range of accessories is available to even more improve an ergonomic and smooth operation. These options include Emergency Release Systems, Quick Connect Disconnect Couplers (manual and hydraulic operated), but also a support jack and central greasing systems. n

For more information: This article was written by Tom Van Tendeloo, marketing manager for Wiese Europe, www.wiese-europe.com

Marine loading arm overview

loaDing arMs TA N K S TO R A G E • January 2012

56

When considering a loading arm supplier, companies need to make

sure all its equipment works seamlessly together

Integrating loading solutions

When considering which loading arm to choose, many

factors must be considered, such as the technology behind a particular manufacturer’s swivel joints, correct seal material selection, vapour recovery, dry break coupler systems, break away devices and overfill prevention.

But one question is often overlooked – will the loading arm work with the company’s new or existing truck, or railcar loading racks?

In others words, can the loading arm be integrated into the loading rack and work with other dynamic equipment such as safe access and fall prevention cages, overhead obstructions such as canopies and roofs, piping, valves and other associated equipment typically found at loading rack sites?

Loading arms are dynamic and most of the issues where clashes can occur are related to the equipment used to protect operators from falls from height while working on the top of trucks and railcars.

This same safe access and fall prevention equipment, which typically incorporates safety cages or platforms with handrails, is also dynamic. It must elevate up and down or articulate out of the way to safely store when not in use to prevent being hit by the trucks or railcars being serviced at the loading rack.

In one scenario, for example, it must be considered how the loading arm will work with an 1,100mm high safety cage system that sits on top of a tank truck for fall prevention.

The safety cage must be there to meet the falls from height standards, so now the loading arm must be able to go up and over the safety cage system.

If there is a low canopy or roof overhead or some other obstructions, the length of the loading arm drop tube required to connect to the truck may cause the loading arm to crash into the overheard structure and not allow the loading arm drop tube to come up and over the safety cage.

In addition, the storage location of the arm must be considered to allow an operator to safely gain access to the loading arm and maneuver the arm into position and not clash with the safe access equipment storage position.

The integration of the loading arm into a loading rack facility can become quite complex. This is only one simple example to demonstrate the thought that must be put into a properly designed loading rack system.

Many times loading arms are purchased from one company and the loading rack with fall prevention is purchased from another supplier.

This is where the problems can begin. To avoid any possible complications, companies should look at manufacturers that produce loading rack systems and loading arms all under one roof. n

For more information:This article was written byPete Singleton the VP of market development for US-based Carbis, [email protected]

truck loading rack with integrated loading arm and fall prevention

railcar loading rack with integrated loading arm and fall prevention

January 2012 • TA N K S TO R A G E tank blanketing

57

Tank blanketing regulators are needed to reduce emissions, yet there

are ways to simplify the process as well as reducing investment costs

covering upin the petroleum industry,

chemicals are blanketed to reduce the release of

volatile organic components (VOCs), which pose risks to people and the environment.

In blanketing applications self-acting safety valves are used for security, while pressure regulators control blanket gas pressure. A pressure regulator is used instead of a control valve because regulators respond to pressure changes more quickly and accurately.

Blanketing requirements are calculated either by the direct method, or according to API, ISO or EN standards. The direct method considers only flow pumping in, while API, ISO or EN take into account the vapourisation of fluid and thermal effect. For low volatility products kept at constant temperature or in small containers, the direct method is used. API, ISO or EN is used for flammable fluids, large tanks and outdoor tanks. The most commonly applied standard is API2000 6th edition.

The simplest blanketing solution is a proportional valve blowing nitrogen inside the tank through an open pipe. If the tank is not filling or depleting, pressure remains stable. When the fluid level does change, pressure changes without control until a safety valve opens.

An alternative solution is to replace the proportional valve with a pressure reducer. When liquid is pumped out, the pressure reducer opens to keep pressure at set level. When liquid is pumped in, the pressure of blanket gas increases until the overpressure safety valve opens, exhausting vapour to atmosphere without control. If pressure decreases below the pressure reducer set point, a pumping effect is

created that consumes more nitrogen than is desired.

By using a back pressure regulator instead, when the same pressure level is reached, only the necessary amount of nitrogen is used to keep the tank close to its set pressure.

Using a pressure regulator provides two benefits. First, the nitrogen pumping effect is eliminated, dramatically decreasing nitrogen consumption. Second, tank pressure can vary over a broad range with little nitrogen needed to maintain tank integrity. Discharge is controlled and emission to atmosphere is greatly reduced. The pressure regulator’s nitrogen saving effects are particularly beneficial in environments that undergo large temperature swings. Tank blanketing solutions that utilise a pressure regulator result in large nitrogen costs savings.

Pressure regulators also decrease the cost to maintain tank safety. Without the pressure regulator, a safety

valve must frequently open and close to maintain tank pressure. The more often the safety valve opens and closes, the more often it must be revamped, an expensive process. In addition, the tank cannot be used during revamping, creating an immobilisation cost. However, when a pressure regulator is used safety valves remain closed, opening only in upset conditions for safety, reducing the need for revamping and keeping the tank in service.

Another important blanketing cost consideration is the set pressure of the pressure reducer and backpressure regulator. The higher the pressure, the more nitrogen consumed by the various leaks around the tank.

For example, lowering the blanketing pressure by 50% reduces nitrogen leakage and cost by 75%. The investment for a blanketing system can be paid back quickly.

To achieve high accuracy with a set point lower than

3mbar, the use of pilot-operated regulator is strongly recommended. Pilot technology provides accuracy less than 0.5mbar, while a self-operated regulator is accurate up to 1.5 to 2mbar. The use of an external control line is recommended to sense the pressure inside the tank rather than inside the regulator. Pressure loss in the pipe with such low pressure can be very high, and therefore tank blanketing regulators should be installed on top of the tank in order to limit the sensing line length.

In some cases the choice of blanketing solutions is constrained by available tank connections rather than the process parameters. If only a single connection is available, an integrated solution combining both pressure reduction and back pressure control is available. n

For more information:www.emerson.com, [email protected]

Nitrogen cost versus leak diameter

ligHtning protection TA N K S TO R A G E • January 2012

58

One common solution to lightning risks may actually be making the

problem worse

A new way to dissipate

on a fairly regular basis, certain types of tanks explode or

catch fire, sometimes, but not always, during electrical storms. This is a recurring industry problem without a reliably effective solution.

There are two possible causes of this type of incident: a direct or proximate lightning strike, or static discharge.

Direct attachment may be the cause of some incidents, but it is not the likely culprit in most cases. There have been many incidents that occurred when lightning was not present in the area. Additionally, there have been many incidents involving steel tanks. It is unlikely lightning attachment caused burn-through or heating ignition of vapour in these tanks. Therefore, the most likely cause is static discharge.

The source of static may be the result of normal operations, such as filling or draining, or it may be secondary effect from a direct or nearby lightning strike. Secondary effect arcing is also static discharge, albeit high energy and occurring over a very short time frame. This arcing is produced by the inrush of ambient ground charge toward the point of a lightning strike. The inrushing charge can arc across gaps in its path, thus providing both a static charge and discharge.

The ideal protection system would address both of these causes. Fortunately, the solution is the same. A system that protects against lightning strikes, both direct and nearby, will also protect against static discharge ignition.

Probability versus consequences

The probability of this type of incident is unpredictable. It could be years between

incidents or years without incidents, followed by a single or series of catastrophic events. On the other hand, one north Texas operator lost two batteries in one day.

The consequences of this type of incident include lost production, the cost of replacing the damaged facility, environmental impact and clean up, and bad press, especially if the tanks are located in a populated area or a local fire company responds.

Conditions leading to ignition

According to API 2003, A.7, in order for an electrostatic charge to become an ignition source, four conditions must be met:1. A static charge must

be generated2. The charge must be

accumulated to the level at which it is capable of producing a incendive spark (A.6.2), that is, a spark with adequate energy to ignite

3. An appropriate gap across which the accumulated charge may arc (source of ignition)

4. An ignitable gas mixture must be present around the source of ignition.

Sources of static charge (rub two molecules together)

The primary source of static charge appears to be turbulence from mixing fluids, either from pumping, particularly through non-metallic pipe, or from filling, especially splash filling, with the falling fluid penetrating standing fluid. Air/foam injection to increase flow rates may also be a primary source. The tiny droplets of fluid above the product are separated by the dielectric gas or air, allowing the charge to build in the vapour space.

A secondary source may be bubbling of the air/gas mixture. This leads to a suspicion that the boundary layer between the liquid and gas may play an expanded role in the problem. There are also miscellaneous sources, such as clothing on people. This factor is humidity sensitive, similar to touching a doorknob on a dry day, and the charge does not usually build to the level where it becomes incendive.

Accumulation of static charge

Charge dissipates from a fluid into points and sharp

edges, not flat surfaces. That is why charge does not readily dissipate into the shell of a metal tank – it is flat. This allows the charge to accumulate at a rate faster than it dissipates. The presence of a carbon veil in a fibreglass tank does not accelerate charge dissipation. It still presents a flat surface to the bound charge on the liquid. An epoxy-lined steel tank is similar to a fibreglass tank regarding static charge dissipation.

Because the static charge eventually relaxes, an incendive spark is most likely while the charging mechanism is active.

Source of ignition (sparking)

When the static charge exceeds the dielectric of the intervening medium, the medium breaks down and a potential equalising arc occurs. The arc may occur between masses of inductance, such as piping, fittings, the thief hatch and its collar (if it is loose enough to rattle, it is loose enough to arc), electronic sensors on the tank, and vacuum trucks, or between the bound charge on the stored product and any of the above.

Ignitable mixture

The likely source of gas is the ‘Coca Cola’ effect. Gas is suspended in the fluid underground. When it reaches the wellhead, the reduction in pressure allows the gas to escape, much like when carbon dioxide escapes from Coca Cola when the can is first opened.

The turbulence involved with further handing allows more gas to escape, much like drinking Coca Cola through a straw, then blowing it back

January 2012 • TA N K S TO R A G E ligHtning protection

59

into the can and drawing it out again. Splash filling, while helping to accelerate molecular breakdown and speeding the separation process, also allows additional gas to escape. Air/foam injection to increase flow rates also generates gas.

To allow combustion, oxygen must be available in sufficient concentration. Oxygen may enter the tank from atmospheric vents or from a thief hatch left open, a common practice. Oxygen may be introduced to prevent a vacuum in the tank during the process of emptying. Therefore, the conditions for combustion may be high when filling an empty tank, as static has been generated by the flowing liquids and oxygen is present in the tank.

Lightning caused ignition

Ignition due to lightning is caused by the ground charge induced by the cloud base charge on the surface of the earth beneath the storm. The storm cloud generates charges within the cloud, and a charge on the base of the cloud. This charge induces an opposite charge on the surface of the earth beneath it. The attraction of opposite charges attempts to pull this ground charge off the surface of the earth, so it is dragged along the surface of the earth beneath the cloud.

When lightning strikes the surface of the earth, it relatively vacates the ground charge at the point of the strike. The surrounding area remains highly charged, so the remaining ground charge flows toward the point of the strike. If this inrush of charge crosses a gap, it may arc. This all happens very quickly, with the storm cloud providing the source of the charge and a sufficient accumulation of charge to form an incendive spark. The tank structure provides the source of ignition and the ignitable mixture.

Solutions

The most common lightning fix is a catenary (overhead wire) system. This system consists of grounded masts or poles supporting a wire or wires over the site. Based upon the above description of the problem, this system is

far from ideal. The catenary wire is intended to get in the way of a lightning strike, and convey it to ground. When used to protect tanks and similar structures, this system cannot mitigate secondary effect arcing, the primary cause of ignition. In

fact, if a catenary performs exactly as designed, it brings the lightning energy to ground near the base of the tank, thereby maximising the likelihood of secondary effect arcing across the tank and appurtenances.

The catenary system

has no effect on the bound charge on the stored product, does not provide bonding to miscellaneous masses of inductance on the tank, and does not affect the likelihood of a direct strike by influencing streamer formation.

Additionally, several options have been employed to control the conditions necessary for an electrostatic charge to become an ignition source.

Condition 1: the generation of a static charge. Among the solutions suggested and tried are employing piping of successively increasing diameter to reduce the flow rate, and locating fill pipe discharge near the bottom of a tank. Although they do reduce the rate of charge accumulation, they are only partially effective, as turbulence still creates static.

Condition 2: the charge accumulation to the level at which it is capable of producing an incendive spark. Among the solutions to this is inserting a metallic rod or similar conductor into the tank to increase the rate of discharge, as recommended by API 2219, 5.4.1.2. However, this is not optimally effective, as the inserted item still constitutes a flat or curved surface.

Condition 3: an appropriate source of ignition. This is commonly accomplished by bonding all masses of inductance. In addition to tank battery appurtenances, vacuum trucks must be bonded to the system. This bonding conductor may be a simple flexible cable, which is just as effective and not as expensive as a retractable reel system, or as complex as a conductive hose, which may be difficult to test on a regular basis and to maintain. Any system used should provide strain relief for the driver who forgets to unhook the truck before driving away.

API 2219 allows grounding of a truck to a ground rod separate from the site ground. As this ground rod may be substantially different from that of the remainder of the site, particularly that of the stored product, this technique may be inadequate.

These steps are moderately effective, but still do not address the bound charge on the stored product.

Condition 4: the

installing in-tank static drain through the thief hatch

thief hatch flexible bonding jumper

bonding to carbon veil lug and valve at bottom of tank

ligHtning protection TA N K S TO R A G E • January 2012

60

presence of an ignitable gas mixture. Normal maintenance should include the dump valve, and operating practices include close thief hatch and controlling the rate of filling and emptying a tank.

New approach

The wild card in tank protection has always been equalising the bound charge on the stored product. Charge dissipates from a liquid onto points and edges. Even in a steel tank, there are none to help dissipate the bound charge on the stored product. The liquid simply lies against the side of the tank, and the charge must inductively couple onto the flat surface. It takes time for the potential to relax, allowing the static charge to accumulate faster than it dissipates.

Lightning Master has designed an in-tank static drain consisting of a stainless steel cable with stainless steel electrodes inserted into the wind of the cable. This drain, installed through the thief hatch and secured to the top of the tank, introduces thousands of electrically sharp points into the stored product, offering a low-resistance path for bound charge to leave the liquid and vapour space. It sucks the charge out of the product, allowing it to relax much more quickly. This allows the charge to dissipate faster than it accumulates.

On a steel tank, the only additional bonding required is a jumper between the thief hatch and collar (if it is loose enough to rattle, it is loose enough to arc).

On a fibreglass tank, a conductor system is installed, bonding the top vent pipe or manifold, the in-tank static drain, thief hatch collar, walkway handrail system, and tank conductive elements such as a carbon veil, and the drain pipe at the base of the tank.

The bonded mass of the tank system is then electrically bonded (grounded) through existing electrically continuous metallic piping or with dedicated conductors on non-conductive piping to the injection well, truck load-out, and site electrical service ground. This brings all site components and structures to the same potential and to ground potential, thus reducing the possibility of arcing. Truck drivers should be trained to bond their trucks to the site bonding system without exception. The truck bonding system may consist of a retractable reel grounding wire, or may be as simple as a flexible cable with a spring pressure clamp attached to its end. In either case, a means of strain relief must be provided to compensate for the driver who drives away with the grounding clip still attached to the truck.

To provide direct lightning strike protection, streamer-delaying air terminals (lightning rods) are installed on top of the tank, vent or vent manifold piping and handrail structure. These air terminals are UL listed lightning rods, and also retard the formation of lightning completing streamers from structures, thereby reducing the likelihood of a direct lightning attachment.

These systems are simple, lightweight and easy to install, and have been employed successfully on hundreds of steel and fibreglass tanks throughout the US and overseas.

This system is designed in accordance with the standards contained in NFPA 780, and is approved by the City of Fort Worth, Texas, and many other municipalities for installation on tanks and batteries within city limits.

It costs less than commonly used systems, such as the catenary system, and is more effective at controlling the conditions that constitute the proximate cause of tank incidents. n

For more information: This article was written by Alan Roachell, Rosewood Resources and Bruce Kaiser, Lightning Master, www.lightningmaster.com

January 2012 • TA N K S TO R A G E legal issues

61

When a legal claim arises, the temptation may be to settle, but

caution needs to be exercised in the negotiation process. It is

important for companies to know when to involve solicitors

settling disputes in the uk

in any business, particularly ones which involves cross-dealings with third parties,

disputes invariably arise and businessmen get involved in legal suits. There is an apprehension that once a case has begun it will continue for a long time, and that the litigant will have to bear the costs of the litigation and the legal costs of their adversary, should the claim be decided against them. Therefore, it is advisable parties aim to settle the dispute.

Provisions have been made in legal procedures which allow parties the scope to make a legal settlement. Part 36 of the Civil Procedure Rules provides a statutory procedure for settlement which is complete in its own right. A Part 36 Offer, as it is popularly called, is a self contained code and provides guidelines for parties on how to make or accept an offer to settle. Interestingly, a Part 36 offer must be in writing and state whether it relates to the full claim or a part thereof and it also allows an opportunity for the person receiving the offer (the offeree) to seek clarifications of the offer made by the offeror.

Parties should exercise abundant caution in making an offer of settlement and conducting settlement dialogue, as it needs to be absolutely sure they conclude a settlement only of that dispute which they intend and no more. There have been numerous examples in the past where parties have approached the court to decide what the terms

were of a settlement that was made between the two sides themselves. This negates the purpose of concluding a settlement in the first place. The terms of the settlement should be clear and well-understood between the parties; in other words, the parties should be ad idem. A legal settlement is in essence a contract by itself. A promise is made by one party to the other that if the latter forgoes a legal claim, the former will suffer some detriment and offer the other a benefit. It is in consideration of this promise that the party intending to litigate its dispute settles the matter.

Although a legal settlement is a contract, this does not mean it can only exist as a single, signed legal document. Settlement agreements are governed by principles of contract law, and so a chain of emails exchanged between two parties can result in legal settlement so long as the requirements of contract formation are present. The English Court in Golden Ocean Group Limited v Salgaocar Mining Industries Limited & another did not accept the argument that if an agreement had been made in writing, there was some limit to the number of documents to which reference was permissible. If there was said to have been an agreement in writing, the court was entitled to look at those documents which were said to constitute the agreement, however many they may be.

There is no requirement for parties to place their

signature on a single piece of paper, which can then be forever pin-pointed as ‘the’ legal settlement between the parties. The legal principle that a settlement is for all intents and purposes an enforceable agreement means the essentials of a valid contract ought to be present; a document having the appearance of an agreement is not enough. One may derive comfort from the thought that ‘if I didn’t sign the document, it isn’t a contract’. That thought can be potentially dangerous. If parties have given full effect to an unsigned document through their conduct, the court shall consider that there was a contractual agreement between parties. There are, of course, exceptions to this. Transactions for the transfer of property are agreements where signature of parties is a sine qua non for execution of the contract.

It is also a myth that where the subsequent execution of a further document is contemplated by the parties at the time of what would otherwise be an agreement, that agreement at first instance, whether a single document or a chain of correspondence, is not a binding contract. The intention of parties to create legal contractual relations will be inferred from the conduct of parties: does that conduct suggest that they intended the future document actually to constitute the real agreement, or was it just to be a record of what was already an established agreement

between parties? This is an objective test which courts use to ascertain whether an agreement was concluded.

English courts have a strong propensity towards upholding contracts. This is because it is presumed that parties intended to create a legal relationship when entering into a settlement. Therefore, if a party appears to have made a settlement and wants to raise an argument afterwards that it was not its intention to enter into the settlement, it has to make a very strong argument in court. This can be a daunting task, especially if there is no written communication to prove this lack of intention. Therefore, parties should make their intentions very clear in writing, stating that they do not consider themselves to be contractually bound to a legal settlement if that is actually how they feel.

This presumption in favour of upholding settlements is an extension of the principle of consensus ad idem; the court will conduct an objective test to establish whether the parties were ‘of a mind’, in that they both wanted to create the same legally enforceable settlement. Therefore, a party who intends to displace this presumption is required to make an objective argument that, given the circumstances of the case, it would be incorrect to presume that a legal settlement had been concluded. An argument the party itself did not intend to conclude a legal settlement is a subjective argument and as such would not hold before

legal issues TA N K S TO R A G E • January 2012

62

an English court or tribunal.The English courts in

such cases take the test of the ‘reasonable bystander’. If a reasonable bystander on their observation found correspondence between parties had resulted in making an offer and acceptance of that offer, it would not matter that one party did not intend to conclude a legal settlement.

Likewise, consideration is also an important aspect when negotiating a legal settlement. A party should understand the value it will receive in exchange for its agreement to relinquish its right to bring or continue its claim in a court of law. Courts do not make judgments on whether the consideration that moved from one party to the other represents good value to the recipient, only on the question of whether any consideration was present. In other words, a court of law will seldom adjudicate on the issue of whether the value exchanged between parties

was adequate, but rather whether it was sufficient to fulfil the requirement of valid consideration under the law of contract. The result of that is that a party who makes a bad bargain cannot look to the courts to help it out.

In a celebrated case, the House of Lords confirmed the doctrine that a court does not investigate the adequacy of consideration when it upheld the ruling that chocolate wrappers sent by members of the public to obtain music records were part of the consideration of the contract, notwithstanding that the company would throw away the wrappers once they were received.

A promise made by a defendant that it will consider the claimant for future business if the latter drops its claim against the former is valid consideration. An offeree cannot then complain that it did not make profit from any future business, and as such there was actually

no consideration. In such a case, the consideration for dropping the claim was ‘to consider the claimant for future business’ and not ‘to do future business.’ Therefore the fact that the claimant ultimately forsake his claim without ever any monetary benefit is immaterial.

A business person, or for that matter anyone who is not well-acquainted with legal nuance, will often use words without stopping to consider that a word used by him may be construed by another in a totally different sense to that which the author had intended. Therefore, parties should make their intentions very clear even in informal exchanges: a simple ‘yes’ or ‘no’ in written communications could be said to reflect a party’s intention to settle a matter.

The presence of a solicitor whilst settlement negotiations are ongoing is always helpful, because the settlement can then be made as watertight

as possible, which will in turn ensure that parties do not have to approach the court in future to resolve the issue whether or not there was a settlement, or what its terms where.

Whether a party handles its own legal settlement or is represented by a lawyer, the key is to make the party’s intentions crystal clear. A claimant must be aware that, in effecting a legal settlement, it is essentially giving up its right to bring the claim again in a court of law, and therefore all the issues in the dispute that it wanted to resolve should be meticulously spelled out. This ensures that parties are on the same footing whilst the negotiation is being finalised, and makes an out of court settlement final and meaningful. n

For more information: This article was written by Kinshuk Chatterjee, a lawyer at Zaiwalla & Co Solicitors. [email protected]; +44 207 312 1000; www.zaiwalla.co.uk

January 2012 • TA N K S TO R A G E insurance

63

Recently implemented regulations create a range of new

responsibilities, liabilities and costs for terminal operators

Reducing environmental risks exposureover the last 50

years incidents in the tank storage

industry have included:• 23 boilovers• 138 fatalities• 547 injuries• 101 million barrels of

product lost – burnt• 56 tanks destroyed• Eight industrial

plants damaged.Taken in the context of increasing global environmental regulation, where operators are now more frequently being targeted for enforcement actions, these statistics demonstrate a real and significant risk to operators of exposure to legal liability under national, provincial/state and local environmental laws.

The storage, transport and distribution of dangerous and hazardous materials, is an inherently risk driven business, although new environmental regulations are rapidly changing the nature and extent of exposure to costs for loss and damage, should they occur.

Across Europe, EU member states impose these regulations through national implementation of a range of EU Directives aimed at preventing pollution and restoring environmental damage including:• The Environmental Liability

Directive (2004/35/EC) • The Water Framework

Directive (200/60/EC)• Integrated Pollution

Prevention and Control (IPPC) (2008/1/EC)

• The Directive on Protection of the Environment through Criminal Law (2008/99/EC).

Globally, a wide range of regulations apply, with many of them borrowing best practice requirements

from the more established regimes operating across Europe and North America.

Recent focus has been on the EU Environmental Liability (Directive 2004/35/CE) (ELD) that, for the first time across all EU member states, establishes a common framework for the prevention and remedying of environmental damage and biodiversity.

The ELD creates a range of new responsibilities, liabilities and costs for operators. Liability may be strict, that is the materials or operations are so hazardous that negligence need not be a factor in determining liability or fault-based (negligence) exposure. Most tank storage operations will have strict liability.

The EU ELD has also created a number of issues, including:• Complex claims requiring

restoration of the natural environment and the use of techniques, such as resource equivalency methods to assess damage

• A relative lack of practical experience in this area in general and in the application of the regulations by the authorities who are responsible for administering the regulations, assessing the damage and setting the remediation targets

• Each country has implemented the ELD with differences, for example in defences, definition of protected species and any risk management and insurance must be able to respond to these differences

• The visibility and sensitivity of any damage in relation to the press, public and community relations.

Others have committed to introduce mandatory

financial guarantees, which can often be met through an appropriate insurance. To date countries that have committed but not necessarily fully implemented this requirement include: Portugal (required as of 1 January 2010); Bulgaria (required as of 1 January 2011); Spain (process in place); and Czech Republic, Romania, Hungary, Greece and Slovakia.

The ELD only became effective in 2007, so its impacts are only just appearing. For example, the recent pollution caused by an oil pipeline failure in southern France has resulted in claims against the owner and operator for damage to protected species in addition to signifcant cleanup costs.

Another indication of the financial impact of the ELD is provided by a French government study using incidents from 1996 and 1997 that compared regulatory costs pre-ELD and post ELD. In the case of a spill into a river, the costs under the ELD were estimated to be as much as 10 times the regulatory damages in the pre-ELD period.

In another loss involving a fire in warehouse hazardous materials (pesticides), post ELD costs were estimated to be 400 times more than prior to the ELD regulations. Other examples studied indicate that even without significant environmental damage, the effect of this directive is to often to increase costs to responsible parties by at least 25%.

The regulatory landscape is creating an increasingly wider range of environmental risks, and liabilities faced by operators include:• Costs of risk identification,

assessment and compliance with environmental laws

• Costs of losses and claims associated with third-party liability

• Costs to defend third-party claims, even where the party is ultimately exonerated)

• Costs of cleanup onsite • Costs of offsite release

of pollutants• Disruption of business

due to the presence of contaminants or requirements for its cleanup

• Cost of fines and penalties imposed by regulators

• Unexpected costs to cleanup acquired properties or businesses

• Losses occurring during remediation due to negligent actions of contractors

• Cost to meet regulatory requirements

• Costs of managing and mitigating risks, including insurance premiums for environmental insurance policies

• Costs to comply with financial responsibility requirements (for example underground storage tanks, waste management facilities and environmental damage)

• Losses due to intentional releases of contaminants (bio-terrorism or sabotage)

• Damages to business reputation.

Relevant to tank storage operations, in 2010 the European Court of Justice (Italian case C-378/08) clarified in relation to an oil refinery site, that the ELD applies to damages caused by an emission, event or incident taking place after 2007, where such damage is from activities carried out after that date or were carried out but had not finished before that date. This ruling sets precedence

Insurance TA N K S TO R A G E • January 2012

64

for EU interpretation and holds true irrespective of when the country actually completed implementation of the ELD into national law.

The court also went on to say that, while causal linkage must be established, fault or intent does not have to be. Moreover, the competent authority in the country has discretion to determine how much investigation is required to allege or prove the cause. This places even more emphasis on the operator to show it is not the cause.

Even a cursory review of many risk management and insurance programmes can identify significant gaps, particularly in insurance cover for these ‘new’ environmental exposures.

Most traditional insurance programmes will have some environmental gaps. The three most common and significant of these are:• Own site (onsite)

cleanup costs• Gradual pollution,

leakage and seepage• Environmental

damage under the ELD (Europe) including non-pollution damage.

Environmental Impairment Liability (EIL) policies are able to provide the necessary cover for these and other gaps ensuring the operations are protected

and environmental losses controlled. Environmental programmes can also include cover for pre-existing (historical contamination) as well as for new conditions for ongoing operations. Examples of typical coverage include: • Sudden and gradual

(seepage and leakages) releases of pollutants

• New and pre-existing (historical) pollution conditions at owned, leased and managed sites

• On and off-site cleanup of pollution conditions to meet regulatory standards for soil, surface water and groundwater (first party coverage)

• Third-party claims for onsite and off-site cleanup, bodily injury, property damage, business interruption, diminution of property values

• Legal defense coverage and technical costs

• Biodiversity damages in the EU (EU ELD) and natural resource damages in the US

• Change in law where new materials are determined to be hazardous or cleanup standards become more restrictive

• Regulatory reopeners (such as regulators requiring future additional cleanup)

• Transport – own and third party contracted.

The importance of having environmental insurance

is further illustrated by the recent fire at a chemical storage facility in the Netherlands. This demonstrates how such an event can also create a range of environmental exposures, ranging from liability for own-site cleanup, pollution of harbour and canal waters causing potential EU ELD to claims for long-term groundwater damage and on-land environmental damage to habitat.

Without some form of environmental insurance, in this case, these issues represent a loss estimated of at least €10-€15 million from a total loss believed to be in excess of €70 million.

In fact, overall claims statistics for environmental insurance are that over 75% of all claims are for onsite regulatory cleanup costs. It is a distinct advantage therefore to be able to manage any insurance claims within the country and be able to take advantage of the claims experience and services that are available from the specialist environmental insurance market.

For example, a company in Portugal that was able to leave the technical management of the loss and damage to the insurer’s expert, while it concentrated on minimising the effects on business,

was extremely valuable.A particular trend is for

environmental programmes to provide ‘gap’ only coverage on an admitted DIC and excess basis. This ensures the benefit of any sudden and accidental pollution cover, typically within the standard terms for European general liability programmes, is effectively leveraged. In some cases, this is not an appropriate structure and the environmental insurance will provide primary coverage for all pollution and environmental damage.

Where the principal aim may be to fully protect a portfolio of European operations, the limits depend on the risk profile and size of the portfolio which could be within the broad range of $30 (€24) to over $100 million with deductibles in the range $250k to $1 million.

Increasingly, larger corporate clients are taking a more catastrophe risk approach with additional high self insured retentions or using captive insurance to provide a first layer, with higher limits purchased from the environmental markets. n

For more information: This article was written by Simon Johnson, director of the Environmental Services Group at Aon, www.aon.com

magazineTo get advertising prices or to request a copy of the media pack for 2012 please contact: David Kelly on +44 (0) 203 551 5754 or [email protected]

For editorial information please contact Margaret Garn on +44 (0) 208 687 4126 or [email protected]

March 2012 issue to cover:

Editorial features include:

• Tank gauging

• Tank cleaning and petroleum reclamation

• Fire safety

• EPCM

• Blending

• Tank inspection and safe entry

• Tank cutting, maintenance and repair

stocexpo, official media partnernIsTM, Orlando Florida

Bonus distribution:

www.tankstoragemag.com

Don’t miss out on your chance to be seen at StocExpo and NISTM!

January 2012 • TA N K S TO R A G E tank storage asia reVieW

65

Delegates at this year’s show were updated on major terminal projects

existing in Asia, as well as witnessing new deals being signed

tank storage show shines once moreMalaysia’s role as a key

storage hub was one of the main themes

covered at Tank Storage Asia expo & conference 2011, held in Kuala Lumpur.

Ahmad Mokhtar, commercial director at VTTI, opened the event by sharing his views. He believes Malaysia needs to develop its onshore storage infrastructure to cope with the capacity currently stored on VLCCs.

In August, the Malaysian government issued a directive for seven floating storage facilities to leave Malaysian waters. These have the capacity to hold about 1.9 million tonnes of crude or fuel oil.

The tankers have been used to storing oil for nearly 10 years by international traders, such as Titan, Glencore and Vitol. This is just the tip of the iceberg though, as there are still as many as 15 to 18 VLCCs off the coast of Johor.

These players must now find alternative homes for their vessels, and while they could relocate to other international waters, costs will be higher and logistics will be less convenient.

VTTI, in a 50/50 joint venture with MISC, is building a storage facility which could take some of this capacity when it becomes operational in April 2012.

Phase one of the project will create 841,000m3 storage capacity in 41 tanks across 30 hectares. Phase two will add an additional capacity of 800,000m3 across an extra 20 hectares.

To give a balanced view of the storage situation in Asia, Ong Eng Tong from trading company Mabanaft gave delegates an update on

the situation in Singapore.As is well known, new

storage terminals will not be approved in Singapore unless they are linked with value added upgrading.

Two key projects in the region include the Jurong Rock Cavern, which will provide an additional 2.77 million

m3 of oil storage space, and floating structures, which should add 300,000m3.

When it comes to expansion projects, terminals rely on the expertise of EPC contractors.

Rotary Engineering has built over 50% of the independent terminal space in Singapore, so Chun Peng Koh, business

development director and Neil Arora, co-head principal finance, were able to explain how the company can assist with expansion projects.

A key stumbling block when it comes to terminal expansions is securing the necessary finance. Arora gave several examples of how this can be overcome.

If, for example, a client wants to build 500,000m3 of oil storage and is able to put in 50% of the equity and raise another 25%, this leaves a funding gap of 25%.

In this instance Rotary is able to provide the short fall and help secure off-take for the facility, meaning that construction can start much sooner.

In another example, if an oil trader wants to build 1 million m3 of oil storage, but has not yet secured

Singapore Oil Storage - Current*• Universal (Hin Leong) - 2300• Oil Tanking Seraya - 1700• Vopak Sebarok - 1262• Vopak Banyan - 536• Tankstore - Busing - 932• Horizon - Banyan - 1234• Caltex - Penjuru - 450• Helios (Chemoil) - 462• SPC - Sebarok - 220• Total - 9096(*Thousand m3) 31 October 2011

Storage capacity in Singapore

sourc

e: M

abanaft

tank storage asia reVieW TA N K S TO R A G E • January 2012

66

the finance, which could delay construction starting, Rotary is able to provide the client with a bridge loan.

In a third example, if a company wants to build a storage facility but the economic returns do not seem high enough, Rotary is able to help optimise the terminal to lower the EPC costs.

During terminal constructions storage operators also need to be aware of the legal risks and implications involved. James Sanford, associate at Norton Rose, gave delegates some key points of advice.

These include establishing the contractual structure

early in the process, securing the land rights, allocating the risks to the party best placed to manage them, and making sure permits, licences and consents are in place.

As well as the legal risks involved, terminals need to be prepared in the case a disaster does happen. This means companies need to be covered by adequate insurance.

Amos Ang, risk engineering manager for marine at Zurich Asia Pacific, explained that there are two types of insurance covers available for liquid cargoes: the Institute Cargo Clauses or the Institute Bulk Oil Clauses. The latter is drafted to suit leak, such

as from connecting pipelines during loading or discharge. The product is covered from when the cargo is in transit until it is delivered. Storage risks can be covered but only at an additional premium.

Ang also explained that many risks could be minimised, especially that of contamination. His advice included telling terminals to appoint qualified independent surveyors to carry out inspections and take representative samples at each stage of the transfer, and to make sure the correct sampling equipment is used and the samples taken properly labelled.

Another problem seen in liquid cargoes is that of outturn shortage. This can be caused by inaccurate tank calibration, use of different cargo density between load and discharge ports and cargoes remaining in tanks or pipelines due to pump inefficiency.

To prevent this, tank calibration is recommended every five years, and air blow is to be carried out to clear the pipelines as well as pigging, if permitted.

Overflow is another common problem at terminals. As is well documented, Ang reminded delegates to test alarms frequently to check they are functioning, and also to use manual gauging or visual checks, rather than solely relying on automatic gauges.

Ending the event on a positive note, representatives from EPC contractor Rotary Engineering and investment holding company Benalec Holdings Berhad signed a memorandum of understanding (MoU) on day two.

The partnership will further develop Malaysia as a storage hub by building a deepwater storage terminal in Tanjung Piai, Malaysia.

Speaking about the storage terminal’s location, Vincent Leaw, managing director of Benalec Holdings Berhad, said: ‘Tanjung Piai is very well positioned to complement the region’s growth in the oil and gas industry, and to tap on the growing demand for the storage and distribution of petroleum and petrochemical products in Asia.’ n


71

upcoming events TA N K S TO R A G E • January 2012

68

DAte event LocAtion

mARcH13-15 stocexpo 2012 Rotterdam, the netherlands13-14 Oil Products Forum Asia (OPFA 2012) Langkawi, Malaysia 28-30 NISTM 14th Annual International Aboveground Storage Orlando, Florida Tank Conference & Trade Show

ApRiL17- 20 7th Annual Bulk Liquid Storage Tank Conference The Hyatt Regency, Johannesburg, South Africa

mAY 21- 23 ILTA Texas, US 28 National Petroleum Management Association Petro Expo Washington DC, US

septemBeR20 Tank Storage Association Conference & Exhibition Coventry, UK 26-29 Shanghai 7th International Oil & Gas Transportation Shanghai, China & Storage Technology Equipment Exhibition

Tank Storage magazine

(ISSN 1750-841X) is published five

times a year (in January, March, May,

August and September) by Horseshoe

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g CCL 39

g Ateco 49

g Protego 49

g Implico 53

g Imhof 53

g Fisher Emerson 60

g Mesa 62

g NISTM 67

g Oil Tanking Inside Back Cover

g L&J Outside Back Cover


Brent CampbellProject Manager, Oiltanking Beaumont

We Can, We CareManaging several construction contractors at the same

time requires good organizational skills, technical com-

petence and excellent people skills. That is Brent.

His dedication to ensure that tanks and pipelines are

constructed the Oiltanking way is obvious. It is this

approach that allows us to build assets that perform the

services required by our customers while protecting the

environment and the health of our employees and visitors.

Your reliable storage partner for liquid bulk.

Admiralitaetstrasse 55 | D-20459 Hamburg Germany Tel. +49-40-370990 0 | Fax +49-40-37099 499 | www.oiltanking.com

page HeaDer TA N K S TO R A G E • January 2012

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January 2012 Volume no. 8 Issue no. 1 · 2017. 12. 7. · API-653 and STI SP001 Certified and...

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