Bulk storage and terminals
CLIMATE CHANGE came back close to those of January. NuStar Energy, which operates a network of refined product pipelines and terminals along the Texas coast, also noted that the extreme temperatures in February caused outages or downtime among some of its customers during and after the storm. It puts the impact on its earnings for the period at some $11mn, at a time when refined product demand had begun to return towards prepandemic levels.
Winds of change Terminals have been buffeted by weather events, but operators are taking steps to make a difference in the achievement of sustainability goals, writes Peter Mackay, Principal Consultant, Meredith & Company.
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Flooding during Hurricane Harvey, 2017 – The National Oceanic and Atmospheric Administration’s (NOAA) Climate Prediction Center predicts the US Gulf is likely to face more hurricanes of the severity of Harvey, which had a massive impact on the Texas coast, with significant flooding and wind damage affecting industry and homes alike Photo: Wikipedia
perators of bulk liquids terminals in the US Gulf Coast region are well accustomed to dealing with hurricanes, keeping a close eye on weather patterns from June to November and standing ready to put in place practised shutdowns in good time ahead of any major weather event. But the winter storms that struck much of North America during mid-February this year were something else. In place of high winds and torrential rain, terminals had to deal with freezing temperatures and power blackouts. Those terminal operators were not alone; winter storm Uri caused blackouts for nearly 10mn people in the US and Mexico, the largest such disruption in the US since 2003, and resulting damages estimated at $195bn or more. Also badly affected were US refiners, with throughput in the US Gulf Coast region falling to 3.9mn b/d, lower than the level recorded during Hurricane Harvey in 2017. Indeed, the US Department of Energy estimates that 20% of US refining capacity was put out of action as a result of external power
22 Petroleum Review | August 2021
outages, constrained natural gas supplies, logistical disruptions or damage to process units caused by sub-zero temperatures. Those storms, says Odfjell Terminals, ‘caused widespread impacts throughout the entire Houston petrochemical supply chain’. As an illustration of the extent of the disruption, Navigator Holdings, which has a 50% shareholding in the Morgan’s Point ethylene export terminal alongside Enterprise Product Partners, notes that the freeze shut down 80% of all US ethylene production and that virtually all the production plants in Texas and Louisiana had to ‘abruptly cease operations’ as they were not designed for sub-zero temperatures and lacked winterisation contingencies. Inventories were rapidly drawn down and what little production remained was going directly into domestic downstream processing; terminal export volumes were near capacity in January but fell off dramatically in February and March. While operations returned to normal within weeks, it took until June before export volumes
Weather forecast The severity of the climatic conditions in the US Gulf area during February has been identified as a symptom of global climate change. Arctic air has been warming twice as fast as the global average, disrupting long-established patterns and shifting the jet stream, allowing the polar vortex to extend its range southwards. If that is true, then more such extreme weather events are likely in years to come and operators of industrial facilities, including storage terminals, will need to learn from this year’s storms and be prepared. That is certainly the case with hurricanes, which arrive each year in the Caribbean and regularly impact facilities in the US Gulf. Indeed, so regular are they that most terminal operators conduct routine drills and exercises so that they are ready to respond to the possible contingencies. According to the International Liquid Terminal Association (ILTA), which represents the sector, its members work with federal, state and local first responders and government officials to promote safety before, during and after extreme storm events. Post-storm checklists help assess potential damage, alert local, state and federal authorities of damage, and allow operations to resume. If damage is severe, alternative sources can be assigned. The ILTA notes that the National Oceanic and Atmospheric Administration’s (NOAA) Climate Prediction Center has forecast a 60% chance of a more active than normal Atlantic hurricane season this year, having already announced an increase in what it deems an ‘average’ hurricane season, with the number rising from six to seven. This forecast suggests that the US Gulf is likely to face more hurricanes of the severity of
