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PERMIAN TAKEAWAY Can trucks and trains fill the void?
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Permian plugged Who would be an oilman, or oil person, I guess one should say? As global benchmark prices have recovered US producers have piled back into the business of extracting oil from shale plays in the hope of making real money after years of depressed prices. For many, the good times are back. But in the hottest play in town – the Texas Permian Basin – roughnecks have struck hard rock in the form of insufficient takeaway capacity. The dynamics of growing Permian production and a lack of pipelines have pushed the WTI Midland-to-Houston discount to more than US$15 a barrel. The signs are that it will not return to single digits until late next year. As our feature on p29 of this issue shows, rail and truck takeaway will likely have little impact on the spread for various reasons: not enough trucks or drivers, Midland to Houston is a long schlepp by road, and the region has only one working rail transloading terminal. This Permian glut will remain a problem until a wave of new pipelines come on stream in late 2019. Three large scale takeaway pipelines are all set to come online in Q4 2019 adding a total 1.81 MMbpd of takeaway capacity. While Permian production will inevitably ramp up with the addition of new takeaways, production is not expected to keep pace with the increase in capacity after that time. One reason, reckons analyst firm East Daley Capital, is the sheer number of well completions it would take to ramp up production as quickly as capacity is increasing. So Permian producers face a lengthy wait and will have to continue selling at a substantial discount for now. That should change from 2020 onwards. But what is bad news for E&P companies is good news for midstreamers who can maximise fee revenue in the scramble for whatever capacity remains. But they too need to be savvy because pipeline constraints will not last forever, and they might just face overbuild further down the line.
Neil Madden EDITOR
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Published four times a year Storage Terminals Magazine is the premier business magazine for executives, technicians, engineers and all professionals working in the global bulk liquids storage industry. With its high level content, industry expert contributions and unparalleled global news coverage, Storage Terminals Magazine gives you the information you need to make your business run smoother, safer and more profitably. So whether you want an update on the effects of oil price movements on demand for storage capacity, technical articles on how to ensure your facility runs as efficiently as possible, or the latest updates on regulation and environmental compliance, you will find all you need in Storage Terminals Magazine. Enjoy!
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CONTENTS
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29
Shale's best performers
23
Permian takeaway
Contents 12
World terminal news
All the news from the global terminal sector
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49 61
New crude terminal
Permian takeaway
69
Aviation fuelling systems
Two case studies from Honeywell and Varec on how fuelling systems keep the planes flying
Crude oil output in the Permian basin is struggling to get to market. Can trucks and trains come to the rescue?
76
Tank coatings
36 Technical tips How to blast with abrasives
80
Loading arms
84
Technology & automation
40
Financial performance
How are midstream MLPs faring in the current market?
49 Shale & unconventional resources
APC has set a benchmark for industrial coatings in the bulk storage of chemicals
The key variables to keep in mind before designing or building your next loading arm system
What’s new in process industry technology, equipment & automation
Latest news from shale, tar sand and other unconventional plays
86 Swift joins Scorpion2 New ultrasonic testing instrument in the Silverwing product line.
55 Terminal Development A new ethylene export facility is slated for Texas
99 ILTA review A review of this year's ILTA
57 Midstream deals Occidental is to sell major midstream operations to specialist firms
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Upcoming events
Conferences and exhibitions for the global storage business
Process safety
CSB’s investigation into the Arkema fire highlights important lessons on how to prepare for flooding
Flood preparation
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WORLD TERMINAL NEWS
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World
Terminal NEWS
SEMPRA selects BECHTEL
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empra LNG & Midstream’s wholly owned affiliate, Port Arthur LNG, has awarded the engineering, procurement, construction and commissioning (EPC) contract for the Port Arthur liquefaction project to Betchel. Bechtel will perform the engineering, execution planning and related activities necessary to prepare and finalise a lump-sum EPC contract for the Jefferson County, Texas, project in accordance with the planned development schedule. The proposed Port Arthur liquefaction project is designed to include two natural gas liquefaction trains to enable the long-term sale of approximately 11 Mtpa of LNG; feed gas pre-treatment facilities; natural gas liquids and refrigerant storage; up to three LNG storage tanks; two marine berths and associated facilities. “Port Arthur LNG is one of three major LNG export projects that are an important part of our growth platform,” said Joseph Householder, president and COO of Sempra Energy. “Bechtel brings
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to our project outstanding management experience and commitment to safety we expect on all of our projects.” “We are confident Bechtel’s construction and management team will help us achieve a world-class LNG export project at Port Arthur and meet the global demand for LNG,” said Octavio Simoes, president of Sempra LNG & Midstream. “We look forward to partnering with Sempra to develop the Port Arthur LNG facility, from planning through project startup,” added Darren Mort, Bechtel’s
LNG general manager. “We are honoured that Sempra has entrusted us with the opportunity to play a key role in helping them deliver energy to customers across the globe.” Development of the Port Arthur liquefaction project is contingent on completing the required commercial agreements (including a definitive EPC contract), securing all necessary permits and approvals, obtaining financing and incentives, reaching a final investment decision and other factors associated with the investment.
Port Arthur LNG is one of three major LNG export projects that are an important part of Sempra’s growth platform
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CALL TO SUPPORT APPALACHIAN ETHANE HUB
Artist’s rendering of STEPS
State legislators from southwestern Pennsylvania called on congress to support the construction of an ethane storage hub in the Appalachian region.
RANGELAND STARTS STEPS Rangeland Energy III has commenced operations at its STEPS terminal located in Corpus Christi, Texas.
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angeland also announced that the company will start loading diesel in rail tank cars for a leading customer in the refined products industry. The diesel will be delivered to a third party with terminals in Mexico using the rail system of Kansas City Southern Railways. “Rangeland will be facilitating the transport of diesel to different destinations in Mexico for an important member of the petroleum industry,” said president Christopher Keene. “This is our first client in the STEPS terminal. As we continue to develop our terminal, we will keep in touch with other important players in the Mexican market, refineries and oil companies, and offer STEPS product delivery and reception services.” STEPS is an integrated hydrocarbon logistics system that receives and stores refined products, LPG and other hydrocarbons at a central terminal and transports them to terminals mainly in Mexico. During the initial phase of the project, refined products and LPG will be
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received at the Corpus Christi terminal and then shipped to third party terminals in Mexico. In future phases, maritime terminals in Corpus Christi and in Mexico will be added to the system, along with the infrastructure to accommodate additional products including crude oil, condensates and fuel oil. The STEPS project is expanded using the experience of Rangeland developing infrastructure and similar projects in areas such as the Bakken Shale and Permian Basin. The Corpus Christi terminal is located along the Kansas City Southern Railroad, 8km from the Port of Corpus Christi and the refineries of Valero, CITGO and Flint Hills. Products that enter will initially be delivered by trucktank or rail tank car, followed in the future by pipelines and barges. Refined products and LPG will be delivered outside the STEPS terminal mainly by rail tank, but the terminal will eventually be able to connect to pipelines and maritime terminals in the future.
State Representative Jim Christiana, and state Senator Camera Bartolotta spoke in favour of the proposed storage hub at a news conference in Harrisburg. Bartolotta introduced a Senate Resolution at the beginning of June that encourages Congress to pass several bills to help establish the hub and take advantage of the region’s deposits of natural gas, which a re rich in ethane. “Pennsylvania is one of the nation’s leading states in terms of natural gas production, manufacturing and the petrochemical industry,” she said. “Building an ethane storage and distribution hub would help our state capitalise on its existing infrastructure and natural resources, giving us an opportunity to create more quality jobs and drive business growth throughout the region. In order to capitalise fully on the opportunities that are in front of us, we need to take strategic steps to ensure the responsible and sustainable development of our energy resources.” An ethane storage hub could be used for the storage and distribution of ethane feedstock to petrochemical facilities such as the one being built by Shell Chemical Appalachia LLC in Beaver County, according to Abby Foster, president of the Pennsylvania Chemical Industry Council. Construction of Shell Chemical’s new US$6 billion ethane facility is currently in progress The facility is situated on the Ohio River with a view toward using ethane from the Marcellus Shale and processing it into ethylene and, finally, polyethylene pellets for the plastics industry.
Senator Camera Bartolotta spoke in favour of the proposed ethane storage hub
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IENOVA TO BUILD LIQUID FUELS PROJECT IN MEXICO Sempra Energy’s Mexican subsidiary, Infraestructura Energética Nova (IEnova), has been awarded a 20-year contract by the Topolobampo Port Administration in Mexico for the construction and operation of a marine terminal for the receipt and storage of hydrocarbons, petroleum, petrochemicals and other liquids. With a projected investment of approximately US$150 million, the first phase of the new liquid fuels terminal will have a storage capacity of 1 million barrels of fuel, including gasoline and diesel. Operations are expected to commence in the fourth quarter of 2020. IEnova will be responsible for the full implementation of the project, including obtaining customer contracts, permits, engineering, procurement, construction, financing, operation and maintenance. “The Topolobampo project will facilitate access to additional international fuel supplies and help meet growing demand in Mexico,” said Joseph Householder, president and COO of Sempra Energy. IEnova will be responsible for the development of the project, including financing, obtaining customer contracts and permits, engineering, procurement and construction, as well as maintenance and operations. Carlos Ruiz Sacristán, chairman and CEO of IEnova, said that the new terminal will increase Sinaloa’s access to fuel supply sources, contribute to the region’s energy security, and foster competitive prices for the end consumer. “This project demonstrates IEnova´s commitment to the development of strategic and necessary energy infrastructure in Mexico. It represents our fifth terminal of this kind in the country, and it is part of the strategic plan to diversify our asset portfolio that we have undertaken in the past few years,” he added.
URSA MONITORING TAKES OFF
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eospatial company Ursa has formally released its fully global oil storage monitoring solution. Ursa Global Oil Storage Monitoring provides oil storage monitoring around the globe for users such as hedge funds, commodities traders, big banks, and oil companies. It uses radar satellite imagery to measure over 3.6 billion barrels of crude oil storage in nearly 10,000 tanks on a weekly basis. Ursa has also added North American oil storage monitoring as part of the expanded global service. The company also announced that it is partnering with S&P Global Platts to incorporate Ursa’s storage monitoring capability into Platts Analytics products and services. The companies also plan to develop jointly new products and services for the commodity and energy markets. “We constantly seek to improve the quality and accuracy of S&P Global Platts Analytics supply and demand outlooks,” said Chris Midgley, head of analytics content, S&P Global Platts. “Ursa’s Global Oil Storage Monitoring helps validate our analysis and enables us to respond closer to real time. Partnering with Ursa will enable us to consider innovative ways to leverage satellite data to further advance our market insight and support
customers’ strategic decisions.” “Ursa’s expanded global oil storage offering connects our customers with the largest, most reliable source of geospatial data in the business plus the analysis and tools to put that intelligence to the greatest use for their businesses,” said Adam Maher, CEO of Ursa. “Working with S&P Global Platts, we can put that capability to work for a much larger universe who will also benefit from Platts’ extensive expertise and ability to turn that data into meaningful insights for users in finance, oil and energy.” Ursa Global Oil Storage Monitoring aggregates and analyses data from the industry’s largest network of radar satellite providers to provide commercial customers with alternative sources of market intelligence and competitive advantage. Coverage includes more than 340 oil terminals including 119 key refineries, and the 15 largest refineries in the world. The product provides weekly direct measurements for high accuracy and reliability and the radar satellitebased collection method is unhindered by weather. Strict QA processes incorporate both automation and human analysis and Ursa also supports data use by regularly sharing analysis, insights, and education with users.
Corpus approves $217m investment programme Port of Corpus Christi has approved a US$217 million financing programme for major capital improvements. The financing will allow the port to continue plans to develop more terminals, rail facilities, and making channel improvements. The plans include the deepening and widening of the Corpus Christi Ship Channel. Currently at a depth of 45ft, the channel will be dredged to 54ft to accommodate Suezmax and larger vessels, and widened to 530ft to allow for two-way traffic flows, positioning the Port of Corpus Christi as the deepest draft navigation port in the US Gulf. These
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enhancements are designed to handle the growing export volumes of US crude and natural gas. News of the bond approval comes on the heels of another major announcement in June when the US Army Corps of Engineers (USACE) included nearly $23 million in its FY18 Work Plan for the Corpus Christi Channel Improvement Project. The $335 million project has now received over $138 million in Federal and port contributed funds, with dredging operations scheduled to commence later this year.
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The new terminal is expected to reduce Andeavor’s cost to import fuels into Baja California supporting its network of ARCO branded stations
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nder the terms of an agreement with CFEnergía, a subsidiary of CFE, Andeavor will sign a long-term lease for the land and will construct and operate the facility, for a total investment of approximately US$100 million. The infrastructure is expected to reduce Andeavor’s cost to import fuels directly into Baja California supporting its growing network of ARCO branded stations and other customers in Northwest Mexico. “The expansion of our branded business in Mexico allows us to extend our integrated West Coast value chain into this attractive and high growth
ANDEAVOR TO DEVELOP refined PRODUCTS TERMINAL Andeavor has announced plans to build a refined products terminal at the Rosarito storage facility of Comisión Federal de Electricidad (CFE), in the state of Baja California, Mexico. geography,” said Greg Goff, chairman, president and CEO. “This logistics project will strengthen Andeavor’s ability to deliver gasoline and diesel cost effectively to our customers directly from our
refineries on the West Coast.” Andeavor expects the redevelopment of the Rosarito facility to be complete in about two years, pending required regulatory approvals and permits.
TALLGRASS PURSUES CUSHING-ST JAMES PIPELINE Tallgrass Energy plans to develop a new crude oil pipeline from Cushing, OK, to the St James, LA, refining complex, as well as a separate new export-capable liquids terminal located near the mouth of the Mississippi River. The proposed Seahorse Pipeline is expected to be 30ins in diameter and approximately 700 miles long, with the capacity to transport up to 800,000 barrels of crude oil per day from Cushing to the Louisiana Gulf Coast. The pipeline will operate as a common grade batch system that, along with Tallgrass’ Pony Express Pipeline, will ensure domestic refiners and international markets have access to ‘clean’ barrels from five different production basins. The proposed new terminal, Plaquemines Liquids Terminal (PLT), is a joint development
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project with Drexel Hamilton Infrastructure Partners and is being structured as a public-private partnership (P3) in concert with the Plaquemines Port & Harbor Terminal District (PPHTD), a Louisiana state agency. The terminal is expected to be fully operational in Q2 2020 and is permitted for up to 20 million barrels of storage. PLT will have the ability to load and unload post-panamax vessels (each with a capacity of about 1 million barrels) and barges on its multiple deepwater docks. Tallgrass anticipates building a separate offshore pipeline extension that would give PLT the added capability of loading VLCCs by Q3 2021. “The Seahorse Pipeline and Plaquemines Liquids Terminal projects build on our strategy to provide diversity of supply and greater market optionality to our customers,” said Tallgrass
president and CEO David G Dehaemers Jr. “These projects provide highly desired takeaway capacity from Cushing to the St James refining complex, providing interconnectivity to more than 2.5 million bpd of refining capacity and access to international markets.” “Our customers can rest comfortably knowing that their barrels will be transported on Seahorse in common grade batches from Pony Express direct-connected supply basins and Cushing-sourced supplies, which will protect the integrity and help preserve the value of their product all the way to Seahorse’s St James and export terminal destinations,” added COO Bill Moler. “From there, our customers will be able to access international refining markets.”
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Enterprise’s new gulf coast facility come on the heel of a second successful loading of a VLCC at the Texas City terminal
ENTERPRISE PLANS NEW CRUDE TERMINAL
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nterprise Products Partners is to develop an offshore crude oil export terminal off the Texas Gulf Coast. The terminal would be capable of fully loading VLCCs, which have capacities of approximately 2 million barrels and provide the most efficient and cost-effective solution to export crude oil to the largest international markets in Asia and Europe. “On the heels of our second successful
loading of a VLCC at the Texas City terminal, we are now planning to expand our capabilities to load crude oil faster and more cost efficiently without the need for lightering vessels,” said Jim Teague, CEO of Enterprise’s general partner. Enterprise has started front-end engineering and design (FEED) and preparing applications for regulatory permitting. Based on initial designs, the project could include approximately 80 miles of 42ins diameter pipeline to an
PBF EXPANDS EAST COAST PRESENCE PBF Logistics is buying a further series of East Coast storage assets, following the 2016 acquisition of East Coast terminals from Plains All American. The firm said it had entered into an agreement with Crown Point International, LLC, formerly known as Axeon Specialty Products LLC (collectively ‘Crown Point), to purchase its wholly-owned subsidiary, CPI Operations LLC, whose assets include a storage facility and other idled assets located on the Delaware River near Paulsboro, New Jersey. The East Coast Storage Assets include a storage facility with
approximately four million barrels of multi-use capacity (of which over 50 percent is heated storage), an Aframax-capable marine facility, a rail facility, a truck terminal, equipment, contracts and other assets. With close proximity to the Paulsboro refinery, the assets are expected to provide synergy opportunities with the partnership’s sponsor, PBF Energy. The total consideration for the assets is $107 million, which is comprised of an initial payment at closing of $75 million with the balance being payable one year after closing. Following closing, PBF expects to invest
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offshore terminal capable of loading and exporting crude oil at approximately 85,000 barrels per hour. “Capital and infrastructure to support our project would be solely provided by private capital and would not be reliant nor contingent on state or federal government agency financial support or infrastructure development. We believe this would enable us to deliver this project in a timely manner once permits are granted and the project is underwritten,” stated Teague.
approximately $8.5 million over the next two years in projects to enhance facility capabilities and expects to achieve runrate EBITDA of $15.5 million at the end of 2020. The transaction is expected to close in the fourth quarter subject to customary regulatory and other approvals. Commenting on the acquisition, Matt Lucey, PBF Logistics executive vice president, said: “The acquisition of the East Coast storage assets will be immediately accretive and will position the partnership for the upcoming International Maritime Organization’s low-sulphur fuel specification change in 2020 by adding significant marineaccessible storage assets to our portfolio that are capable of handling a range of material from finished petroleum products and residual fuel oils to heavy, high-sulphur refinery feedstocks.”
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MAGELLAN, LBC TO EXPAND SEABROOK Magellan Midstream Partners and LBC Tank Terminals have announced plans to increase Seabrook Logistics’ crude oil and condensate storage and dock capabilities in the Houston Gulf Coast area. Seabrook Logistics, owned 50/50 by subsidiaries of Magellan and LBC, plans to construct nearly 700,000 barrels (111,000 cbm) of additional crude oil and condensate storage in Seabrook as well as a new Suezmax dock with up to a 14m draught and approximately 400,000 bpd of dock capacity. Following completion of the announced expansion, Seabrook
Logistics will own approximately 490,000 cbm of storage, deepwater access through an Aframax dock and a Suezmax dock and connectivity to Magellan’s Houston crude oil distribution system, providing it access to multiple inbound crude oil pipelines. This latest expansion is estimated to cost approximately US$120 million, shared equally by Magellan and LBC,
and is expected to be operational by late 2019, subject to receipt of all permits and approvals. If the facility were fully built out, Seabrook Logistics would have up to 870,000 cbm of storage capacity and a total dock capacity of at least 700,000 bpd, with options to further increase dock throughput capacity.
S T O LT H A V E N H O L D S S A F E T Y D A Y S Stolthaven Terminals has held several Safety Days at its terminals around the world in a drive to improve and reinforce safety culture in the company. A second safety day will be held later in the year. “Everyone should have the expectation that they can return home from work safely, without injury or incident,” the company said. The company noted that risks in day-today life become part of ‘normal’ life and are taken for granted. Complacency can then
become the risk. When Stolthaven held its first global, co-ordinated safety day, the messages were to the point and lessons were learned. The initial focus included promotion of safety awareness for employees and their responsibility to their colleagues; engaging employees to focus on safety as a ‘time out’ from their normal duties; and highlighting local issues specific to the individual terminals. Among the day’s events, Stolthaven Moerdijk, in the Netherlands, incorporated the safety day into its team event day, delivering team building with an external facilitator. In the UK, Stolthaven Dagenham focused on its suppliers providing background information.
This helped employees to understand exactly why we wear PPE, not just that we have to wear it. There was also a focus on how safetycritical components work – and why no one should just walk past if they notice that a component is damaged. Stolthaven Houston explored risk awareness and how it impacts on everyone, personally and professionally. The terminal’s safety day started with video and leadership messages, which were followed by group presentations, department showcases on how they reduce risks for the terminal, and finally a celebration of service awards.
Stolthaven Houston explored risk awareness
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PHILLIPS 66 EXPANDS SWEENY HUB Phillips 66 is proceeding with an expansion of the company’s Sweeny Hub.
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he project includes the construction of two 150,000 bpd NGL fractionators in Old Ocean, Texas, additional NGL storage capacity, and associated pipeline infrastructure. The project is expected to cost up to US$1.5 billion and begin commercial operations in late 2020. “We are pleased to move forward with the Sweeny Hub expansion, a key part of our Midstream growth strategy that optimises our integrated NGL value chain,” said Greg Garland, chairman and CEO. “The Sweeny Hub is positioned
to provide fractionation capacity for rapidly growing Permian Basin NGL production and access to US Gulf Coast petrochemical, fuels and LPG export markets.” Supply agreements have been secured for Y-grade NGL feedstock, including an agreement with DCP Midstream which has an option to acquire up to a 30 percent ownership interest in the new fractionators. “The combination of DCP’s gathering, processing and pipeline services with Phillips 66’s fractionation, storage and export capabilities offers Permian producers a full-service wellhead to market solution,” said Garland.
The Sweeny Hub currently has 100,000 bpd of fractionation capacity through Phillips 66 Partners’ Sweeny Fractionator One, 200,000 bpd of LPG export capability, and access to 9 million barrels of gross NGL storage capacity at the nearby Phillips 66 Partners’ Clemens Caverns. On completion of the expansion, the Sweeny Hub will have 400,000 bpd of NGL fractionation capacity and access to 15 million barrels of total storage capacity.
The Sweeny expansion could cost up to $1.5bn
On completion, the expanded Sweeny Hub will have 400,000 bpd of NGL fractionation capacity and access to 15 million barrels of total storage
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