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Report from the UK TSA conference
THE TERMINAL ZONE
CONFERENCE REPORT • WE MAY BE LIVING IN UNCERTAIN TIMES BUT THE TANK STORAGE INDUSTRY NEEDS TO DEAL WITH THINGS AS THEY ARE. TSA’S ANNUAL CONFERENCE WAS THERE TO HELP
THE RICOH ARENA in Coventry has for some years now provided a regular welcome to the UK Tank Storage Association (TSA) and its annual conference and exhibition. And so it was again that visitors thronged once more to the venue this past 26 September, eager to see what was new on the stands and hear the latest from the conference presenters.
Conference attendees were welcomed by Adrian Jackson, TSA vice-president and CEO of the UK’s pipeline agency, OPA. He reminded them to take the time to visit the 62 exhibitors in the hall outside and to see what was on show, before handing over to the conference chair, HCB’s editor-in-chief Peter Mackay, who moderated the event with his usual aplomb.
TSA always invites representatives of the competent authorities to speak on compliance issues facing the tank storage industry in the UK but this year proceedings were kicked off with a paper looking at the commercial environment for storage terminal operations, in what Giacomo Boati, executive director for midstream and downstream oil markets at IHS Markit, described as “a very interesting time for storage”.
NEAR-FUTURE FUELS The International Maritime Organisation’s (IMO) new restrictions on sulphur oxide emissions from ships, which take effect on 1 January 2020 – the so-called ‘IMO 2020’ rule – are aimed at changing the behaviour of ship operators. However, the need to supply low-sulphur bunker fuels around the world immediately on that deadline is, Boati said, “the most disruptive event in the oil market for decades”. It will affect all players in the fuel oil and middle distillate supply chains all around the world – and simultaneously. Boati said industry should not expect low-sulphur fuel to be available in sufficient quantities on the deadline and said he anticipates non-compliance rates of around 15 per cent. Quite how oversight of compliance is to be achieved is as yet not clear.
In the longer term there is further uncertainty arising from the move towards decarbonisation in transport fuels. However, Boati said, most of the growth in the global car parc over the next ten years will be gasolinepowered, largely because of rising car ownership in China. In IHS Markit’s model, the use of alternative fuels in road transport will only really take off after 2025 and he expects 30 per cent of the global car fleet (and 50 per cent in Europe) will be powered by alternative fuels by 2040. In heavy goods vehicles, diesel will likely remain the most widely used fuel because of its cost and efficiency.
Growth is apparent in all transport sectors, including air and sea, but the challenge will be to ensure sustainable growth in view of the carbon dioxide emissions reduction targets being touted by the UN and other agencies.
So what does all this mean for storage terminals? The news is not that bad, Boati said. Overall, global oil product demand is forecast
to continue to grow through to 2035, with an increase of around 11m bpd compared to today. Most of this growth will come from Asia and Africa. Indeed, the long-term outlook points towards growing refined product imbalances and new trade flows. This suggests that terminal operators will need to be nimble to take advantage of continued growth in demand for tank storage services.
BACK IN THE UK Closer to home, the UK government’s industrial strategy aims to make the UK a good place to do business and to provide high-quality jobs. The government has promised to invest in a major upgrade to the UK’s infrastructure and to ensure that the UK has a reliable, low-cost and clean energy system, especially in the face of plans for decarbonisation.
But, as Dr Paul Logan, director of the Chemical, Explosives and Microbiological Hazards (CEMH) Division of the UK Health & Safety Executive (HSE), said, this implies a lighter hand on the regulatory tiller, something that will be much easier post-Brexit. But how will that work in a high-hazard industry?
Dr Logan also noted that Greg Clarke, secretary of state at the Department for Business, Energy & Industrial Strategy (BEIS), said in June this year: “As the Fourth Industrial Revolution changes the way we live and work, it is vital that our regulatory system keeps pace.”
At present, Dr Logan said, the UK is one of the safest places in the world to work, thanks in no small part to the Health & Safety at Work etc Act (HSW); he spent some of his presentation reminding the audience of how the UK got to this point, beginning with the 1833 Factories Act, which largely aimed at protecting children in the workforce. Today’s regulatory approach is somewhat different, with HSW and the Control of Major Accident Hazards (COMAH) Regulations taking a goal-setting and proportionate approach that involves balancing risk against cost and promoting effective risk management.
But in this sector, there are a lot of ageing facilities, with many of the UK’s refineries and other oil and gas assets now 50 years old or
more. This is presenting operators with a challenge. HSE wants operators to invest in risk control rather than in paperwork, and it also recognises that the sector and the regulations that govern it are mature.
There is also a growing focus on leadership, Dr Logan said. HSE is concerned that some senior executives in the high-hazard sector fail to understand the risks their operations present; they are prone to putting their absolute trust in system designs and can make business decisions without taking into account their impact on process safety. Indeed, they have a “strong bias” towards messages about success, and have little time for safety warnings. Dr Logan quoted a senior manager involved in the Piper Alpha enquiry, who said: “I knew everything was all right because I never got any reports of things being wrong.”
In fact, Dr Logan said, “There are no new accidents – just the same mistakes in different places.” Operators need to learn from small incidents especially, as these may indicate a bigger incident about to happen. Communication between and across organisational levels is vital to heed these warnings.
CLEAN UP THE AIR These challenges to safety regulation are mirrored by the challenges to environmental regulation, as Dr Jo Nettleton, deputy director of Radioactive Substances and Installations Regulation at the Environment Agency (EA). Following the recent change in prime minister in the UK, she reported that the government is still supportive of the
EXHIBITORS AT THE TSA EVENT HAD MANY NEW PRODUCTS
AND SYSTEMS ON SHOW THAT MAY HELP TERMINAL
OPERATORS MEET THEIR REGULATORY OBLIGATIONS
strategic plan for industry, including decarbonisation, but that the immediate future is unclear because of the new faces at the top and the impending Brexit. “Does this mean lower compliance and more pollution events?” she wondered.
Last year was bad in terms of pollution incidents, Dr Nettleton said. To some extent this was due to bad weather but EA is also concerned that there may be signs of increasing non-compliance. One year’s figure is not enough to tell so EA is waiting to see how 2019 pans out.
There is, though, the prospect of a change in the regulatory landscape post-Brexit. EA would like to see the same level of standards being applied but, Dr Nettleton said, there may be the opportunity to introduce additional regulations or to provide greater flexibility to the regulated community. In particular, she pointed to the fact that, despite an overall increase in air quality, around 69,000 deaths each year in the UK can be put down to poor air quality – this is certainly something that EA is keen to address. However, she recognised that it is a challenge to get industry to reduce its emissions in a time
THE TSA EVENT PROVIDES AN IDEAL OPPORTUNITY TO
SHOW OFF EXPERTISE AND KNOWLEDGE TO A WIDE BUT
FOCUSED AUDIENCE, SOMETHING THAT HCB HAS BEEN
KEEP TO DO FOR DECADES NOW of such economic and political uncertainty.
EA is, though, being proactive in this area and Dr Nettleton gave as an example the case of a combined heat and power plant, which was successfully providing energy to local businesses and putting energy into the grid; it was faced with a need to meet new emissions targets but the cost of doing so would have made the plant uneconomic. EA worked with the operator to identify a pragmatic solution, involving a one-off permit for the facility that helped it unlock investment in a new boiler plant. As a result, it has improved its nitrogen oxide emissions levels and now meets the tighter limits.
Looking further ahead, climate change is leading more extreme weather events that affect everyone, including the high-hazard industries. We can expect more dry summers, with the risk of more wildfires, as well as more unpredictable rainfall patterns with the concomitant risk of flood events. She said industry needs to prepare for this and reminded the audience of the work of the Chemical and Downstream Oil Industries Forum (CDOIF) to draw up best practice guidelines on flood defence.
But the issue of protecting the environment and public health is, Dr Nettleton said, “a very busy space”. Different government departments are involved, which have their own priorities, and public opinion is also varied. EA’s position is that it wants to be involved and influence government policy decisions and to regulate in a way that enables sustainable growth while protecting the environment. For more ideas on what to expect, she pointed to the Regulated Industry’s Strategic Business Plan 2018-2023, which is currently available, and the EA’s own five-year action plan, which is currently being finalised.
DOWN TO ZERO After lunch, Dr Brian Worrall, head of group sustainability at DCC, looked more closely at the implications of a decarbonised energy system. “This is for us to think about, not another generation,” he stressed, “even if it’s going to take decades to implement.”
The ideal aim of decarbonisation is that the world will use more energy but will take all the carbon out – and do it at the same price or less. But for all the technologies that are already available or in development, “there’s no free lunch,” Dr Worrall said, noting that there is still plenty of oil in the ground and that we could easily go on using it.
Governments around the world are coming under increasing pressure to do something but, while they can see the problem, they may not be able to put the right solutions in place, Dr Worrall said. He also cautioned against picking one technology over another – all technologies will need to be used, in appropriate ways and in combination with each other, if decarbonisation targets are to be met.
The commitment to “do something” is obvious: Dr Worrall noted the Paris Agreement, which has been ratified or signed by almost all nations in the world (with the major exception of the US), the UK’s ‘2050 Net Zero’ commitment, the ban on fossil fuel boilers in new homes in the UK and Ireland from 2025, France’s ambition to phase out the use of heating oil by 2027, and the ban on the sale of new gasoline and diesel-powered cars in Norway from 2025. Nevertheless, according to recent forecasts, oil products will still represent 86 per cent of the transport sector’s fuel needs in the EU in 2050, and 32 per cent of total final energy demand.
There are various different methods to generate decarbonised liquid fuels but almost all rely on electrolysis and, therefore, a plentiful
supply of clean electricity produced from renewable sources. This offers some scope to use spikes in renewable energy supplies, for instance from wind farms or hydroelectric plants, to manufacture liquid fuels.
We are all going to have to learn a new list of acronyms: PTL (power-to-liquid), GTL (gas-to-liquid), BTL (biomass-to-liquid) and HVO (hydro-treated vegetable oil). Along with the use of biodiesel, advanced algae-based biofuels, biogas derived from organic waste and renewable technology, compressed and liquefied natural gas, hydrogen and electricity, these can – and hopefully will – deliver the volume of decarbonised fuel necessary to meet future transport and industrial needs. The government does not have to decide which route to take, Dr Worrall said, it just needs to ensure there is a level playing field so that the market can settle on the best choice.
He also had a message for TSA: trade associations have a big part to play in the transition; they have a unique perspective and can help things happen by providing governments and other regulators with sound scientific evidence and by conducting trials. He urged TSA to ally with like-minded partner associations and to lobby regulators and keep its members informed.
FINAL THOUGHTS Also on the agenda was a presentation by Caron Maloney, specialist inspector, risk assessment at HSE, who spoke about the difference between individual and societal risk. In her job, she has to establish the level of detail required for a company to demonstrate it has completed its risk assessment effectively. The greater the risk, the greater the degree of rigour required. Companies need to assess the potential hazards involved in their operations, as well as the complexity of those operations, along with the size and nature of the population that could be affected if something goes wrong.
HSE’s decision making process is transparent. Indeed, it is contained in a document, Reducing Risks, Protecting People, that is available on the HSE website. Maloney illustrated how it works in practice through a ‘fantasy’ storage terminal, close to residential areas. The various scenarios she painted explained how a slight variation in the arrangement of the site or in the way that different products are stored can have a big impact on the risk assessment. However, where there is the potential for there to be a broad impact on the surrounding population, the risk assessment will need to be more detailed.
In the end, Maloney said, suitable controls must be in place to address all significant hazards. HSE starts from the expectation that those controls must, at a minimum, achieve the standards of relevant good practice precautions, irrespective of specific risk estimates. Moreover, she quoted Lord Justice Tucker, who said in respect of one case, “The greater the risk, no doubt, the less will be the weight to be given to the factor of cost.”
Attendees had been urged to stay for the final presentation, given by consultant Allan P Greensmith, who delivered a very personal and emotional report on a fatal accident. And, while it is the guys on the shop floor who are most at risk, the message applies equally to C-level executives and supervisors, he said. Human failures pose more of a threat than technical failures, he noted, but his main message was this: just because you haven’t had a lost-time injury in years doesn’t mean that you can sit back and stop trying. “We can’t become complacent or distracted,” he said.
It is to be hoped that, by the time the next TSA annual conference comes round, Brexit will be done and industry will face a less uncertain future. The 2020 event will take place on 24 September, once more at the Ricoh Arena. Full details will be provided on the TSA website, www.tankstorage.org.uk.
THE 62 EXHIIBITORS WERE PLEASED WITH THE TURNOUT
AND THE OPPORTUNITY TO MEET THEIR CUSTOMERS, AS
WELL AS THEIR COMPETITORS, AT THE RICOH ARENA.
