April / May 2020 | Volume 16 | Issue 02
TOWARDS TANK TOPS
STARTING THE YEAR WITH A BANG
AWARD WINNERS 2020
The one thing storage operators needn’t worry about for the rest of the year is whether their tanks will be filled
Geopolitical experts take a closer look at the biggest market disruptions and uncertainties to happen in a generation
View the winners & photographs from this year’s Global Tank Storage Awards
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UP FRONT CONTENTS
CONTENTS April/May 2020 | Volume 16 | Issue 02 UP FRONT 04 Contributors
48
06 Comment
TERMINAL NEWS 08 Africa & Middle East 10 The Americas 22 Europe 25 Incident report
TANK STORAGE AWARDS 27 Global Tank Storage Award Winners 2020
34
PROFILES 42 Serving Pakistan’s energy needs 44 GP Global: unlocking market potential with storage assets
MARKET ANALYSIS
38
34 Storage markets shocked into new fundamentals 38 Towards tank tops 40 Decarbonising the energy system 46 Indonesia back in the oil & gas race
STOCEXPO 2020 REVIEW 48 A time for change
42
27
44
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UP FRONT CONTENTS
54
Photo: Koole.com/fotopaulmartens.nl
TECHNICAL FEATURES 54 Technical news
66
60 Early leak detection for cost savings 62 Future-proofing loading arms 64 A single source of truth for oil & gas 66 Ensuring rapid response time for effective spill control 69 Preparedness against cyber-attacks 73 Cybersecurity: a growing concern for maritime 76 Commoditising a storage asset
73
EVENTS 50 Defining the industry’s role: photos from this year’s IP Week 81 Upcoming events
AT THE BACK 80 Advertisers’ index 80 Social storage: Most viewed posts this month
76 62
50
PAGE 02
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UP FRONT CONTRIBUTORS
CONTRIBUTORS April/May 2020 | Volume 16 | Issue 02
PUBLISHER
SUBSCRIPTION RATES
Margaret Dunn +44 (0)20 3551 5721 margaret@tankstoragemag.com
A one-year, 7-issue subscription costs €210. Individual back issues can be purchased at a cost of €45 each.
INTERNATIONAL SALES MANAGER
CONNECT WITH US
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Tank Storage Magazine
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CONTACT
MARKETING MANAGER Lisa Mattes +44 (0)20 3196 4394 lisa.mattes@easyfairs.com SENIOR SALES EXECUTIVE Baron Bray-Sackey +44 (0)20 3196 4387 baron.braysackey@easyfairs.com CEO EASYFAIRS UK & GLOBAL
April / May 2020 | Volume 16 | Issue 02
TOWARDS TANK TOPS
STARTING THE YEAR WITH A BANG
AWARD WINNERS 2020
The one thing storage operators needn’t worry about for the rest of the year is whether their tanks will be filled
Geopolitical experts take a closer look at the biggest market disruptions and uncertainties to happen in a generation
View the winners & photographs from this year’s Global Tank Storage Awards
T +44 (0)20 3196 4300 F +44 (0) 20 8892 1929 margaret@tankstoragemag.com www.tankstoragemag.com Easyfairs 2nd Floor, Regal House 70 London Road Twickenham TW1 3QS United Kingdom
Established 2005. Trusted. Valued. Influential.
Front Cover Courtesy: CST
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Matt Benyon +44 (0)20 3196 4310 matt.benyon@easyfairs.com model in sub-saharan africa. introducing the independent storage Oiltanking matola explains how it is
as it explores gas storage. is ensuring greater energy security The sharjah national oil corporation
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IN A CAPTIVE MARKET AN INTERNATIONAL CONCEPT
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Aug / Sep 2019 | Volume 15 | Issue 04
Tank Storage Magazine, (ISSN 1750-841X) is published seven times a year (in February, March, May, August, September, October and November) by Easyfairs UK Ltd, 2nd Floor, Regal House, 70 London Road, Twickenham, TW1 3QS, UK. The US annual subscription price is $243. Airfreight and mailing in the USA by agent named WN Shipping USA, 156-15, 146th Avenue, 2nd Floor, Jamaica, NY 11434, USA. Periodicals postage paid at Jamaica NY 11431. US Postmaster: Send address changes to Tank Storage Magazine, WN Shipping USA, 156-15, 146th Avenue, 2nd Floor, Jamaica, NY 11434, USA. Subscription records are maintained at Easyfairs UK Ltd, 2nd Floor, Regal House, 70 London Road, Twickenham, TW1 3QS, UK.
PAGE 04
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UP FRONT COMMENT
WHAT A DIFFERENCE AN ISSUE MAKES It’s pretty incredible to think how much has changed in the time between printing the last edition of the magazine in February and this one. AFTER years of worrying about low storage rental rates, underutilized tank capacity and stiff competition between storage operators – everything has changed. Now a new super contango is on the horizon and discussions have turned to when, not if, storage tanks will be at full capacity. The coronavirus pandemic has completely crushed demand for fuel at the same time as the Saudi-Russia oil price war has rocketed supplies. We now have an unprecedented oil surplus that is stretching storage capacity to its limits. At the time of writing, jet fuel demand had dropped by 60% with most major airlines grounded and the situation still rapidly evolving. Traders are predicting that oil demand could fall at the fastest pace on record as entire cities to go lockdown. This demand could fall by a least 5 million b/d in April – the equivalent of 5% of global demand as the world tries to slow the spread of the virus. On page 38 of this edition, JBC Energy takes an in-depth the look at the impact Covid-19 is having on the market – an article that is definitely worth a read. The question on everyone’s lips now, is how long will all this last? Also within this edition is a reminder of a few of the events that took place before the coronavirus pandemic escalated to the containment phase in
PAGE 06
Europe. StocExpo and the Global Tank Storage Awards were held in March and despite the challenging circumstances, it was a great opportunity to celebrate companies’ achievements in innovation, sustainability and safety. You can view the full list of winners on page 31. It’s going to be several months before the industry is able to get together again, so in the meantime Tank Storage Magazine will do our best to keep you updated. The printed edition of the magazine is still being posted worldwide as usual and you can also access the digital issue online. Our website is updated daily and by signing up at www.tankstoragemag.com we will send you a free newsletter every week. Our thoughts are with everyone who has been impacted by Covid-19. I hope all our friends and colleagues remain safe and well, With very best wishes,
TERMINAL NEWS AFRICA & MIDDLE EAST
TERMINAL NEWS: AFRICA & MIDDLE EAST UAE
KHALIFA PORT TO HOUSE THE FIRST COMMERCIAL BULK LIQUID STORAGE TERMINAL IN ABU DHABI Abu Dhabi Ports has signed a strategic agreement with Saudi Arabia based Arabian Chemical Terminals (ACT) that will see the development of the emirate’s first greenfield commercial bulk liquid storage terminal at its flagship, deep-water Khalifa Port. Further diversifying Abu Dhabi Ports’ portfolio with enhanced capabilities in the handling of liquid bulk products and gases, the project will benefit existing customers and attract new customers in the region seeking liquid bulk storage. Serving as the first terminal to be developed by ACT in the UAE, the facility’s
strategic location and advanced facilities, which will deliver world-class logistics and industrial services, is expected to appeal to ACT’s current clientele that includes some of the world’s largest oil and gas firms. Both new and existing customers will be able to take advantage of Khalifa Port’s strategic location combined with its improved maritime, logistics, and industrial capabilities The agreement for the bulk liquid terminal, which will be developed on a 50,000 square metre land plot adjacent to a 16 metre deep-water quay access, with option for an additional 150,000 square metres of land was signed by Captain Mohamed Juma Al Shamisi, Group CEO of Abu Dhabi Ports and Rakan Alireza, Managing Director of Arabian Chemical Terminals Ltd and Deputy Managing Director of Reza Investment Company Ltd. To maintain business continuity while ensuring adequate prevention measures against the spread of Covid 19 were in
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place, the signing of the agreement was conducted remotely through Abu Dhabi Ports’ digital capabilities. As per the agreement, the project is set to be completed in two phases with the first stage slated for commissioning in the second half of 2022 entailing the deployment of 44 storage tanks sized 1250 and 3000 tonnes each. The terminal’s second phase will commence following expansion of the surrounding area and will consist of a number of larger industrial storage tanks and spheres. Upon completion, the facility will be able to handle liquid bulk products that include vegetable oils and oleochemicals, bitumen, liquid gases, petrochemical downstream products, hydrocarbons and fuels, as well as non-liquid gases, speciality and niche chemicals. Broadening the range of capabilities and value offering for Abu Dhabi Ports’ clients, particularly those in the oil and gas and manufacturing segments, the new bulk liquid storage terminal at Khalifa Port will provide customers with the opportunity to reduce their costs of outsourcing their liquid and gas expenditures. Both new and existing customers will be able to take advantage of Khalifa Port’s strategic location combined with its improved maritime, logistics, and industrial capabilities. Captain Mohamed Juma Al Shamisi, Group CEO of Abu Dhabi Ports, says: ‘Providing technology-rich, end-to-end logistics solutions for customers of all sizes and industries is at the core of Abu Dhabi Ports’ diversification strategy. ‘The commitment to a 50-year lease by our Saudi Arabia based partner ACT serves not only as an example of strengthening of economic ties between Saudi Arabia and the UAE, but also highlights the cooperative spirit shared by the two nations to drive future trade growth. Working closely with ACT, we are pleased to now offer a comprehensive suite of integrated logistics solutions that are powered by the most advanced technologies available in the market.
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PAGE 08
Rakan Alireza, Managing Director of Arabian Chemical Terminals and Deputy Managing Director of Reza Investment Company says: ‘We’re excited to be spearheading the development of our first commercial tank farm in the UAE, here in Abu Dhabi, as we previously pioneered in KSA.
TERMINAL NEWS AFRICA & MIDDLE EAST ’Located between Abu Dhabi, Ruwais, and Dubai industries, the new liquid terminal will not only prosper as a result of its strategic location, but will be further bolstered by Khalifa Port’s multimodal connectivity with access to the sea and UAE’s extensive road and future GCC railway network.
UAE
BPGIC TO SUBSTANTIALLY INCREASE STORAGE CAPACITY Brooge Petroleum and Gas Investment Company has signed a land lease agreement with Fujairah Oil Industrial Zone to more than triple storage capacity at its terminal. The agreement is for a strategically located prime plot of land with a total area of 450,000 m2 on which the company plans to develop its Phase III facility. This will add up to three and a half times the size of BPGIC’s projected operations post-Phase II, which will be one million m3. BPGIC intends to use the land to further increase its capacity for storage and refinery services by developing additional
storage and refining capacity using the same technology, technical features and tank diversification as used in Phase I and Phase II. BPGIC’s initial studies indicate that the land could house up to approximately 3.5 million m3 of storage tanks and, potentially, a refinery with a capacity of up to 180,000 barrels per day. BPGIC is in discussions with potential collaborating on the Phase III facility and has a signed memorandum of understanding in place. BPIGC believes that once complete, it will become the largest oil storage and service provider in Fujairah. Nicolaas Paardenkooper, CEO of Brooge Holdings and BPGIC, says: ‘We are thrilled to announce that we have secured a lease for this strategic and sizeable plot of land in Fujairah Oil Industry Zone, which can accommodate additional capacity of more than 3.5 times our facilities currently operating and under construction. ‘When the Phase III expansion is completed, we expect to become the largest oil storage and service provider in the increasingly important FOIZ and Port of Fujairah.’ BPGIC will require additional financing to fund the development of the Phase III facilities and plans to start discussions with regards to the financial structure with potential financiers based on the outcome of the final studies in the near future.
Bahrain
BAHRAIN LNG COMPLETES MIDDLE EAST’S FIRST LNG TERMINAL Bahrain LNG has completed mechanical construction and commissioning of the first LNG receiving and regasification terminal in the Middle East. The terminal, in the Kingdom of Bahrain, comprises a floating storage unit, an offshore LNG receiving jetty and breakwater, an adjacent regasification platform, subsea gas pipelines from the platform to shore, an onshore gas receiving facility, and on onshore nitrogen production facility. His Excellency Shaikh Mohamed bin Khalifa Al-Khalifa, minister of oil of the Kingdom of Bahrain, says: ‘The successful completion of the terminal is a crucial milestone for this project, which is of strategic importance to the energy sector of the Kingdom of Bahrain. ‘We look forward to the upcoming commencement of commercial operations in order to secure regasification services to the Kingdom of Bahrain.’
By the Tank Industry, for the Tank Industry
EEMUA’s role in the tank storage industry is to improve and promote safe, efficient use of heavy industrial engineering equipment and materials – to benefit people, the environment and business. For more than 75 years EEMUA has captured and shared knowledge with Members across engineering disciplines, geographies, generations, technologies, industries and times of change. EEMUA’s collaborative approach has proven important as new industries face challenges that traditional industries have already mastered. Safety and efficiency knowhow contributed ‘by the industry, for the industry’ is shared as practical aids for engineers in their work to make the environment and everyone’s future safer and more prosperous: • Checklists and Information Sheets – for specialist engineering tasks • Industry-recognised guides and handbooks – EEMUA Publication 159: Above ground flat bottomed storage tanks – a guide to inspection, maintenance and repair • Training Choices – certified to satisfy professional bodies, regulators and professional development, flexible to fit work schedules on-site and off-site A non-profit, Corporate Membership organisation, EEMUA’s policies and activities are driven by Members. Join EEMUA and share the engineering knowhow that will drive safety and prosperity throughout the 21st Century. WWW.EEMUA.ORG Contact membership@eemua.org or call on +44 (0)20 7488 0801
PAGE 09
TERMINAL NEWS THE AMERICAS
TERMINAL NEWS: THE AMERICAS Canada
CONSTRUCTION WORK PROGRESSES WITH TRANS MOUNTAIN EXPANSION PROJECT Pipe and terminal construction work is well underway for the Trans Mountain expansion project, with construction due to be underway across the entire line by the end of 2020. Work is underway with pipe in the ground and terminal construction in Alberta, and significant work is ongoing at the Burnaby and Westridge marine terminals in British Columbia. The Trans Mountain board of directors recently approved a project cost estimate of $12.6 billion to bring it into service by the end of 2022. To date, the company has spent $2.5 billion in respect to the project, which includes the impact of delays and the resulting additional regulatory process. It is anticipated that an additional $8.4 billion will be spent to complete the project, plus $1.7 billion of financial carrying costs. The company says that this estimated cost of the expansion reflects today’s realities of enhanced environmental protections, security, quality assurance
and indigenous including, and is based on reasonable assumptions. The company’s projected earnings before interest, taxes, depreciation and amortisation (EBITDA) are expected to be at least $1.5 billion in the first year of the Project’s operation and expected to grow annually. These projections are underpinned by long-term contractual commitments covering 80% of the system’s 890,000 barrels a day of capacity. Ian Anderson, president and CEO of Trans Mountain, says: ‘Today’s Trans Mountain expansion project has seen significant changes, enhancements and improvements since it was originally envisioned in 2009, and first introduced to the public in 2012. The project reflects the input and feedback from thousands of Canadians and incorporates the very best safety and environmental protections. ‘From the installation of state-of-the-art leak detection and monitoring technology, route adjustments to avoid sensitive areas, tunnelling versus trenched crossings, to installing more valves and ground water monitoring stations, Canadian’s will be proud to know that Trans Mountain has established the very highest benchmark for the development and construction of a major energy infrastructure project.’
US
DJ SOUTH GATHERING TO EXPAND COLORADO PIPELINE DJ South Gathering will expand its fast-growing crude oil gathering and transportation system in the prolific DJ Basin in northeastern Colorado. DJS’ Platteville Complex now has connectivity to Tallgrass Energy, LP’s Pony Express Pipeline and terminal system. With an initial throughput of 48,000 barrels per day, the connection into Tallgrass’ Grasslands terminal continues ARB Midstream’s mission to operate the most connected crude pipeline system and offer shippers the widest market access in the DJ Basin. ARB’s link to Tallgrass’ Pony Express system will be fed by ARB’s 300,000 barrels of dedicated crude oil storage at Platteville, which is in turn fed by DJS’ 90,000 b/d Badger segment, 220,000 b/d Matador pipeline and the 150,000 b/d bi-directional Freedom pipeline, linking Platteville to Lucerne West. ARB’s crude oil gathering systems include over 250 miles of new pipeline covering the core of the DJ Basin, with over 625,000 b/d of planned and existing throughput capacity and 600,000 barrels of storage. The continued expansion of the ARB Midstream pipeline system in the DJ Basin is funded by Ball Ventures through its energy division: BV Natural Resources.
PAGE 10
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TERMINAL NEWS THE AMERICAS
Canada
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TC ENERGY APPROVES $1.3 BILLION NATURAL GAS PIPELINE PROJECTS
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TC Energy has approved two new expansion projects totalling $1.3 billion on its wholly owned natural gas pipeline systems. The $0.9 billion 2023 NGTL Intra-Basin System expansion will deliver natural gas from the Western Canadian Sedimentary Basin to markets within Alberta on the NOVA Gas Transmission System, while the $0.3 billion Alberta Xpress project will see the expansion of the ANR Pipeline to provide a seamless path for Canadian production to access growing LNG export and other markets along the US Gulf Coast.
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Russ Girling, TC Energy’s president and CEO, says: ‘Our natural gas pipeline systems require expansion as customers continue to contract for incremental pipeline capacity to meet growing demand.
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‘These new investments within our existing system footprints supplement our ongoing $30 billion secured capital programme and demonstrate the longterm need across North America and in global energy markets for clean-burning natural gas, as well as the value of our existing infrastructure as a platform for organic growth.’
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The 2023 NGTL Intra-Basin System expansion is underpinned by 309 million MMcf/d of new firm service delivery contracts. Customers have executed agreements with 15-year terms, with service commencing in 2023, that will connect WCSB supply to growing Alberta market demand in the power generation, oil sands, petrochemical and utility sectors. The 2023 NGTL Intra-Basin System expansion will include 119km of new pipeline in existing rights-of-way and 90 MW of additional compression. Applications for approvals to construct and operate the facilities are expected to be filed with the Canada Energy Regulator in 2020 and construction will commence as early as fourth quarter 2021.
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The Alberta XPress project on ANR is underpinned by 160 MMcf/d of new firm service contracts and will include compressor station modifications and additions within the existing ANR footprint, as well as utlise existing capacity on the Great Lakes Gas Transmission and Canadian Mainline systems. Construction is due to start as early as the third quarter of 2021.
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TERMINAL NEWS THE AMERICAS
US
MAGELLAN MIDSTREAM MOOTS PARTNERSHIP WITH SENTINEL MIDSTREAM Magellan Midstream Partners may partner with Sentinel Midstream on plans to build a deepwater crude oil export terminal. According to S&P Global Platts, if the companies do establish a partnership, Sentinel would still lead the Texas GulkLink project, while Magellan would build the pipeline to connect its large East Houston storage and distribution system to the offshore terminal. The facility will be located off the coast of Freeport, Texas, and will be capable of fully loading VLCC vessels. It will include an onshore oil storage terminal connected by a 42-inch pipeline to a manned offshore platform 30 miles off the Gulf Coast. From the platform oil will be transported to two Single Point Mooring buoys to allow for VLCCs to receive two million barrels of crude oil with loading rates up to 85,000 barrels per hour. Texas GulfLink is one of four offshore oil terminal projects with applications pending review under the US Maritime Administration.
Mexico
supply can become a catalyst for energy diversification and economic development and look forward to seeing similar results.’ José López Soto, director of port authority administration of Baja California Sur, adds: ‘The LNG terminal at Pichilingue port is an important infrastructure project that will undoubtedly bring significant benefits to Baja California Sur.’
Brazil
AÇU PETRÓLEO SIGNS CONTRACT WITH TOTAL FOR SHIP-TO-SHIP OPERATIONS Açu Petróleo has signed a contract with Total to carry out crude oil ship-to-ship operations at the T-Oil maritime terminal in Brazil. The contract will serve Suexmax and BLCC vessels, as T-Oil is the only Brazilian private terminal qualified to receive VLCC vessels with a capacity of up to two million barrels. T-Oil has three berths with a draught of 25 meters and is operated by its subsidiary Oiltanking Açu Serviços under a service contract for O&M services. Since starting operations in 2016, the terminal has operated a total volume of 140 million barrels of crude oil. In addition to Total, other companies such as Galp, Petrobras, Repsol, Shell and Equinor also operate at the terminal.
NEW FORTRESS ENERGY CONTINUES WORK ON LNG TERMINAL New Fortress Energy is continuing work on the construction of an LNG receiving and regasification terminal in the port of Pichilingue, Baja California Sur, Mexico. Marine work is underway at the site of the terminal and all necessary permits have been obtained for the onshore construction of the power plant. Additional equipment, materials, and workers will be deployed to the site to expedite completion of the project. The facility is being constructed with power generation to provide low-cost electricity and truck loading bays for the supply of LNG to local hotel and industrial customers. New Fortress chairman and CEO Wes Edens says: ‘With the project will underway, we are closer to introducing more affordable and cleaner energy for Baja California Sur. We have witnessed how LNG PAGE 16
The joint venture owners expect to make a final investment decision later this year, pending permit approval and customer volume commitments that support the project meeting the owners’ economic return threshold. Trafigura has withdrawn its application to develop the Texas Gulf Terminals deepwater port facility that was submitted to the United States Maritime Administration in July 2018. The Bluewater Texas joint venture combines the unique market position that Trafigura has build in the US as a leading exporter and marketer of crude oil with Phillips 66’s commercial expertise, existing infrastructure network on the US Gulf Coast, and proven operating experience, including the safe operation of a single port mooring buoy in the UK since 1971. The joint venture is working with the Port of Corpus Christi Authority to provide a safe and environmentally sustainable infrastructure for the export of crude oil to global markets while benefitting the regional economy.
US
SHELL OIL PRODUCTS PUTS TWO US REFINERIES UP FOR SALE Shell Oil Products, a subsidiary of Shell, is marketing two of its refineries, one in Mobile, Alabama and Puget Sound near Anacortes, Washington. The company says the decision is consistent with its previously disclosed plans to reshape its refining portfolio globally to leverage Shell’s natural strengths and integration opportunities.
US
PHILLIPS 66 & TRAFIGURA TO DEVELOP DEEPWATER PORT Phillips 66 and Trafigura Group have formed a joint venture to develop an offshore deepwater port project located 21 miles east of the entrance to the Port of Corpus Christi. Bluewater Texas Terminal, to be constructed by Phillips 66, will consist of up to two single point mooring buoys capable of fully loading VLCCs to export crude oil. The project is currently in the permitting stage.
Robin Mooldijk, EVP manufacturing, says: ‘We are refocusing our global presence in line with that of our customers trading operations and chemical plants. This will result in a more valuable, integrated downstream business.’ The process may or may not result in a finalised sale transaction, and if it does not result in a sale, Shell plans to continue operating the refineries. Mooldijk adds: ‘Both refineries have done an excellent job over the last number of years and have made several notable achievements in safety, reliability and performance.’ Shell says that the US Gulf Coast will remain a key manufacturing hub for Shell, along with Rotterdam and Singapore.
JUNE 8-10, 2020 HOUSTON, TEXAS
40TH ANNUAL IN T E R N AT ION A L OPE R AT IN G CON FE R E N C E & T R A D E SHOW
KEYNOTE SPEAKER PREVIEW
MORE 2020 KEYNOTE SPEAKERS TO BE ANNOUNCED!
Taking Command: Leadership and Risk Management
Admiral William H. McRaven, USN (Ret.) Retired U.S. Navy four-star admiral and former chancellor of the University of Texas System Author, Make Your Bed: Little Things That Can Change Your Life and Maybe the World Retired U.S. Navy four-star admiral and former chancellor of the University of Texas system, William H. McRaven opens our conference with a presentation on leadership and risk management. McRaven is an expert on the topic, having commanded special operations forces at every level, before eventually taking charge of the U.S. Special Operations Command. He is a recognized national authority on U.S. foreign policy and has advised Presidents George W. Bush and Barack Obama as well as other U.S. leaders on defense issues. McRaven has been recognized for his leadership many times, including in 2011, when he was the first runner-up for TIME Magazine’s “Person of the Year.” McRaven’s book Make Your Bed: Little Things That Can Change Your Life and Maybe the World, based on his 2014 UT commencement speech, has received worldwide attention.
The Cook Political Report’s Road Map to the 2020 Election
David Wasserman Senior Election Analyst, The Cook Political Report Highly respected election analyst David Wasserman will break down the upcoming 2020 U.S. national election, running through scenarios and possible outcomes. Wasserman is the U.S. House editor and senior election analyst for the non-partisan newsletter, The Cook Political Report, and a contributor to NBC News. Wasserman will present data-driven forecasting to look at both national and local trends, the relationship between consumer brand loyalty and voting and what the future holds for the American elections. Wasserman drew widespread praise in 2016 for his accurate pre-election analysis, including his uncanny September piece entitled, “How Trump Could Win the White House While Losing the Popular Vote.” Chuck Todd, host of NBC’s Meet the Press, recently called Wasserman “pretty much the only person you need to follow on Election Night.”
WWW.ILTA.ORG/AOCTS
TERMINAL NEWS THE AMERICAS
US
PHILLIPS 66 PARTNERS ACQUIRES INTEREST IN PIPELINE PROJECT Phillips 66 Partners will acquire Philipps 66’s 50% interest in the Liberty Pipeline project for $75 million. The 24-inch Liberty Pipeline will provide crude oil transportation service from the Rockies and Bakken production areas to Cushing, Oklahoma. The pipeline is underpinned with long-term volume commitments and service on the pipeline is targeted to commence in the first half of 2021. The cost of the pipeline is expected to be $1.6 billion.
capacity of four million tonnes per annum of LNG. Farhad Ahrabi, CEO of Cameron LNG, says: ‘Reaching commercial operations on Train 2 is another significant milestone for Cameron LNG, its employees and partners. I would like to thank our employees for their hard work and commitment, not only for their accomplishments on Train 2, but also for getting Train 3 close to completion.’
‘We remain committed to maintaining a strong financial position and disciplined capital allocation, investing in projects with attractive returns and delivering growing distributions to unitholders.’
US
CAMERON LNG’S TRAIN 2 STARTS COMMERCIAL OPERATIONS Cameron LNG has started commercial operations on Train 2 of its liquefaction-export project in Hackberry, Louisiana. Cameron LNG completed all major construction activities for Train 2 last year and began receiving gas flow for testing in November 2019 as it reached the final stage of the commissioning process. In December, Train 2 began producing LNG and shipping commissioning cargos as part of the process to support stabilising production and performance testing. Commercial operations started following the completion of performance testing and receipt of the Federal Energy Regulatory Commission authorisation to commence service. Train 2 includes a projected export PAGE 18
Steve Bickerton, senior managing director of Prostar Capital, says: ‘Now that our senior leadership team is established, we are very pleased to commence our capital investment plan for GTI Statia. These improvements are a critical component of our investment rationale and will allow us to modernise the terminal while continuing to provide outstanding customer service and deliver attractive returns for our investors.’ John Roller, president and CEO of GTI Statia, adds: ‘Our plan allows the facility to focus on being a leading terminal operator and will leverage our strategic vision to enhance the service, quality and value of the business.’
Philipps 66 Partners plans to fund the transaction through a combination of cash on hand and the revolving credit facility. The transaction closed on March 2. Greg Garland, Phillips 66 Partners’ chairman and CEO, says: ‘The Liberty Pipeline is a great addition to the Phillips 66 Partners portfolio. It is a strong organic project and continues our strategy of growing PSXP with stable fee-based cash flows, supported by long-term volume commitments. Phillips 66 Partners is well positioned to execute this pipeline project on the heels of successfully starting up the Gray Oak Pipeline.
the Caribbean. The capital investment plan aims to improve infrastructure flexibility, a critical factor for storage operators in enabling the IMO 2020 transition.
US
US
PROSTAR ANNOUNCED $100 MILLION EXPANSION AT GTI STATIA Prostar Capital will invest up to $100 million to expand and upgrade operating capacity at its GTI Statia storage terminal. The expansion at the terminal, which is one of the largest independent crude and refined product storage terminals serving the US Gulf Coast, Latin American and Caribbean markets, is to meet demand from new and existing customers. Since acquiring the asset in July 2019, Prostar has put in place a new senior team, including Walter Wattenbergh, former CEO of LBC Tank Terminals, as chairman of GTIS and John Roller as president and CEO. Prostar is now focused on executing its capital investment plan for the terminal, driven by demand from new customers to capitalise on emerging regional and global trends in the oil market. This plan involves the investment of up to $100 million over the next two years on tank upgrades and jetty and marine infrastructure improvements. The upgrades will further GTIS’ role as a major provider of make- and beak-bulk services to its customers looking to move crude oil by VLCC in and out of the US Gulf Coast as well as to end markets in the AsiaPacific region. They will also allow GTIS to continue to provide bunkering services to cruise and cargo customers throughout
TATANKA MIDSTREAM RECEIVES $500 MILLION CAPITAL FROM ENCAP EnCap Flatrock Midstream has made an initial capital commitment of $500 million to a newly formed midstream company Tatanka Midstream. Tatanka is an independent energy company focused on acquiring and building midstream assets in North America. The company’s goal is to create value by improving the operations, maintenance and overall efficiency of acquired businesses and building highly competitive new assets that serve the continually growing and changing needs of the North American energy market. It is led by three founders, CEO Keith Casey, president and chief investment officer Nate Weeks and chief financial officer Carlos Mata. The founders have more than 75 years of collective experience in the midstream and downstream energy sectors. CEO Keith Casey says: ‘We are excited to partner with EnCap Flatrock to create a company that provides innovative midstream solutions that are safe and environmentally responsible, forge optimal and efficient pathways to market, and create exceptional value for all stakeholders. ‘EnCap Flatrock thinks about midstream and the midstream opportunity set the same way we do, the firm’s values are aligned with ours, and the EnCap Flatrock team brings a wealth of contacts and technical and commercial expertise that complement our own. We think it’s a powerful pairing.’
THE FETSA SUPPLIER PARTNERSHIP
WHO SHOULD JOIN?
WHY SHOULD I JOIN THE FETSA SUPPLIER PARTNERSHIP?
The FETSA Supplier Partnership is open to companies that do business with tank storage companies or have an affinity with the tank storage Who Should join? sector. This includes, but is not limited to: The FETSA Supplier Partnership
We offer you privileged access and visibility to senior decision makers in the tank storage industry through our events, publications and meetings. Specific benefits include: NETWORKING: One complimentary ticket to attend our Annual FETSA Conference
is open to companies that do business with tank storage companies and AGM Dinner exclusively dedicated to FETSA members, conference speakers and high level stakeholders fromlimited the EU political environment. First option for or have an affinity with the tank storage sector. This includes, but is not to: Technical equipment providers Companies providing safety services
sponsorship opportunities around the Annual Conference and related events.
VISIBILITY: Name and logo with summary of services offered will feature on a Surveying companies dedicated Supplier Partnership page of our website and will be included in our communication tools such as the FETSA website, the monthly newsletter and the services Port authorities annual management report which are circulated to senior industry executives. You will be entitled to draft an article in a quarterly supplier partnership newsletter.
Technical equipment providers Fire fighting/protection companies
Companies providing safety Loading equipment manufacturers
Fire fighting/protection companies Companies providing auditing and management systems
Loading equipment manufacturers Tank farm construction and maintenance companies Companies providing auditing Surveying companies systems and management Port authorities
Tank farm construction and (Tank) Cleaning companies maintenance companies Electrical & Instrumentation (E&I) control automation services Database providers Magazines and other industry publications
(Tank) Cleaning companies
FETSA KNOWLEDGE EXCHANGE: Possibility to organise industry seminars on Electrical & Instrumentation (E&I) relevant topics and/or with the approval of the relevant chair/secretariat to present control automation services new/emerging technologies and legislation to our committees/task forces.
Database providers
PART OF OUR COMMUNITY: Use of FETSA meeting rooms in Brussels at preferential prices (subject to availability). You can use other the FETSA logo onpublications your Magazines and industry website and printed materials in order to state that you are part of the FETSA supplier partnership. INSIGHT: You will receive our exclusive members only newsletter and annual management report so you are kept informed about the challenges we face in EU policy.
PRICE
• Annual fee of EUR 2500 (excl. VAT.) • Billed annually at the start of the subscription period (1 January). • All applications for Supplier Partnership are subject to approval the FETSA Executive Committee, and subject to the terms and conditions set out in the Supplier Partnership Agreement.
• Competition law must be respected.
Contact Ravi Bhatiani, rb@fetsa.eu for further information FETSA Rue Abbé Cuypers 3 | b 1040 Brussels, Belgium | Tel. +32 2741 68 33 | www.fetsa.eu
TERMINAL NEWS THE AMERICAS Capturing and efficiently processing natural gas in the Permian Basin is a key part of the US energy transition and we look forward to supporting Diamonback in these efforts. Travis Stice, CEO of Rattler’s general partner, adds: ‘Enhanced planning and coordination between our gas gathering and processing partners in this venture, and across all of our operations, increases the capital efficiency and reliability of the integrated systems and minimises increasingly undesirable outcomes such as flaring.’
US
PORT OF CORPUS CHRISTI RECEIVES $17 MILLION TO EXPAND OIL DOCK The Port of Corpus Christi has been given a federal grant of more than $17 million to expand Oil Dock 3 as part of a four-phase redevelopment of the Avery Point Terminal. Avery Point is one of the port’s most productive public oil terminals, currently operating at over 84% capacity. The four ship docks are more than 55 years old and require major rehabilitation and/or reconstruction to safely and efficiently accommodate the modern vessel fleet. This high utilisation prevents the decommissioning and redevelopment without the creation of new berth capacity nearby to accommodate existing (and growing) demand during the reconstruction. The $17.6 million grant from the US Department of Transportation – Maritime Administration will double barge berthing capacity at the dock to accommodate 90% of barge traffic currently calling on the other three Avery Point docks. This will create enough surplus capacity at the other three docks to allow phased decommissioning and redevelopment of each without any disruption of operations. Total project cost is estimated to be $22 million, with $17.6 million coming from the Port Infrastructure Development Grant and the remaining balance coming from the Port of Corpus Christi. Congressman Michael Cloud says: ‘The activity of cargo and barges passing through at the Port of Corpus Christi each day contributed to our region’s thriving economy. These funds will improve port infrastructure, providing increased assess for our local businesses and industries to their trade partners.’ Charles Zahn, Jr, Port of Corpus Christi Commission chairman, says: ‘We
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applaud the Administration’s foresight in supporting coastal infrastructure investments. As the Port of Corpus Christi continues to crusade for federal funding for this much needed infrastructure, we are thankful that the Administration and our Texas delegation are committed to energy independence, balance of trade and national security.’
US
ARCLIGHT CAPITAL & RATTLER ANNOUNCE NATURAL GAS JOINT VENTURE ArcLight Capital Partners and Rattler Midstream have entered into a 50/50 joint venture to own, operate and expand a natural gas gathering and processing system in the Midland Basin. The new entity, Amarillo Rattle, is owned jointly by Amarillo Midstream and an affiliate of Rattler. The joint venture currently owns and operates the Yellow Rose gas gathering and processing system with a total processing capacity of 40,000 Mcf/d and more than 84 miles of gathering and regional transportation pipelines in Dawson, Martin, and Andrews Counties, Texas. The joint venture plans to construct and operate a new 60,000 Mcf/d natural gas cryogenic processing plant in Martin County, Texas, as well as incremental gas gathering and regional transportation pipelines. The new processing plant is due to start full commercial operations in mid-2021. Diamondback has contracted for a portion of the new processing plant’s capacity, which is well-positioned for future expansion. Dan Revers, managing partner and founder of ArcLight, says: ‘We are very pleased to partner with Rattler on this exciting new natural gas focused midstream JV in the Midstream Basin.
US
CONTANDA & BW TERMINALS TO MERGE Contanda and BW Terminals, which have been under common ownership since Contanda was acquired by institutional investors, have announced plans to merge. The combined company will have 18 sites with more than ten million barrels of storage capacity. Michael Suder, a terminal industry veteran and the current CEO of BW Terminals, will assume the role of Contanda CEO and serve as the CEO of the combined Contanda-BW Terminals organisation post-merger. His appointment follows G.R (Jerry) Cardillo’s decision to pursue other opportunities. In a statement, the board of directors says: ‘Mike has a proven record of accomplishment at BW Terminals and have overseen tremendous growth at each of the companies he has led throughout his almost 30-year career in the terminals industry. We believe he is the ideal leader for the Contanda-BW Terminals organisation. ‘We have tremendous respect for what Contanda has achieved under Jerry’s leadership and wish him well in his future endeavours.’ Suder adds: ‘Both Contanda and BW Terminals have a reputation for exception service enabled by dedicated employees. By bringing Contanda and BW Terminals together, we are entering a new chapter of growth and success.’ The integration is expected to be complete in the first half of 2020.
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TERMINAL NEWS EUROPE
TERMINAL NEWS: EUROPE UK
INTER TERMINALS COMPLETES GRAYS TERMINAL UPGRADE Inter Terminals has completed a multi-million-pound infrastructure project at its Grays terminal on the River Thames. The optimisation programme has increased throughput capacity, which enables the receipt and dispatch of increased volumes of petrol and diesel at significantly faster rates than previously possible at the terminal. The terminal provides cost-effective access to London’s fuel distribution network. Product can be received into the facility from sea and road and redelivered by road. As part of the major infrastructure improvements, the terminal’s two existing jetties have been upgraded to accommodate larger vessels. With an improved depth up to 12.8m, max LOA of 244m and unrestricted beam jetties can now receive vessels up to 40,000 tonnes. In addition, new marine loading arms and mild steel pipelines have been installed which allow faster discharge of cargoes into storage. As a result, discharge rates from vessels have more than doubled to 1,600 cbm/hr, thereby substantially reducing vessel turnaround times at the jetties. Additionally, road loading facilities have also been improved, with retail loading gantries have been increased to seven, together with additional commercial loading capacity. New five-arm gantries now allow different products to be loaded at each loading bay. The terminal handles high and low flash petroleum products, including diesel, gasoil and kerosene with 310,489 m3 of storage capacity across 51 mild steel tanks.
David McLoughlin, Inter Terminals’ managing director and country manager for the UK and Ireland, says that the strategic investment in the terminal will contribute to the provision of a reliable fuel supply to the south east of England, which is essential to the region’s economy. ‘Following the upgrade, larger cargoes of hydrocarbons are now being received at Grays and the terminal is currently handling in excess of 300 loads per day.’
The Netherlands
ODFJELL REPORTS STRENGTHENED TERMINAL FINANCIALS Odfjell has reported improved financials for its terminal division as a result of its restructuring of the portfolio as well as increase tank lease and service revenues in the US and Dalian. The segment reported an EBITDA of $8 million in its fourth quarter financial results compares to $6 million in the previous quarter. Total average available capacity decreased slightly by 11,723 m3. This decreased capacity reflects Korea carrying out periodic maintenance on some of its tanks, while the US carried out customer outfitting of one of its tanks at the Charleston terminal. Over the last few months, Odfjell has been working with its joint venture partners in the US and Antwerp to develop strategies to further improve and grow its terminal facilities. This will involve initiatives to modernise and automate the terminals, as well as expanding capacity on existing land banks. Odfjell says that Houston will be a main target for growth. Projected capital expenditure for 2020 – 2022 is $64 million, of which $32 million
is growth related capex and $32 million is related to maintenance capex. The company confirmed that its two terminals in China are operating as normal despite the coronavirus outbreak affecting the country. The terminals are located in the Northeastern part of China, which has so far been less affected by the virus. Measures are being taken to mitigate exposure to the virus and prevent it from spreading. As part of Lindsay Goldberg’s exit from Asia, Odfjell SE may consider tagging along on a sale of its ownership in terminals in China. The process is expected to be concluded in the coming quarters.
Country
GREENERGY MERGERS WITH CANADA’S BG FUELS Greenergy has merged with BG Fuels, a leading Canadian gasoline and convenience retailer. The merger will create economies of scale and provide the industry with greater choice and flexibility for fuel supply by combining Greenergy’s supply chain expertise and growing independent dealer offer, and BG Fuels’ national retail brand management and site operation capabilities. BG Fuels will be integrated into Greenergy over the course of the year. The combined business will be led by Greenerg CEO Christian Flach, with Joe Calderone, BG Fuels CEO, joining the board. Christian Flach, Greenergy CEO, says: ‘Since entering the Canadian market in 2013, Greenergy has invested in strategic infrastructure in Ontario to deliver low-cost and resilient fuel supply to customers, and also introduced two new retail brands for the independent dealer market. The merger with BG Fuels will allow us to extend our supply footprint and retail offer across Canada, enabling significant future growth. The experience and resources of both businesses will further strengthen our retail offer to the independent dealer market. Joe Calderone, BG Fuels CEO, adds: ‘We look forward to leveraging Greenergy’s proven supply chain capabilities to enhance our portfolio of service stations across Canada.’
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TERMINAL NEWS EUROPE
The Netherlands
VOPAK REPORTS STRONG FINANCIALS AND SHANGHAI TERMINAL EXPANSION Vopak has reported strengthened 2019 financial performance with strong EBITDA, increased earnings per share as well as plans to increase its Shanghai terminal. The storage operator reported a full year 2019 EBITDA of €830 million, an increase of €96 million from 2018 as a result of good aggregate business (including new assets) performance of €37 million, positive currency translation effects of €14 million and positive IFRS 16 effects of €45 million. The company reported good performance from new assets, partly offset by hub terminals in Europe and Singapore and said the occupancy rate of 84% reflected IMO 2020 capacity conversions during the year and ongoing market conditions at oil hub terminals. Vopak has also launched a share buyback programme to return €100 million to shareholders following the completion of the divestment of the terminals in Algeciras, Amsterdam and Hamburg. Additionally, the company will expand the Vopak Shanghai – Caojing Terminal with 65,000 m3 for chemical gas products. This industrial facility serves the chemical plants that are located in the Shanghai Chemicals Industry Park and its adjacent areas. The additional storage capacity has been fully rented out under longterm contracts and is expected to be commissioned in the second half of 2022.
our terminals, as part of broader efforts to develop our digital architecture. Growing Vopak’s digital capabilities and using data are key to our short-term performance and long-term value creation, as well as to our position as the leading independent tank storage company.’
Porthos project, based in Rotterdam. The project will enable various companies to supply CO2 to a transport pipeline that runs straight through the port area. The CO2 will be transported via this pipeline to an empty gas field beneath the North Sea for permanent storage.
Looking ahead, Hoekstra says that the company remains focused on growth and will use the majority of cash from recent strategic divestment to grow the portfolio.
Industry in Antwerp, Ghent, Terneuzen and Vlissingen does not have access to empty gas fields off the coast. Investigations will be conducted to assess whether this industry can be connected to the Rotterdam system via pipeline. The objective is to emit less CO2 into the atmosphere, helping to combat climate change.
‘We aim to grow EBITDA over time with new contributions from growth projects and IMO 2020 converted capacity and replace the EBITDA from divested terminals, subject to general market conditions. In the period 2020-2022, Vopak may invest €750 million to €850 million in sustaining and service improvement capex, subject to additional discretionary decisions, policy changes and regulatory environment. ‘To complete the Vopak’s digital terminal management system build and roll-out, Vopak expects to spend annually €30 million to €50 million in IT capex over the period 2020-2022. We continue with further strengthening our cost culture and expect to compensate for annual inflation in our cost performance. We will continue to look for attractive ventures in new energies and innovative technologies. Growth investment for 2020 could amount to €300 million to €500 million.’
Commenting on the results, Eelco Hoekstra, chairman of the executive board and CEO of Vopak, says: ‘2019 was a successful year for Vopak. We executed our strategy, realised strong EBITDA and significantly increased earnings per share. ‘Between 2017-2019, we have been transforming our portfolio through €700 million divestments and €1 billion investments in new growth projects. We successfully divested almost 5 million m3 of oil capacity, mainly in Europe, and bolstered our hub positions. We prepared our oil hub terminals for IMO 2020 and expanded storage capacity in future growth markets. In 2019, we expanded our LNG business in Pakistan and Colombia and started the construction of new industrial terminals in China and the US. Our portfolio is well-positioned for future developments. As part of our new energies’ focus, we made our first investments in hydrogen and solar. Delivery of our digital strategy has progressed well. We continued the rollout of our new cloud-based system for PAGE 24
The port management, comprising North Sea Port, Port of Antwerp sand the Port of Rotterdam Authority are jointly investigating how the infrastructure between the ports should look like under the project name CO2 TransPorts. The capture and storage of CO2 is one of the tracks in the transition towards a climate-neutral industry by 2050. Other aspects include the production of green hydrogen, electrification, use of CO2 and recycling. CCS also plays an important role in the European Green Deal as a means to combat climate change. In 2020, the three ports can apply for a subsidy from a European fund for infrastructure, the ‘Connecting Europe Facility’. In Rotterdam, the Port of Rotterdam Authority, Gasunie and EBN are collaborating on Porthos. According to planning, the first CO 2 will be stored by the end of 2023. The first phase is expected to only involve CO 2 from companies in Rotterdam. North Sea Port and the Port of Antwerp will be investigating the options of laying joint pipelines in their areas to which industry can connect.
The Netherlands
LBC ACHIEVES FIRST MILESTONE IN STORAGE EXPANSION PROJECT Belgium
POSSIBLE EU SUBSIDY FOR CO2 STORAGE PROJECT IN NORTH SEA The European Union has designated a project to store CO2 from industry in Antwerp, Ghent, Zeeland and Rotterdam beneath the North Sea Project of Common Interest status. This means that the EU is prepared in principle to provide a subsidy for the
LBC Tank Terminal’s has reached the first milestone in its Rainbow II storage expansion project, which will grow capacity by 70,000 m3. The first piles have been driven into the tank pits out of a total of 1,300 at the terminal in the Rotterdam-Botlek region. The project is part of a multi-year investment programme to revamp and expand the Rotterdam site and the additional capacity will serve the growing market for the storage and transhipment of chemicals in the Port of Rotterdam.
TERMINAL NEWS INCIDENT REPORT
INCIDENT REPORT A summary of the recent explosions, fires and leaks in the tank storage industry
25/2/2020
10/3/2020
CALIFORNIA, US
BARCELONA, SPAIN
Marathon Petroleum refinery
Proquibasa
A large fire started at around 22:50 local time on 25 February and was extinguished at around 03:50 on 26 February. There were no reports of injuries, and no evacuations of nearby residents occurred. Marathon Peroleum refinery is located 21km south of downtown Los Angeles. It has a crude oil capacity of 364,000 bbl/d and is the largest refinery on the West Coast.
An explosion at a small chemicals plant in Barcelona, Spain killed one and injured 13 others. The explosion occurred on 10 March at a plant run by Proquibasa. The company provides blending and chemical delivery services. Antonio Cabeza, chief of the Barcelona Fire Department said the explosion occurred during pressure testing of an air reservoir,
4/3/2020
18/3/2020
DAESAN, SOUTH KOREA
UTAH, US
Lotte Chemical
Kennecott Refinery
Lotte Chemical indefinitely shuttered its naphtha cracking complex at its petrochemical plant in Daesan, South Korea, following a fire that broke out at the unit’s compressor on 4 March. The explosion injured 31 people. The company is looking into the exact cause of the accident, it said, adding there was no leak of toxic chemicals.
A refinery in Utah was evacuated and shut down after a 5.7-magnitude earthquake rocked the Wasatch Front, causing a chemical spill in a warehouse building. The leak has since been contained. Responders discovered about 8,200 gallons of a 12,000-gallon tank of hydrochloric acid had leaked out onto the catch basin, which caused plumes to rise from the building.
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TANK STORAGE AWARDS A NIGHT OF EXCELLENCE SPONSORED BY
Thank you to everyone who joined us at this year’s Global Tank Storage Awards on 10th March!
View all the photographs from the evening at www.tankstoragemag.com/awards PAGE 27
TANK STORAGE AWARDS A NIGHT OF EXCELLENCE
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TANK STORAGE AWARDS A NIGHT OF EXCELLENCE
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TANK STORAGE AWARDS A NIGHT OF EXCELLENCE
“Thank you for the organisation of a complex event in a tough environment surrounding Covid-19, especially the Global Tank Storage Awards – it was simply perfect!” Nuria Blasco, General Manager, Tepsa
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TANK STORAGE AWARDS A NIGHT OF EXCELLENCE
TANK STORAGE AWARD WINNERS TERMINAL EFFICIENCY
WINNER:
RISING STAR
WINNER:
TERMINAL OPTIMISATION
WINNER:
CLH
John Reynolds, Managing Director, Reynolds Training
Toptech Systems
SUSTAINABLE IMPACT
OUTSTANDING ACHIEVEMENT
EMERGING TECHNOLOGY
WINNER:
Sprague Operating Resources
WINNER:
Nuria Blasco, General Manager, Tepsa
SAFETY EXCELLENCE
WINNER:
Diakont Advanced Technologies
SAFETY TECHNOLOGY
WINNER:
WINNER:
Fujairah Oil Terminal
Re-Gen Robotics
PORT INNOVATION
ENVIRONMENTAL PERFORMANCE
INNOVATIVE TECHNOLOGY
WINNER:
WINNER:
WINNER:
UMF
Tecam
TWTG
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MARKET ANALYSIS GLOBAL STORAGE MARKETS
STORAGE MARKETS SHOCKED INTO NEW FUNDAMENTALS Cyril Widdershoven, Middle East & geopolitical expert & global head strategy & risk at Berry Commodities Fund, shares his thoughts on some of the biggest market disruptions and uncertainties to happen in a generation and why future opportunities for the industry still exist
AFTER years of being a statistical factor in oil market developments, looking at the OPEC+ and US shale oil confrontation, driven by stable growing demand and reoccurring supply issues, the fundamentals of the total constellation have changed dramatically. The year 2020 has started with a bang, not only for the global economy, commodities and trade, but also for midand downstream oil and gas players. The normal fundamentals of the global oil storage sectors all would be on green with an ongoing supply demand conflict and a fractured OPEC+ production cut strategy. A renewed flux or even glut of oil and gas volumes would have been pushing stocks and storage figures of most players into the green, with increased interest of
PAGE 34
investors, operators and institutional investors at the same time. A fractured OPEC+ strategy and an all-out oil price war would have opened up the doors for optimism at offices worldwide of oil and petrochemical storage companies as with higher supply than demand figures, storage would be a hot item. First signs in 2020 of these normal phenomena were seen in the offshore VLCC storage markets, as rental rates for VLCCs and other oil and petchem tankers showed exponential rate levels. After that Saudi national oil company Aramco opened up the gates of hell for US shale oil and Russian crudes by stating it would raise supply levels to 13 million bpd the coming weeks. Oil prices plunged even further after that and other OPEC+
members, such as Russia and the UAE, reported higher production volumes the next weeks. Global demand for storage is going to be a real issue of concern to producers, as their increased production levels, while demand is hitting rock bottom, maybe even 10 million bpd will be removed due to the ongoing lockdown of the global economy, and increased production and manufacturing in main markets such as the EU, US and Asia. Already, demand is severely hit by the almost global blockade of national and international airlines and an end to tourism in most countries. For the oil storage sector, the latter situation is a major opportunity as all producers are currently looking for increased storage volumes. International
MARKET ANALYSIS GLOBAL STORAGE MARKETS traders are scrambling to find oil storage tanks, not only on land but increasingly at sea. Recently, Saudi national shipping company BAHRI, the sole transporter of Aramco produced oil and products, has entered the market in full, taking more than 10 new vessels on long-term contracts. Traders, such as Glencore, or oil major Shell, also have been reported to enter the market with contracts for VLCCs to store surplus production. Both are indicators that parties are concerned that current on land storage volumes will not be enough the coming months to keep with increased unwanted supplies. US storage is already seeing a major rebound in their fortunes. Cushing, Oklahoma, which is ‘the pipeline crossroads of the world’, is already reporting a new breath of life in the struggling sector. The total oversupply could reach more than 1 billion barrels in the coming months. Not all will be heading to commercial storage, as nations, such as OESO SPRs, will be taking a vast part of the current cheap oil available. Others, such as OPEC producers, or countries in Asia (India, China) are already filling up their available storage space. In the last few weeks, China has been very active in the market, showing increased levels of oil being acquired and put in storage. Vast storage facilities have been set up by Asian countries over the last few years, some in close cooperation with OPEC producers, such as Aramco and ADNOC. At present Asia tops the list of storage locations with 22 million barrels of the 63 million barrels in global floating crude inventory. Consultancy Vortexa stated in the press that six new tankers carrying up to 7 million barrels of crude have already entered floating storage in China in March. THE OPEC+ PRICE WAR Over the coming months most of the attention from traders and oil storage company owners will be on opportunities in the US and Europe. Both have become a main target of the ongoing, and unexpected, OPEC+ price war outcome. OPEC leaders Saudi Arabia, UAE and Kuwait, have been reported to be looking at increased market share opportunities in the US. A wave of Saudi oil is already heading to the US, not only to hit US shale oil customers with extremely lowpriced Saudi crudes but also to prevent a possible Russian oil glut into the world’s second largest market. The battle for US customers and market share is ongoing, but the severity of the attack is at levels not seen before. The latter will put US shale production in the bullseye, as American shale oil growth has been supported previously by ever increasing exports. Analysts now expect that US crude exports will plunge by
around 1 million bpd in April-May to a level of 2.5 million bpd. The latter will necessitate, if production is going to be kept at the current levels, that more US shale oil is going to be stored. The COVID-19 impact, combined with the possible lockdown of major US industrial sectors, means that demand will plunge too, combined with an influx of cheaper Saudi and Russian crudes and products. With the ongoing contango in the market, as forward prices are higher than immediate prices, traders worldwide are incentivised to park barrels into storage in the hopes of selling them for a profit later. Looking at the global situation, contango will grow even stronger as long as Russia and Saudi continue their current market strategies. A CRITICAL POINT As several major banks, such as Goldman Sachs, are currently reporting the situation could even become much more critical than currently is understood. With an oil flood not seen before in history, and a possible demand crush of 10 million bpd in short term, storage availability will be critical as long as producers are keeping up the volume levels brought to the market. Strains on storage availability could become visible very soon, as space is finite, while production is even being ramped up by some producers.
With an oil flood not seen before in history & a possible demand crush, storage availability will be critical as long as producers are keeping up the volume levels Goldman Sachs even expects a real crunch in summer, if production levels talked about will become a reality. Still, some relief could come by Strategic Petroleum Reserves in OECD countries. US president Trump already has promised to put more oil in the SPR, even up to the roof. Other OECD members and Asian countries could be deciding the same. The future will depend however, even after the US energy independence declaration last year, of the strategies of OPEC producers in MENA and even West Africa. Saudi Arabia and the UAE are maybe the key holders in the current crisis. Riyadh’s statement to ramp up supply to record levels, some are even talking about 13 million bpd, and Abu Dhabi’s production increase by almost one third, does not
bode well at present. Moscow, who in principal is the main culprit behind the current supply crisis, has stated it will add another 500,000 bpd to the market. At present the situation is unclear, as goals and strategies of all concerned are not aligned. As some expect, overall surplus could be hitting 3-3.5 million bpd in April, but it could hit the 6 million bpd mark around August if the situation continues. The IEA in Paris indicated in its latest assessments that market supply already is at 3.5 million bpd surplus. With Saudi Arabia-UAE-Russia and others ramping up supply, the 6 million bpd surplus mark will be reached easily, ceteris paribus. TURBULENT TIMES AHEAD However, lower oil prices are not a blessing to most producers. Several major OPEC producers have been struggling already to cope with lower average oil prices as their economies and government budgets need higher price levels. The loss of revenues will hit hard, not only for countries such as Russia or the leading OPEC producers, but without any doubt the more-politically fragile oil producers, such as Iran, Venezuela, Libya and Iraq. A major breaking point for some of these regimes is near, maybe even causing more turmoil in the market than at present is needed. US shale is a strange duck at present. Even the financial situation of most US shale oil producers is dire, some even heading for bankruptcy or Chapter 11, most players have however hedged their production for 2020, and Washington could even be bailing some others out. Production will be hit, but less than in a normal situation. The latter means US shale oil will enter the market but will not be finding customers, except oil storage operators. When storage markets are maxed out, oil is hitting tank ceilings globally, the real crunch will come. Oil prices will hit a downward turn that could be self-destructing for most. With a continuation of the current situation, even if OPEC and Russia will rush the next weeks back to the table, the market has been hit by a tsunami, leaving a lot of casualties around. Current prospects for oil storage operators are looking bright, not only in OECD, China or India, but also for MENA and African operations. With most new oil being exported to USA-EU or Asian clients, some dents are being made in the available volumes in oil producing countries, especially Saudi Arabia and UAE. The latter, trying to increase pressure on the market with their so-called Royal Flush in hand due to perceived spare production capacity and available reserves, are already biting into their own domestic and PAGE 35
MARKET ANALYSIS GLOBAL STORAGE MARKETS regional oil storage volumes to bring the level of export volumes to the market as promised. Without any doubt, mainstream OPEC producers are not able to produce more, even not when discounting costs by taking out CAPEX and looking only to OPEX. Any new loss of revenue, as additional production volumes are not generating enough cash to counter losses in price, will increase already existing budgetary pressure on Arab producers and companies. With an estimated 1 billion increase in stored crude oil volumes (or Bloomberg’s more bleak assessment of 1.7 billion, which is three times as much as during the biggest-ever surplus recorded by the IEA (1988)), prices are going to be low or even heading for price and sector destruction levels, hitting below $20 or maybe even $8 per barrel. Even though storage operators are going to make a large buck out of the current situation, looking further the picture is bleak for all. With a possibility that all storage will be full at end of 2020, production will need to collapse, if not being cut to unseen levels. The latter will put most oil and gas producers, traders and storage operators at risk. With constrained production, and no upward demand expected to quickly remove 1 billion barrels, the whole sector is going to look at a financial crunch. With not enough new storage, even offshore, production cuts will bring a long list of independents and minnows to the brink. The oil and gas majors will survive, based on their cash reserves, while national oils are a different entity, going broke is not option.
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A FINANCIAL STORM OPEC, Russia and US oil and gas sectors are looking at a financial storm, as longterm demand is down due to COVID-19 and global economic shutdown. Lower oil prices also have a direct link to financing in future. With increased volatility already present in the market before the current crisis, due to energy transition and the ‘Greta Thunberg’ effect, financing future operations, and storage, will be under pressure. The attractiveness of oil and gas is lost for a growing number of people. Investors, institutionals and banks are already wary to support expansion or even consolidation of their investment portfolios in oil and gas. Current price developments and demand destruction is putting another nail in the coffin. OPEC+ price wars could be the siren call for most. FUTURE OPPORTUNITIES EXIST Are there still opportunities in future? Yes, while MENA oil and gas is not going to survive the onslaught unscarred, people should realise that the overwhelming majority of operations, ownership and reserves are in the hands of national oil companies or subsidiaries in region. These companies are holding not only a direct link to governments, but also to the mainstream national and regional financial institutions, such as Islamic Investment Banks, private offices and sovereign wealth funds (SWFs). This combination is a major buffer
With the backing of their respective governments, built on the fact that they play a pivotal role in the economy & future diversification efforts, MENA-based entities will prosper after 2020-2021 against negative outfall from global crisis situations. With the backing of their respective governments, built on the fact that they are playing a pivotal role in the economy and future diversification efforts, MENA based entities will prosper after 2020-2021. Investments in the region will regain former levels, as global demand for oil and gas needs to be satisfied. If IOCs, independents and minnows have been the major casualties of the current price war and the global COVID-19 crisis, ample room for expansion will exits for national entities, wanting to become an international giant in future. The upstream picture is clear, downstream investments will also continue, most probably with NOCs getting a larger appetite for refineries and storage plants to counter regional and global shocks. Aramco, ADNOC, KP, QP and even EGPC/EGAS could be the new sisters, taking a big bite out of trading and storage at the same time.
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MARKET ANALYSIS COVID-19 MARKET UPDATE
TOWARDS TANK TOPS The one thing storage operators needn’t worry about for the rest of the year, is whether or not their tanks will be filled…
THE OIL market is currently deep in uncharted territory having to deal simultaneously with a supply shock from the abrupt termination of the OPEC+ production cut agreement and a demand shock from the coronavirus (COVID-19) pandemic. The market has demonstrated before, that it can deal with either shock by itself. The great financial crisis of 2008/2009 was solved by a combination of stimulus spending and OPEC cuts, while the decision of OPEC to cut production in November 2014 stimulated demand strongly enough to tackle the oversupply. Each of these events was noteworthy enough to go into oil lore. With OPEC+ abandoning its long-term strategy of market management we are seeing the opposite of what would normally occur in a demand shock. Instead of quickly cutting supply in the face of massive demand losses stemming from COVID-19, Middle Eastern OPEC countries are priming their pumps to push even more oil onto the market in a bid to reclaim market share lost in previous years. If Saudi
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Arabia and others continuously play hard ball, we are looking at a market surplus of several million b/d for the remainder of this year. Whether the surplus is 2, 3, 4, 6, or 8 million b/d will depend on how disastrous for the economy COVID-19 really is and how long OPEC opts to keep supplies elevated. There is also the key question of how much spare storage capacity is available. The outbreak of the coronavirus in China and its subsequent spread throughout the world has devastated global oil
‘As of January 2020, we estimate a global occupancy rate of about 82%, which puts spare storage capacity at about 18%, equivalent to 730 million barrels’
demand. At this point it is still difficult to gauge the full extent of the damage and we have been forced to revise our estimates downwards several times already. Undoubtedly, the product being hit the hardest is kerosene as air travel bans have led to mass groundings at airports, with, for instance, United Airlines cutting flights by 50% in April and May. Germany’s Lufthansa is also slashing some 80% of its short-haul commercial capacity and 90% of seating capacity on long-haul flights until at least April 12th (and probably significantly longer). We estimated global jet demand at around 7.5 million b/d in 2019. Over the next few months we can expect this level to fall by a good 60% due to the mass groundings of commercial flights, which equates to some 4.5 million b/d (note that the air freight business has not been curtailed). Whether these extreme measures will be sustained throughout the second quarter or perhaps into (and even throughout?) H2-2020 is still open. But there are also 95 million b/d of oil
MARKET ANALYSIS COVID-19 MARKET UPDATE demand in all other products that will be affected. Analogies with recessions may not work, because this time the consumption of pretty much everybody is reined in substantially, with entire industries (tourism, aviation, sports, music, culture) largely cancelled out. Industries, like the car-manufacturing business are also stalling, with factories in Europe and North America shutting down on a combination of health security measures, supply chain issues and a lack of demand. Power demand in stronger affected European countries appears to be down currently by about 10-15%, while lockdown measures are still being expanded and enforced stronger. Personal movements are being substantially reduced, with mobile phone data e.g. here in Austria suggesting 40-50% less movements. What will oil demand do in this environment? A fall of roughly 10% does not appear outlandish, making the 10 million b/d (considering special statues of jet fuel) of lost demand a possibility in April and for a period of about 1-2 months. Afterwards things should improve, even though briefer waves of lockdowns may come back. One might be inclined to think that it no longer matters whether the surplus is 3, 4, 5, 8, or 10 million b/d. But of course it does, as we would reach tank tops in a matter of months in the more aggressive scenarios. Indeed, outside of China (where data on storage is hard to even assess), we estimate global dirty (i.e. crude and fuel oil) storage capacity at around 4.1 billion barrels (calculated as the sum of maximum inventory levels per country seen since January 2012). As of January 2020, we estimate a global occupancy rate of about 82%, which puts spare storage capacity at about 18%, equivalent to 730 million barrels. That may sound like a big figure but if the global balance is 10 million b/d long, it would fill up in a mere 73 days. Likewise, if the oversupply is 5 million b/d we have around 146 days before tank tops are reached. This is a simplified calculation that excludes important variables such as floating storage and Chinese storage capacity that will play a large role in whether or not tank tops are reached. We would estimate that China can take 1.5 million b/d into storage on top of its crude import requirements. As for floating storage, the market proved last year that it could operate despite 20% of its fleet being either unavailable or restricted to major charterers on account of sanctions, dry-dock works, et al. We would therefore argue that 20% of the global VLCC fleet could be put on floating storage duty, if the need arose. That would equate to about 180 supertankers capable of storing 360 million barrels. But the point remains that none of these measures would avoid a tank top scenario if the global balance is long 10 million b/d beyond a few months.
‘We estimated global jet demand at around 7.5 million b/d in 2019. Over the next few months we can expect this level to fall by a good 60% due to the mass groundings of commercial flights, which equates to some 4.5 million b/d’
encompassing crude, fuel oil, gasoline, jet/kero, and gasoil/diesel. The figure takes into account some 400 million barrels of floating storage, split as 350 million dirty and 50 clean. It also assumes a steady 1.5 million b/d build in Chinese stocks, which, by year-end, results in another 460 million barrels (see chart, this is also the reason behind the upwards slope in the forecasted storage capacity figure). Now how long will it take to fill this up? That of course depends on the supply and demand assumptions which are both shrouded in a mist of uncertainty. To penetrate this fog, we outline three scenarios that result in varying stockbuilds (see chart). All cases assume the bulk of the length over Q2-2020, but to varying degrees that depend primarily on the extent of demand loss from COVID-19. The Low case also assumes a strong decrease in supply from July as OPEC and other countries cut production, while in the High and Medium cases OPEC does not cut as much, forcing higher cost producers to slash more output. The closer we get to tank tops, the deeper the oil price will fall in order to force more production offline. Even in the Low case, storage levels get tighter than anything seen in recent memory, so we can confidently say that we will get pretty close to tank tops by the end of this year. It may not be much of a consolation in these trying times, but the one thing storage operators need not worry about for the rest of the year, is whether or not their tanks will be filled.
Then there is the ability of refiners to process the crude into products, which, in an anaemic demand situation will end up on stock. Indeed, this is what we saw in 2015/2016 when dirty storage outside of China peaked in October 2015, pushing dirty spare storage capacity down to 10%. Demand at the time was vibrant and the high crude availability triggered a veritable buyers’ crude market that resulted in high refinery run rates and growing product stocks. This was only put to an end by concerted efforts from OPEC to rein in production with the stated goal of bringing OECD stock levels back in line with the 5-year average. This also cost OPEC the market share it is currently struggling to win back. In any case, storage for combined gasoline, jet/kero, and gasoil/diesel fuels over the whole of 2016 was some 115 million barrels higher than in 2015. As of the start of 2020, we estimate gasoline and middle distillate spare storage capacity at around 18%, or 380 million barrels, assuming a storage of a consolation in these trying times, but the one thing storage operators need not worry about for capacity of 2.1 billion barrels. For more information: the rest of the year, is whether or not their tanks will be filled. If we put all of these factors together, This article was written by Johannes weFcome Chairman andSFounder or moup re with inforan maexpanded tion: Thisstorage article was writBenigni, ten by Eugene enior Cruofde Lindell, capacity figure of 7.1 billion barrels JBC Energy, www.jbcenergy.com
M a r k e t A n a ly s t a t J B C E n e r g y eugene.lindell@jbcenergy.com
Evolution of Oil Storage and Forecast [billion bbls; million b/d] 16 14 12
10
Est stock level (crude, FO, Mogas, Distillates) - High Case * Storage capacity defined as sum Est stock level (crude, FO, Mogas, Distillates) - Medium Case of max. inventories per country (excl. China) in Jan-12 to present Est stock level (crude, FO, Mogas, Distillates) - Low Case Storage Capacity*: Crude, FO, Mogas, Distillates [billion bbls] Stock Change - High Case [million b/d] Increase in forecast Storage Capacity due to: Stock Change - Medium Case [million b/d] Floating storage (C/DPP): 0.4 billion bbls Stock Change - Low Case [million b/d] China storage: 1.5 mmb/d: 0.46 billion bbls
8 6 4 2 0 -2
historical stock level excludes China
Stock levels in billion bbls Forecast Stock change in million b/d -4 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 Jul-20
SuDeP
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MARKET ANALYSIS OIL & ENERGY FORUM
DECARBONISING THE ENERGY SYSTEM Changing attitudes towards energy production and consumption globally are presenting unprecedented challenges for the oil & gas sector to adapt and innovate towards a decarbonised future OIL was the worst performing sector of the last decade in the S&P 500 index, up 5% versus the S&P 500’s 180% climb as a result of investors exiting oil names. At the Platts London Oil & Energy Forum during IP Week, it was acknowledged that the challenge facing the sector is on a scale that has not been seen before. Opening the one-day conference, Baroness Brown of Cambridge, vice chair of the committee on climate change, explained to delegates the implications of net zero. In 2019, global emissions were flat, with Europe, China and the US reducing emissions. Despite this, the use of oil and gas does continue to increase, and climate change was the top three risks in the World Economic Forum’s global risks landscape for 2020. Baroness Brown said that society needs to start using hydrogen on a larger scale for power generation, heating buildings and heavy processes, as well as carbon capture and storage to decarbonise the industry. ‘The scale of the challenge is significant. In the UK over the next 30 years, we need to double the electric system, create a hydrogen industry, start carbon capture and storage, plant lots of trees, convert 30 million existing buildings to low carbon heating, make major changes in agriculture and land use as well as implement major changes to our diet. ‘This is a challenge on a scale that we have not seen before.’ She said that the industry needs to act
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now and start to make changes to meet various net zero targets.
crudes are coming on in the Atlantic Basin.
‘It will take more than the market and a carbon price. We have to start all of these things now regardless of what is fastest and cheapest.
‘US shale producers are having to show greater capital discipline,’ he said. ‘A lot of debt is maturing, and the producers can’t just keep reinvesting in drilling.
‘We don’t have all the answers yet, but we know that we can do what we need to with the technologies available.’
‘2020 is the last year we will see really strong growth [in US shale].’
Looking at global energy market dynamics, S&P Global Platts’ head of global analytics Chris Midgley said that global energy prices have become full interconnected to demand and supply responses and that China remains the key demand driver globally. Examining more recent global developments, Midgley said that COVID-19 – a strain of the novel coronavirus that has caused disruption to multiple sectors and economies globally, coupled with the warmest ever northern hemisphere winter in January reduced world oil demand by 1.7 million barrels per day. ‘We are seeing a new trend in demand for oil,’ he said. ‘Weather events, trade and the energy transition are all having an effect and as a result, products such as diesel are coming under pressure.’ He noted that these new dynamics mean that markets are starting to tighten up around the supply of products and that Chinese refineries are cutting back two million barrels per day of crude. Additionally, in the US, shale production growth is declining. Midgley noted that outside of OPEC and the US, crude oil production is growing and that new
He added that in terms of price, oil is returning to the $60 bbl mark and that ‘it is hard to see it go above that’. In a special panel session, Midgley, along with Beth Burks, ESG associate director, S&P Global Platts and Simon Thorne, global content director, generating fuels & electric power, S&P Global Platts, debated on the next steps for oil and gas in relation to the energy transition. Burks said that there is a noticeable ‘stepping up’ in ambition amongst oil and gas companies and that more disclosure and debate is needed to mitigate any ‘greenwashing’. Thorne added that the pace of change by energy industries, including power generation, is effective and it is spurring on more change. However, Midgley pointed out that the world still needs fossil fuels and questioned how much carbon offsetting was taking place during the production of energy. ‘Net carbon zero by 2050 is very hard,’ he said. ‘We need to double the energy we are going to consume to tackle the one billion people without electricity. The problem is that we are waiting for tomorrow to be the solution.’
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PROFILE GAS & OIL PAKISTAN
SERVING PAKISTAN’S ENERGY NEEDS 01
With more than half of Pakistan’s total oil product demand being met through imports, fuel marketer and retailer Gas & Oil Pakistan sees tremendous opportunity in serving the markets supply chain GAS & Oil Pakistan (GO) is positioning itself to capitalise on the country’s flourishing market dynamics with plans to substantially increase its storage terminal network to meet the growing demand for oil products. The company, headquartered in Lahore, currently has four owned and operated depots and two storage terminals. Its most strategically important terminal was commissioned in the fourth quarter of 2018. Built on 15.5 acres of land close to the PARCO Mid-Country Refinery, the Mahmoodkot Terminal comprises 84,225 MT of capacity for diesel (HSD) and gasoline (PMG). It has a 12-bay loading gantry capable of filling more than 100 tank trucks of 50,000 liters in capacity in a single eight-hour shift. The terminal is connected with the 800 kms long pipeline running from Karachi to Mahmoodkot operated by PAPCO (Pak-Arab Pipeline Company). The terminal serves markets in the southern and central Punjab area as well as providing its depots with stocks of imported HSD. In an interview with Tank Storage, Zeeshan Tayyeb, chief operating officer, says that the dedicated pipelines have
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given the company the flexibility to receive both products at the same time from the PARCO refinery. ‘This, coupled with the large amounts of storage we have, gives GO an advantage in terms of timely receipt of both the products and utilising excess storage to meet the needs of other companies who either do not have storage within the refinery area or who do have storage but are not connected to either PARCO or PAPCO for the receipt of motor gasoline. ‘The terminal is also of national importance because it creates additional storage by being connected to the white oil pipeline system as it gives extra ullage of 84,225 MT, which comprises 34% of the dead stock in the current system. ‘Additionally, the storage capacity at the terminal can also help ease tanker congestion at FOTCO (Fauji Oil Terminal & Distribution Company) in Port Qasim to allow for timely berthing of the vessels bringing imported products. ‘We hope to make this terminal one of the best performing terminals in the country as this is one of the few terminals that has automated flowmeters,
automatic tank gauging and will be connected to our SAP system going forward. This will help us to optimise storage at our located and provide service to other oil marketing companies using GO’s services.’ The company has also acquired a storage terminal at Port Qasim on a long-term lease for the receipt and storage of imported products. GO also has facilities in Sahiwal, Daulatpur, Sarai Nuarang, Kotla Jam and Hub, bringing GO’s total storage capacity to 130,160 MT. STRATEGIC SUPPLY CHAIN Tayyeb says that the country’s current supply chain dynamics present numerous opportunities for the company to offer its bespoke solutions to ensure a continuous supply. ‘Currently, more than half of the total requirement of the country is met through imports and this situation is unlikely to change in the near future until significant investments are made in Pakistan’s refining capacity.
PROFILE GAS & OIL PAKISTAN GROWING A SUCCESSFUL CONCEPT On the back of the company’s recent successes, as well as the current flourishing market dynamics, GO plans to build more storage facilities as well as increase capacities at some of its existing terminals. Tayyeb says that the company plans to build in strategic locations in Juglot in Gilgit, Vehari and Khanpur in Rahimyar Khan as well as increase capacities at its depots in Sarai Naurang and Daulatpur. Additionally, the company intends to open 1,000 more retail outlets across the country by 2022 as well as have a network of 100 company owned and company operated retail outlets.
‘Since most of the product is imported through the ports located in the south of the country, the white oil pipeline is of great importance to ensure a robust supply of product across the country.’ Plans are in place to convert the pipeline, which currently transports gasoil, into a dual product line so that it can also transport motor gasoline. ‘As a result of this, the importance of the pipeline and the Mahmoodkot Terminal is going to increase and GO is going to be in a good position to capitalise on providing services.’ Actively engaged in oil marketing, storage, transportation and supply operations, GO has more than 500 retail outlets across the country with a permanent marketing license from OGRA. Its four proprietary oil storage depots and two storage terminals were
Currently, more than half of the total requirement of the country is met through imports and this situation is unlikely to change in the near future
‘The company as a whole wants to be a leader in providing and supplying quality fuel to all parts of the country by opening more retail outlets and company owned and company operated retail outlets as well as introducing green products such as additives to lower the emission of harmful gases. ‘We are also looking at converting our retail outlets to solar energy and are examining the possibility of introducing electric charging points for electric vehicles, which are now starting to enter the Pakistan market.’
built to meet the country’s growing need for the storage of petroleum products. Its recent sales figures for January December 2019 reveal a 20% growth compared to the same period in 2018. Tayyeb says that the increase in sales from 1.0 million MT to 1.2 million MT was the highest in the industry and resulted in GO becoming the fifth largest oil marketing company in the country in terms of motor gasoline and hi speed diesel sales.
01 Mahmoodkot Terminal, which was commissioned in the fourth quarter of 2018 02 The company has four owned and operated depots and two storage terminals
02
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PROFILE GP GLOBAL
UNLOCKING MARKET POTENTIAL WITH STORAGE ASSETS 01
With predictions that a more varied mix of energy will be needed in the near future, GP Global is unlocking new market potential by developing storage infrastructure for a diverse portfolio of product lines THE ENERGY conglomerate, which operates in oil and gas trading, bunkering, lubricants, bitumen, aviation fueling and shipping & logistics, currently has three storage terminals strategically positioned in key demand centers including the UAE and India.
In an interview with Tank Storage Prabakaran Muthukrishnan, global head of GP Group’s terminalling business, says: ‘We are looking at the opportunities emerging in the market and are equipping
To complement its increasingly diverse portfolio of energy assets, its storage division is perfectly located in key trading hubs to capitalise on existing and emerging market dynamics.
‘We are expanding our market presence and our businesses transcend across all geographies. We continue to closely look at all opportunities coming to the market in all areas of oil trade’
And with a radically changing energy landscape, driven by new political agendas and regulations, the company is enhancing its storage business by introducing new product portfolios as well as adapting current infrastructure to store different types of energy. PAGE 44
ourselves to provide rapid response to the changing market dynamics. ‘We are expanding our market presence and our businesses transcend across all geographies. We continue to closely look at all opportunities coming to the market in all areas of oil trade.’ SERVING GLOBAL TRADE For example, its facility in Fujairah, the second biggest bunkering hub globally, started providing for and storing low sulphur fuel oil as a result of the IMO 2020 regulation before it came into effect. Tanks were adapted and converted ahead of the regulation’s start date and the company has its own barges to ensure supply.
PROFILE GP GLOBAL imports, storing and arranging inland transportation, thus providing the muchneeded value added services.
02
THE EXPANSION POTENTIAL Both its facilities in the UAE are poised for expansion, with 73,000 square meters of expansion space available at its Fujairah terminal to cater to growing market demand. In Fujairah, recognising the potential changes emerging in the energy mix viz growth in electric vehicles and development of renewable and clean energy sources, plans are drawn for calibrated expansion of facilities. With the unfolding of opportunities and growth in demand, we shall enhance the storage capacity leveraging the additional space available. However, Prabakaran says that the company’s approach towards any future storage expansion is pragmatic and will be based on evolving market movements.
‘We expect a paradigm shift in storage requirements by 2035 for which we need to calibrate our approach’
03
Additionally, the company is looking at expanding its retail presence in East Africa.
While bunkering represents the largest share of its business, the terminal, which offers 412,000 m3 of storage across 17 tanks, is also geared to capitalise further on trading activity as the region positions itself to become a global storage and trading hub. Its latest facility in Hamriyah Freezone, Sharjah enjoys the same high occupancy levels as its Fujairah terminal, with longterm contacts in place. It handles the full spectrum of petroleum products, including naphtha, gasoil, MTBE, condensate, fuel oil, kerosene, base oil, bitumen and petrochemicals across its 400,000 m3 of capacity. ‘The strategic impact of this region on our storage business is significant. Fujairah for example connects the east with the west for petroleum product movements. Additionally, it is surrounded by producing countries with many refineries with significant amounts of expansions planned. ‘The UAE market has a strategic importance for storage. Around a third of global seaborne oil trade passes through the Strait of Hormuz. So, if there is any disturbance in the region, the oil price moves higher. However, Fujairah offers an opportunity to avoid this market
‘The recent IMF Report has observed that the oil influence in the Middle Eastern region will gradually shrink by 2035 with emergence of a different basket of energy mix. Significant share of oil in the energy basket is expected to be replaced by electricity and renewable and clean energy sources. Consequently, we expect a paradigm shift in storage requirements by then for which we need to calibrate our approach.’
‘Our ambition is become a global energy conglomerate, to be the champions of growth, enter new markets and be the most prominent energy service provider for customers.’
01 GP Group is enhancing its storage business with new product portfolios and infrastructure adaptations
reaction by taking away some of the movement and can exert some control over the energy price.’ Its facility in Pipavav also serves the full spectrum of classified and nonclassified petroleum products across its 250,000 m3 of storage capacity. Despite the challenges it has within the port, which has only one jetty to handle oil products, besides non availability of rail connectivity for hinterland movements of oil products for inland distribution, the company has switched few of its product lines to include molasses and ethanol.
02 Its storage division is located in key trading hubs to capitalise on existing and emerging market dynamics. 03 Prabakaran Muthukrishnan, global head of GP Group’s terminalling business
‘We hope that these new products will further improve the business. Our ambition at Pipavav is provide end to end services to our customers from receiving PAGE 45
MARKET ANALYSIS INDONESIAN ENERGY MARKET
INDONESIA BACK IN THE OIL & GAS RACE Jaya Prakash looks at what is being done by key industry players to help achieve Indonesia’s goal of being a leading oil and gas producer
LIKE the kid who does not how to give up after losing a race, Indonesia is back at the oil and gas production race. In a recently published news report on March 4, the government’s Upstream Oil and Gas Regulatory Special Task Force (SKK Migas) said that two developments last year ‘added optimism’ to Indonesia’s goal of becoming a leading gas producer. He was referring to the resumption of a stalled gas project at the offshore Masela Block and the discovery of a giant gas reserve at the Sakakemang Block in South Sumatra. But as reality always is in the massive archipelago of 17,000 islands, major oil, and gas players have said plans are still in preliminary stages about how the country will achieve its target of becoming a net exporter of oil and gas after Jakarta left OPEC several years ago. However, Repsol could not contain its glee when announcing its latest strategic find. The company said that its partners, PAGE 46
Malaysian-owned Petronas and MOECO had made the largest gas find in Indonesia in 18 years, ranking the field as the 10th largest find globally over the last 12 months. Indonesia, the company said, is the focus of Repsol’s exploration investments in Southeast Asia and plans are underway for both onshore and offshore. Plans are underway to execute an intense drilling and seismic acquisition campaign in 2019 and 2020. The exploration and production strategy of the company is focused on the development of gas assets, considered a key fuel for the energy transition to a lowcarbon global economy. Gas makes up three-quarters of the company’s reserves and two-thirds of output. Repsol has made more than 50 hydrocarbon discoveries during the 20072019 period. Ten have ranked among the largest hydrocarbon finds globally in their respective years, demonstrating
Repsol’s exploratory abilities. Repsol has proprietary cutting-edge technology that has resulted in the company’s high exploration success. However, Repsol and Indonesia’s oil and gas ambitions could mean that the country could well be missing the ‘limelight’ it once had when it was a net oil and gas exporter. ‘It is only for domestic usage, not for exports’, Budhi Halim, of PT Mega Maritim explains to Tank Storage, underscoring the grave shortage of the commodity for export and also suggesting therefore that storage tanks and other requisite infrastructure might not be an immediate priority. CHARITY MUST BEGIN AT HOME Just as was the case in 2009, domestic consumption mattered more than in extending ‘charity’ to others. Then as now, new production and exploration
MARKET ANALYSIS INDONESIAN ENERGY MARKET activities were planned but, were executed with very little forethought employing underused expertise and possible little audit.
country around to make good on a deficit that breached more than $1.2billion just in January 2020 alone, according to Statistics Indonesia data.
Yet despite such straitened conditions, Jakarta has not lost its romance for the old yore, when its time with OPEC meant huge volumes of oil and gas.
‘The vision of 12,300mmscfd by 2030 is a challenging one and it will require considerable effort, collaboration and investment on the part of the industry and the government to achieve this’, Gary Selbie, country manager for Premier Oil Indonesia, to the Jakarta Post within the context of the arduous challenges the nation faces amidst a growing population, wilting infrastructure investment and competing social and economic challenges.
Even as recently as last year, the nation’s energy ministry said that oil and gas sub-sectors have a strategic role in national development, both as a source of energy, fuel and a country’s acceptance of exports. But just how that will pan out, will depend on how much Jakarta will begin addressing problems in the nation’s creaking infrastructure. Just how dire Indonesia’s woeful infrastructure problems were, came unstuck when President Joko Widodo said there are plans to move the capital city of Jakarta, away from the Javanese mainland and over to Borneo because the city is sinking and submerging into the waters beneath it. As matters stand, plans by the Directorate General of Oil and Gas rest solely in being a reference to government and society. However, the big question is how all these plans will play out when they seem perceptibly long on rhetoric and short of real concrete, discernible action plans. It is no secret that Indonesia desperately needs to boost gas exports and turn the
FALLING OIL AND GAS INVESTMENTS More grist came from the Energy and Mineral Resources Ministry, which said oil and gas investments in the country fell by 7%, scuppering a much-needed chance at meeting target numbers of more than $15 billion. With Asia expected to be dominant region for LNG exports in the decades to come, according to Dutch energy giant Shell, there most definitely is plenty riding for the continent in general, and Indonesia in particular. According to the International Energy Agency, China is expected to account for
more than 40% of global gas demand growth to 2024, propelled by the government’s goal of improving air quality by shifting away from coal. Chinese natural gas consumption grew 18% in 2018. The agency also forecasts strong growth in gas consumption in other Asian countries, particularly in South Asia. In Bangladesh, India and Pakistan the industrial sector is the main contributor to growth, especially for fertilisers, to meet the needs of growing populations. Even Malaysia is mulling a new regasification terminal in the city of Malacca as well as taking giant leaps to construct a pipeline, which according to maritime analyst Nazery Khalid, is ‘a 600 km interstate land-based pipeline linking the Malaysian states of Sabah and Sarawak on Borneo Island’. Yet for all the buzz ringing with sonic fanfare around the region, speaking to Tank Storage Hartoto, chairman of the Indonesian Ship Owners Association, says: ‘The energy types seen in the Netherlands’ is attractive to Indonesia now. ‘There is no new investments in old, traditional models’, she adds. Will Indonesia get to where it wants to? Without much of an investment in traditional energy products, only time will tell on which page of history the nation will be on.
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REVIEW STOCEXPO 2020
A TIME FOR CHANGE
There is no denying that the world is changing and continues to change at a staggering pace. If it wasn’t clear enough at the beginning of the year, then it has been brought even more sharply into focus in recent weeks with the global political, social and economic response to the COVID-19 pandemic IN THESE turbulent and uncertain times storage terminals stand tall and strong, acting as a vital conduit for energy flows to keep countries and economies moving. In these fastchanging new market dynamics, the adaptability of storage terminals to new forms of energy and new supply and demand trends is of vital importance to the industry. Amid a turbulent global environment, the StocExpo conference and exhibition provided important industry updates, discussions on market developments, sharing best practice initiatives as well as looking ahead to the terminal of the future. The energy transition and the role of new forms of energy was a key theme throughout the first day of the conference, with presentations on looking at how terminals need to adapt to a decarbonised energy sector, the future role of hydrogen, developments in the LNG sector and the demand for power storage. Delivering the keynote presentation, Artur Runge-Metzger, director at the European Commission, explained more about Europe’s ambition to be the first climate neutral continent by 2050. ‘Climate change is affecting everybody – every industry in Europe and it is only going to get worse. We have to combat and battle climate change and that means we will have to reduce emissions both in Europe and globally. PAGE 48
‘Europe has set itself a target – by 2050 it should become climate neutral. All sectors will have to contribute to that, but the one that will lead the transformation in the coming decades is the energy sector. This means that in the next two decades, we will be out of greenhouse gas emissions in the energy sector.’ He said that the European Green Deal will focus on investing in the EU’s economy to achieve a net-zero greenhouse gas emissions economy with a raft of ‘deeply transformative’ policies including a new ‘climate law’, a carbon border adjustment mechanism as well as a EU Industrial Strategy. ‘It is a very comprehensive deal and we want to execute this hand in hand with industry.’
Charles Daly, Chairman of Channoil Consulting then explored the question of what terminals could do with empty tanks in a zero carbon world. Daly suggested that one option would be for redundant tanks to develop a pumped hydro scheme. Cheap or self-generated electricity could be used to pump water into the largest tanks and use them as potential energy stores. An underground pit would then need to be dug and a fan fitted at the bottom, with a vertical drive shaft to a generator. Once called upon to produce electricity for the grid the water would be allowed to flow by gravity through the water generator and then recovered in other tanks. The process would then be repeated with the collected water being pumped into the primary reservoirs.
REVIEW STOCEXPO 2020 He also said that as used cooking oil becomes a viable feedstock for next generation biofuels it might be beneficial if storage terminals built an esterification unit on a redundant site. Samuel Ciszuk, Founding Partner at ELS, also gave a really insightful presentation on how the market will change in the coming years. He said that although the 2050 targets have been set, it’s all about 2030. A revised 2030 target, to cut CO 2 from 40-50% from 1990 levels (or 55%) will be set first after the summer. ‘There are major changes expected to the current EU emissions trading scheme (ETS),’ he explained. The EU ETS currently covers heavy industry, such as power generation, steel works and refineries, as well as intra-EU flights. This may be extended to include shipping. ‘It’s possible that a carbon border will be introduced to avoid carbon leakage. This would ensure that the price of imports reflect more accurately their carbon content.’ INNOVATIVE EXHIBITORS Senior decisionmakers from BP, Shell, ExxonMobil, VTTI and Nis Gazprom Neft, were in attendance to see the innovative new products and services on display on the exhibition floor. 123 of the sectors biggest and most influential companies including Actemium, Agidens, Belven, Ivens, DTN, EPS Group, J de Jonge and Kanon Loading Equipment exhibited at the show. The Kanon Loading Equipment team were promoting their marine loading arms, truck loading arms, loading platforms, flex cages, elevating platforms and flexible LNG Bunkering solutions at StocExpo this year. CEA were promoting their asset management data-merging software that pools all asset data together to so that clients can view it in 2D, 3D and even 4D, and their services to update,
‘For us despite coronavirus, StocExpo is actually better than last year because the people are really focused. The lead quality is much higher, people are looking for something and we haven’t wasted a second.’ Jose Zaragoza, project division manager, Tecam
digitalise and ensure the consistency of all asset data. The team from Carbis Loadtec had on the stand their vertically elevating platform for the safest access possible to road and rail tanks, as well as the AutoLoad automatic loading arm which removes the need for human interaction with process pipes and the eliminates the dangers of working at height. Jose Zaragoza, project division manager at Tecam, says, ‘For us despite coronavirus, StocExpo is actually better than last year because the people are really focused. The lead quality is much higher, people are looking for something and we haven’t wasted a second.’ BRAND NEW PRODUCTS AND SERVICES The iTanks Innovation Zone was host to a number of brand-new products and services from industry disruptors and established suppliers alike. Yokogawa had a team in the Innovation Zone to demonstrate their new Industrial Internet of Things (IIOT) sensors and solutions for predictive asset maintenance. I’d just like to offer my heartfelt thanks to everyone in the bulk liquid storage sector,’ says Mark Rimmer, show director
at StocExpo. ‘It’s obviously been an incredibly challenging show this year, but it has been great to have the support and commitment of the industry and to see so much innovation on the show floor. We’re now putting all of our energies into delivering a fantastic StocExpo 2021, which will be held in the new location of Antwerp, Belgium. See you all next year!’ StocExpo will return on 16 – 18 March 2021 at the Antwerp Expo, Antwerp, Belgium.
PAGE 49
EVENTS IP WEEK 2020
DEFINING THE INDUSTRY’S ROLE
BACK in February, seemingly a lifetime ago, the industry gathered to debate and discuss the latest market challenges, opportunities and future outlook at the annual IP Week. The theme of the IP Week conference was focused on defining the industry’s role and how to deliver a low carbon future. For the first time, the climate emergency and energy transition were centre stage at IP Week 2020, with senior industry leaders, NGOs, investors and academics gathered to discuss urgent global challenges. In and amongst the networking events, meetings, and parties taking place across London, the 17th annual Tankbank and Port of Amsterdam party took place at the Conrad London St James Hotel, which Tank Storage Magazine proudly sponsored.
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EVENTS IP WEEK 2020
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TECHNICAL NEWS
TECHNICAL NEWS: GLOBAL INDUSTRY UPDATES Wells Services Group
WELL SERVICES GROUP CONFIRMS THE ACQUISITION OF OSS ENVIRO Well Services Group (WSG), a leading and well-established UK service provider within the energy industry, has acquired OSS Enviro, a leading specialist in fixed and mobile optical gas imaging services. Optical gas imaging cameras detect a wide range of Volatile Organic Compounds (VOC’s) for leak detection and quantification. With reduction of fugitive emissions becoming a focus of the energy industry WSG is now able to offer this additional service to assist its clients in their efforts to become carbon neutral. Sealed cryogenic coolers fitted to the
devices ensure extreme sensitivity to detect the smallest leaks. OSS Enviro MD Rob Griffiths says: ‘We will now be able to offer group customers
WSG Enviro will give the customer real time leak information and actionable data and integrity history of all onsite components thus ensuring and improving safe operations onsite and controlling environmental impacts.
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a true service for leak detection and repair (LDAR). With new legislation and stricter controls due to be announced in 2020, we believe we now have the right partnership to lead the market into a safer, better global environment.’
Using existing and well established WSG Service Lines WSG is perfectly placed to conduct repairs for the client during planned and unplanned outages. WSG Enviro will use WSG’s Asset Integrity Software (AIM) for the identification, quantification and record keeping of survey results, offering the client an all-encompassing service. WSG already provides a full range of high-quality services to the international oil and gas industry, the petrochemical and geothermal industry as well as the energy sector, both onshore and offshore and provides customers with full life cycle support to their assets, covering commissioning and start up, shutdowns & outages, operations and decommissioning. OSS Enviro will now trade as WSG Enviro and be based out of the UK Group headquarters at Normanton. WSG Enviro will be the only company offering this technology to the oil, gas, utilities and storage sectors in the UK, Ireland and Benelux.
TECHNICAL NEWS
Emerson
EMERSON LAUNCHES FIRST ULTRASONIC TRANSDUCER WITH METAL 3D PRINTED MINI-HORN ARRAY Emerson has released the Daniel T-200, a titanium-housed transducer, for its gas ultrasonic flow meter product line, marking the first use of metal 3D printing to enhance the acoustic performance of ultrasonic flow meters in custody transfer
applications. The T-200’s robust design provides increased reliability, uptime and safety while achieving the highest accuracy class attainable in gas measurement. In an ultrasonic flow meter, transducers generate acoustic signals that are sent back and forth across the fluid stream. The difference in the transit times of these signals is used to determine the fluid flow velocity. Signal quality and strength are critical to measurement accuracy, which is paramount in custody transfer applications. An error of only 0.1% can equate to hundreds of thousands of euros annually in a large diameter high pressure pipeline.
‘The T200’s mini-horn array could not be made without metal 3D printing technology, making it transformational to the sound quality and performance achievable through a titanium barrier,’ says Kerry Groeschel, director of ultrasonic technology at Emerson. The meter’s all-metal housing provides a barrier from corrosive hydrocarbon fluids and wet gas, thereby extending the life of transducer components and ensuring stable performance. This unique design allows the meter to be hydrotested with transducers in place, steam cleaned while in the operating line and blown down with no limits on the rate at which the meter can be depressurised. The T-200 can also be safely extracted while the meter is under pressure without special high-pressure extraction tools, which reduces the possibility of greenhouse gas emissions during extraction. The capsule which contains the piezoelectric crystal used to produce ultrasonic sound waves is retractable as a single piece for simplicity and ease of use. The new design is rated for a wide range of operating conditions, including pressures from 1 bar gauge (barg)/103 Kilopascal (kPa) to 255 barg/25,855 kPa and temperatures from -50 to 125 degrees Celsius.
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TECHNICAL NEWS
As part of the EPC contract, Bechtel Oil, Gas, and Chemicals will perform the detailed engineering, procurement, construction, commissioning, startup, performance testing and operator training activities for the project. The scope of the agreement also includes continuing pre-final investment decision engineering to better assure project cost and schedule certainty.
TWTG
TWTG LAUNCHES TWO NEW INDUSTRIAL IOT PRODUCTS TWTG has launched two new products: the NEON thermocouple sensor and NEON vibration sensor. The NEON vibration sensor sends alerts to maintenance engineers, as soon as assets, such as engines, conveyor belts, and pumps start to fail. This sets of a trigger when there is a change of frequency in the vibration or when outliers in the data occur. An engineer is alerted to check on this asset to prevent it from failure or long-term damage, which saves costs and ensures operational uptime. Now, assets which are not under constant supervision from operators can be monitored around the clock. The TWTG NEON thermocouple sensor comes with a wired thermocouple and uses on-board intelligence to determine average values over user-determined time scales to provide insights that can be used directly within existing systems. The device can be attached to existing installations and monitors changes or absolute extremes in temperature. By monitoring these on a variety of locations, insights can positively benefit operations. With the wired thermocouple, extremely low temperatures can be measured (-270°C), such as hydrogen or high temperatures (1700°C) that are found within furnaces, and everything in between. The TWTG NEON product range supports all industrial customers moving towards LoRaWAN as the Industrial IoT network of the future. PAGE 56
The LoRaWAN network gives industrial operations a secure solution, which has no vendor lock-in, scales up to tens of thousands of sensors, covers complete sites with only a small amount of gateways and best of all – the lowpower approach means that the lifetime of the NEON products can be extended dramatically. This international networking technology is quickly becoming the industry standard. NEON stands for a standardised approach to collecting data points from within the operation and a general approach to creating integrated solutions with existing IT ecosystems.
Sempra Energy
SEMPRA ENERGY SUBSIDIARY PORT ARTHUR LNG AND BECHTEL SIGN EPC AGREEMENT Sempra Energy and Bechtel have announced that their respective subsidiaries, Port Arthur LNG and Bechtel Oil, Gas, and Chemicals have signed a EPC contract for the Port Arthur LNG liquefaction project under development in Port Arthur, Texas. ‘Building new export infrastructure in the US is critical to providing overseas markets with cleaner fuel alternatives,’ says Jeffrey W. Martin, chairman and CEO of Sempra Energy. ‘Partnering with a world-class construction firm like Bechtel bolsters our execution plan for one of the world’s largest LNG development projects.’
The Port Arthur LNG development project is expected to initially include two liquefaction trains, two liquefied natural gas (LNG) storage tanks, a marine berth and associated loading facilities and related infrastructure necessary to provide liquefaction services, with a nameplate capacity of approximately 13.5 million tonnes per annum (Mtpa) of LNG. The project site sits on nearly 3,000 acres of land along three miles of the Sabine-Neches waterway and has the potential to become one of the largest LNG export projects in North America, with expansion capabilities of up to eight liquefaction trains and approximately 45 Mtpa of capacity. In January, Sempra LNG signed an Interim Project Participation Agreement (IPPA) with Aramco Services Company, a subsidiary of Saudi Aramco, for the proposed Port Arthur LNG project. The IPPA represents another milestone for both companies after signing a heads of agreement in May 2019 for the potential purchase of 5 Mtpa of LNG and a 25% equity investment in the project. In December 2018, Port Arthur LNG entered into an agreement with Polish Oil and Gas Company for the sale and purchase of 2 Mtpa of LNG per year. The Port Arthur LNG development project received authorization from the US Department of Energy to export domestically produced LNG to countries that do not have a free trade agreement with the U.S. in May 2019. Additionally, the Federal Energy Regulatory Commission issued the approval to site, construct and operate the liquefactionexport facility in April 2019. It is estimated that the proposed project will create a craft workforce on site that peaks at about 5,000 construction jobs, as well as several hundred additional Texas jobs in support of the project, including material fabrication. Nearly 200 long-term jobs will be created to operate and maintain the Port Arthur LNG facility. Development of the Port Arthur LNG project is contingent upon obtaining additional customer commitments, completing the required commercial agreements, securing all necessary permits, obtaining financing, incentives and other factors, and reaching a final investment decision.
TECHNICAL NEWS
Adler and Allan
ADLER AND ALLAN CONTINUES GROWTH WITH EXPANSION OF NDT TESTING TEAM Environmental risk reduction specialists Adler and Allan expands its fuel and energy offering by growing its non-destructive testing (NDT) team, offering customers a high level of experience and technical knowledge of tank inspection and assessment. Adler and Allan’s market-leading NDT testing and analysis methods will be used for storage tanks, pipeline and well inspection, offering customers the most accurate and precise inspection available. The team are British NDT Institute PCN Level 2 qualified and have full EEMUA and API recognition, as well as boasting a wealth of international experience in every sector that the business serves, working with some of the world’s biggest organisations. The service quickly identifies degradation, corrosion, weakness, cracking and welding defects, before damage occurs, including leading edge magnetic flux leakage techniques and innovations for remote access to difficult reach areas. Justin Burton, NDT Manager, says: ‘Adler and Allan’s inspection department provides an integrated approach to costeffective, optimised inspection solutions that improve the safety, environmental and operating performance of storage vessels and piping assets, while ensuring they meet regulatory requirements. We are proud to offer the whole
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TECHNICAL NEWS
Tecam
TECAM WINS AT THE GLOBAL TANK STORAGE AWARDS Spain-based environmental technology specialist Tecam has won the Environmental Performance award at the 2020 Global Tank Storage Awards. Judged by an independent panel of judges including representatives from Shell, BP, Kinder Morgan, Vopak, Navigator Terminals, Ineos and many more, Tecam was awarded the accolade for its recent project at Koole Terminals. Tecam first started the project with Koole (Koole Tankstorage Minerals (KTM) in 2018 and has been awarded a second contract with the terminal at the end of 2019. Initially, Koole contacted Tecam looking for an environmental solution for vent gas emissions treatment. Due to the nature of operations at a tank terminal the flow of vapour as well as the Volatile Organic Compounds (VOC) content of this vapour are not constant. Both flow rate and VOC load are subject to frequent changes depending on the product transfer taking place and the type of product being stored. On top of this base flow, vapours are generated by manipulations (pumping into storage tanks, barges and sea going vessels). These conditions prompted the company to look for an emission reduction system that could avoid environmental pollution. THE SOLUTION Tecam, specialists in advanced environmental technology for the treatment of emissions and hazardous waste, was awarded the contract to find a solution and develop the project. Due to the volume and nature of the emitted vapours, with low concentration of VOCs, and very variable steam flows, a Regenerative Thermal Oxidizer (RTO) was designed as a central element of the Tecam proposal, considering its stable performance, low consumption and technical advantages, which are: • Adaptable for small, medium and large air flows. • Wide range of pollutants to be treated. • High thermal efficiency • Does not generate any waste. Vapours are collected in a steam collection system and pretreated in a pretreatment train.
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Photo: Koole.com/fotopaulmartens.nl
The installation achieved the elimination of pollutants and emissions below the required limits: • VOC: 20 mg / Nm3 • CO: 50 mg / Nm3 • SOx: 50 mg / Nm3 (thermal SOx) • NOx: 50 mg / Nm3 (thermal NOx) • MVP2: 1 mg / Nm3 • PM10: 5 mg / Nm3
THE RESULTS Tecam environmental technology installed for this project has been able to reduce 99.9% of pollutants at Koole Tankstorage Minerals terminal in the port of Rotterdam. During its first year of operation, this integrated system avoided the issuing of more than 693 tonnes of VOCs into the atmosphere. Taking this figure to the 20-year lifecycle of the installed system, there are around 13,860 tonnes of treated VOCs that will not be issued into the atmosphere in the next years. Tecam is quite new in the storage sector, with its first project being in 2018. ‘However, we have been working in the petrochemical sector for over 10 years,’ Bernat Sala, Tecam’s CEO explains. ‘We are making our mark in the storage industry and Koole has just committed to two more installations from us over the next two years.’
Apart from its HQ in Barcelona, Spain, Tecam has offices in China, Latin America and Russia. The company’s unique approach is to offer flexibility, fast responses to enquiries and custommade solutions. Like many companies, all installations have been postponed for the time-being due to restrictions surrounding the spread of Covid-19. ‘In the short term many projects are on hold,’ Sala explains. ‘However longterm, we expect issues surronding health and the environment to be even more important than ever to the tank storage sector. Just this week we have signed two more projects in China so we are optimistic that once the Covid-19 restrictions have subsided, our business will come out stronger than ever.’
ADVERTORIAL
RE-GEN Robotics is the leader in offering no-man entry, ATEX tank cleaning services and since launching in Spring 2019, interest from the industry has been phenomenal. Terminal and refinery operators have been striving for more reliable, efficient and safe methods of cleaning, inspection and assessment and Re-Gen robotics has seen a very real appetite across the board, for “no man entry” tank cleaning. In March, Re-Gen Robotics lifted the Safety Technology Award at the 2020 Global Tank Storage Awards, in Rotterdam, for their innovative tank cleaning technology. It was recognised as a solid innovation and definitely in line with the way the industry is heading, in terms of improving safety, reducing costs and improving efficiency. The industry is now embracing automated, explosion proof robotic tank cleaning, as the long-awaited alternative to ‘man entry’ cleaning and the company’s vision, to become the most efficient, safe and reliable tank cleaning service provider to the petrochemical industry has come to pass. It is providing a realistic and proven alternative to ‘man entry’ tank cleaning. The health and safety of personnel engaged in tank cleaning is paramount and using robotic equipment to carry out works in hazardous confined spaces is the most logical and safe way to clean tanks. It also creates a tremendous logistics cost and risk benefit for tank owners. Re-Gen Robotics has invested over £3 million in creating three purpose-built, explosion proof robots, designed to operate in the most inhospitable environments. Their large robots de-sludge, wash and clean large scale tanks and the lightweight and highly portable compact unit is suitable for use on smaller sites and underground storage tanks and containers, including petrol forecourts, interceptors and process tanks. Plans are in place to expand their robotic offering in 2020. The company is in the fortunate position to be supported by their sister engineering company, Re-Eng. Their operators have direct communication with the R&D Department, so work on NPD can be carried out simultaneously to their tank cleaning service, as and when required. Recent product development includes off-set suction heads that are capable of reaching under roof drains and into sumps and a 360 degree, high pressure jet head, designed to wash up to a height of five metres. During their latest contract, a low-profile squeegee head was designed purely for cleaning in low access areas, such as under roof drains, inside the tank.
Re-Gen Robotic’s unique, closed loop cleaning system is fully compliant with existing safety legislation and can reduce cleaning time by up to 45 per cent, significantly decreasing downtime and loss of production whilst the tanks are not operational. The Ex-zone rated equipment is effective, reliable and provides predictable cleaning times, which is crucial to tank owners’ planning schedules and means the tank is brought back into operation earlier and reduces the need for additional tank capacity, permitry delays and additional support teams. In fact, what used to be a large-scale, hazardous team operation, has been condensed to a routine, twoperson job on site. Re-Gen Robotic’s has a solutionsfirst, product-second mindset, their unique robotic technology is making a monumental difference to safety and their next phase robots will continue to revolutionise the industry. A TYPICAL CLEAN: The ADR tanker is stationed 10 meters from the tanks and the robotic equipment is craned into position. No scaffolding or bespoke equipment is required as Re-Gen supplies the complete system to position the robot in the tank.
specially designed 3,500 PSI jetting water nozzles, powered by a high-pressure low flow pump. The auger system at the front of the robot breaks down heavy sludge without the requirement to use water, thereby generating less waste. The sludge is then extracted by an ADR certified jet/vac tanker with 4,800 C/ m3 per hour vacuum capacity. The operator has real-time visuals of the entire tank cleaning operation, which is recorded on CCTV from the ATEX cameras equipped with LED lights which provide lighting for inside the tank. The footage is made available to the client upon completion of the works. All files are date and time stamped to ensure the process is traceable for auditing purposes. A record of gas detection readings is also issued on completion of each vessel cleaning, produced by the onboard gas monitoring equipment. There is also no requirement to spade the valves on tanks. On average it would take two members of staff a full day to spade one tank, therefore reducing tank cleaning time, downtime and saving money for the terminal operator.
The trained and certified operator remains in the Zone 1 control unit where activity is observed through a series of ATEX cameras and gas monitoring equipment fixed to the robot. The unique features of the large robot make it ideal for cleaning the storage tanks. Powered via hydraulics it safely enters the tank via its manhole, supported by hydraulic ramps, and removes sludge from the internals of the tank. The robot efficiently loosens and removes sludge from the tank using a combination of
Fintan Duffy, Managing Director at Re-Gen Robotics. For more information visit www.regenrobotics.com, email: info@regenrobotics.com or telephone +44 28 300 50 800.
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TECHNICAL FEATURE LEAK DETECTION
EARLY LEAK DETECTION FOR COST SAVINGS HYDROCARBON spills are every tank terminal operator’s nightmare for newly built storage tanks but especially for older storage facilities. Spills can create risks with very high implications, for example:
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• Costly loss of hydrocarbon products • Costly downtime for infrastructure repairs • Fire and explosion hazard • Costly clean-up, remediation and restoration • Long-term environmental damage • Costly governmental fines and adverse publicity The presence of an immediate leak warning system on site is crucial as it is the first sentinel before escalation to a disaster. Installing such systems should be the conclusion of a site risk assessment. The optimal solution is based on installing reliable, field proven and third-party tested systems for detection and monitoring hydrocarbons leaks and spills. WHERE TO MONITOR IN A TANK TERMINAL Groundwater monitoring Even sophisticated tank gauging systems cannot detect small leaks of oil or fuel from large tanks to groundwater. Current health standards allow drinking water to contain less than 1 ppm of hydrocarbons. This means that an undetected leak of 1 liter/gallon of hydrocarbons can contaminate more than 1 million liters/ gallons of groundwater.
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A Leakwise ID-221 oil sheen detector installed in a groundwater monitoring well near the tank will give a reliable warning on hydrocarbon seepage into groundwater much earlier than any manual sampling. An array of monitoring wells with Leakwise ID-221 sensors in the perimeter of a tank farm will give an indication of leak drifting and layer trend. If the groundwater is already contaminated by a thick oil layer, Leakwise ID-225 sensors can be installed in the monitoring wells to monitor the progress of remediation activity, as these sensors can linearly measure oil layer thickness up to 200 mm. Floating roof drainage pipe monitoring Rainwater accumulated on a storage tank’s concave roof affects its floatation, making it necessary to drain the water. This is usually done through a flexible pipe running from the floating roof down the tank through the oil product, with an outlet above ground near tank base. However, there are several associated risks. Oil product from the tank can penetrate the flexible pipe through pinholes or cracks and be discharged through the drainage system unnoticed. Oil product from the tank can run over the roof through the roof’s seal if the floatation of the roof is un-balanced, and then exit through the roof’s water drainage pipe. This can happen also during heavy rain and a partially clogged drainage pipe. Local regulations may require that drained roof water will be treated. This may be minimised by monitoring
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the drained water and diverting it to treatment only if contaminated with oil. There could be accidental overfill of oil product. Monitoring the drain exit of each tank is essential for informing management that leaks have occurred, and which tank needs to be repaired. Monitoring the drain exit with a Leakwise ID-223 oil sheen detector installed in a sump or retention tank/local separator will reliably indicate any leakage. Tank bunded (diked) area Drainage channels and sumps around storage tanks collect and drain storm water. However, they also collect any hydrocarbons from leaking pipes, valves or pumps. Accidental overfill is also contained in the bunded area. These sumps, which can be either wet or dry depending or rains, should be continuously monitored for the following reasons: • Health and safety – undetected buildup of flammables in the bund area creates harmful vapors and possible fire or explosion • Environmental – leaks or spills must be detected before they are released from the contained area • Economic – product loss is a direct cost against the business. However, an additional cost can be incurred when clean storm water from the bunded area is sent for unnecessary treatment A Leakwise ID-223 oil sheen detector installed in the collecting sump will continuously monitor the water before releasing it to public water. If oily water is detected, an alarm will be set off and
TECHNICAL FEATURE LEAK DETECTION Leakwise controllers display system status on the front panel, and interface to user’s control center via relay contacts, 4-20mA, Modbus and wireless messaging.
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INSTALLATION EXAMPLE
the water outlet valve will be closed. The oily water could then be (manually or automatically) diverted into an API separator or any other oily water treatment system. Such operation method will reduce the load on the water treatment system, may reduce system size, and eventually cut treatment costs. Monitoring oil separators and skimmers In many tanks storage facilities water is collected and sent to a separator, or interceptor, where oil is separated, and water is discharged directly to the sea, river or public water. In other cases, water from the tank area could be treated by an API separator. A Leakwise ID-225 oil layer thickness monitor will continuously monitor the thickness of the accumulated oil and inform the operator when to skim the oil. Oil skimmers can be automatically controlled by the ID-225 sensor, starting the skimming at a user-set oil thickness and stopping before water is removed with the oil. This can result in considerable savings in treatment and disposal costs. Monitoring water treatment discharge Installing a Leakwise ID-223 sensor in the final retention pond will continuously monitor the discharged water and ensure that the treatment process is running smoothly. An oil overflow to the exit chamber will be detected and the operator notified, or the system can automatically stop the discharge and contain the oil, allowing the operator to take an appropriate corrective action. Monitoring loading terminals Oil distribution terminals are used for loading truck-containers with refined oil products to be distributed to gas stations. These terminals are prone to oil leaks during the filling process. The area of the terminal is drained to a sump that collects rainwater but also the potential oil spills. A Leakwise ID-223 sensor installed in the sump will give an early warning as soon as
an oil sheen is detected. Water release will then be stopped until the water is treated. LEAKWISE TECHNOLOGY Leakwise technology was verified by several third-party tests and has a huge global installed base. A Leakwise system is comprised of a sensor and a controller. The sensor is a floating device that sits flat and accurately on water surface. It uses a proprietary high-frequency low-power Electromagnetic Energy Absorption Technique. The energy is introduced to the upper layer of the water. Since water absorbs more electromagnetic energy than hydrocarbons, changes in the absorption rate of the water indicate the presence or buildup of a hydrocarbon layer. The sensor continuously sends the measured signal to the processor, which analyses it and determines if there is a presence of a hydrocarbon layer and evaluates its’ thickness. The processor then activates the alarms and controls according to easily adjustable sensitivity settings. This technology is optimised for detection and monitoring the buildup of separated or emulsified non-soluble hydrocarbons on water and other aqueous solutions. The technology is sensitive enough for differentiating between hydrocarbons and no liquids at all, which allows also hydrocarbons detection in containment areas that may be continuously or occasionally dry. Leakwise sensors can detect the presence of as little as 0.3 mm of hydrocarbon on water. Detection is immediate upon contact of the hydrocarbons with the sensor. The immediate detection fully complies with the 30 seconds detection response requirement of FM Class 7745 standard. After detection, the system continues to monitor the oil layer buildup and trend up to 25 mm. Leakwise oil thickness special sensors are optimized for linear measurement of thick oil layers on water, up to 200 mm.
Adding fuel leaks and spills monitoring systems can be challenging for existing large fuel storage facilities, where the wiring infrastructure was not prepared in advance to accept such systems. One solution is to use a battery-operated system with a small solar panel, and a wireless communication to the control room. Wireless can be either a point-topoint radio link or a cellular link. For example, Leakwise ID-223/2000 sensors were installed in 23 tank bunded areas in a European tank facility. Outside the dike a battery-operated controller was installed for each sensor, with point-topoint wireless link at 869.4 - 869.65 MHz, fixed channel, 500mW transmit power, and line-of-sight range up to 5km. A point-to-point receiver was installed in the control room with a receiving antenna installed on a mast on the roof. The communication from all transmitters was verified at the receiver to have a success of 99.9 % (during a test period of two months and more than 17,000 transmissions, with several thunderstorms during this period). Communication security is achieved by digital encryption of transmissions. The customer previously had a bad experience with other leak detection systems that had reliability issues. Prior to purchase, the customer wanted to be sure that Leakwise technology would work reliably on a range of insoluble hydrocarbons including crude oil. They commissioned a third-party consulting company to test the Leakwise technology. Tests with crude oil and diesel, both at ambient and chilled temperatures, clearly showed that the technology reliably detected these types of oils. In addition, the tests established that the technology continued to work reliably even when the sensor was coated by crude oil, and oil layer thickness continued to be reported while increasing or decreasing. For more information This article was written by Shimon David, technical director, Agar Environmental. www.leakwise.com.
01 Leakwise ID-223/500 oil sheen detector installed in a sump 02 Leakwise ID-223/2000 oil sheen detector installed in a bunded area 03 Leakwise ID-223/500 oil sheen detector installed in a water collection pond of a tank farm
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TECHNICAL FEATURE LOADING ARMS
FUTURE-PROOFING LOADING SYSTEMS I NEED to safely access the top of my road tanker; I need a platform that will work for me for the next 25 years; I need grounding and overfill; I need a new loading arm; I need to improve our spill containment. These are all issues every plant or terminal manager faces on a regular basis. The reality is that the terminal manager needs all of the above, plus many other ancillaries to make the plant safe, future proof and efficient. However, the bigger issue is that all these stand-alone items need to be able to work together as an integrated solution. They also need to be up and operational on schedule so that the terminal can ship and/or receive product, ensuring the end-to-end supply chain is up and running. In many ways, you will only be as good as your inbound and outbound product flow, and if raw material cannot be efficiently brought in and out, the business will suffer. When considering a new project or an upgrade, there will be a focus on safety, cost, RONI, productivity improvements and aftermarket support. The assets will most likely be in operation for the next 25+ years, so it’s imperative to work with a company that will be there 25 years from now continuing to support the business with preventative maintenance plans, training and upgrades, but also with a company that helps create industry standards, ensuring that the solution is as ‘future proof’ as possible. THE LOADING ARM The loading arm should not be considered as a stand-alone item. It needs to be able to fit under the platform canopy in the parked or stored position. It needs to be easily handled by the operator when accessing the top of the tanker. It needs to be easily raised over the access gangway cage and into the top of the tanker. It may then need to reach the bottom of the road tanker to avoid splash loading. And remember, most tankers differ in height and diameter, and the loading arm and access gangway need to reach all without having to move the tanker. Therefore, the front-end design work is essential if we are to capture all the issues that come into play between these two pieces of moving equipment. Likewise, if you are loading a highly toxic product and will be kitted out in full PPE, a wider gangway that will provide the operator greater flexibility could be a consideration.
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Loading arm considerations would include: • Top inlet or bottom inlet, right or lefthand design. If you are loading, a top inlet, with a primary arm below the horizontal will create a self-draining arm • Materials of construction (carbon steel, low-temperature carbon steel, stainless steel, aluminum etc.) • Seal materials (nitrile/Buna, Viton, PTFE, Chemraz etc.) • Option for powered operation in one or more planes of operation • Vapour recovery cone or plate, if required • Hold-down device – as you load the vessel, it will sink on its axis. The holddown device will ensure a tight seal between the vapour cone and the manlid • Vapour line pressure switch to avoid over pressurisation due to a line blockage • High Level Cut-Off (HLCO) system • Swivel joint bridge straps for electrical continuity • Parking latch and sensor These are just some of the design issues that need to be reviewed at the design stage, for the loading arm. GANGWAY AND CAGE When looking at the gangway, the goal is to provide a safe means of access and egress to the tops of tank trucks, so that operators can perform their work in a safe, productive, and efficient manner. This, on the face of it would appear to be a simple challenge. However, trucks and railcars come in an almost infinite number of shapes and sizes. The number of times the gangway will
be used needs to be considered as this can range from once or twice a week, to 180 times a day. Additionally, what environment is the gangway operating in - dry and dusty perhaps such as you will see at a cement plant, or in an environment such as a caustic – both applications will require a totally different solution. Repetitive strain injury, back, neck, shoulder and hand injuries account for almost 20% of unplanned days away from work. Likewise, OSHA in the US consistently has fall protection – or lack thereof – as the number one safety violation, with almost 6,000 violations each year. Taking time at the front end to specify the right gangway for the application is not only essential, but it will protect employees and improve productivity. SafeRack recently introduced a first in the industry; the ergonomically designed GX gangway, with an integrated power lift and gravity lowering device. The advantages include: • • • • •
Mitigates repetitive strains Mitigates manual lifting Ultra-smooth operation Improved productivity and throughput Enhanced safety
Holistically, when looking at an installation, some of the things that need to be considered are: • Platform, access and egress - if an operator has to wear full PPE, a 24” wide gangway will impede productivity and efficacy, so thing 36” or even 48”. • Be cognisant of different railcar clearance envelopes; one size will not fit all
TECHNICAL FEATURE LOADING ARMS • Safety showers and eyewashes (no more than 20 seconds from an operator) • Lighting LED, under and above the platform • Control huts/control rooms • Connections/interface between key equipment • Automation • Materials of construction and seal materials • Spill containment - understand the latest SPCC and EPA requirements
• Gangway – a wide gangway and cage will avoid the railcar off-set crash box being an entry/exit obstacle • Restrict movement and prevent drive-off’s by incorporating extended handrails – a great and inexpensive adder • Canopy design options and height above the platform; loading arm clearance can be a big issue • Optimising the loading arm position • Installation considerations including soil inspection
• Safety bollards; protect the assets • Issues with rail loading on radius tracks; consider a pivoting gangway cage • Custody transfer/metering • Meter design (PD, Turbine, Coriolis etc) • Grounding • Windsocks • Overfill - many different issues to consider here including cane probes and point level switch probes • Interlocking safety systems and barriers • Safety gates
In conclusion, when looking at a loading platform upgrade or new project, take the time up front to consider both today’s needs and potential future requirements. In our world, we often see people compromise on improved productivity and throughput for safety reasons; this is not a bad thing. However, we believe that with the right solution you can achieve both. For more information This article was written by Graeme Murphy, vice president of strategy & business development, Saferack. Saferack is a leading manufacturer and integrator of railcar and truck loading facilities www.saferack.com/productcategory/loading-platform-systems
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TECHNICAL FEATURE BLOCKCHAIN
A SINGLE SOURCE OF TRUTH FOR OIL & GAS Oil and gas: welcome to post-analogue era of post-trade processing THE OIL and gas sector has long lived with an uncomfortable internal contradiction: this is an industry simultaneously responsible for some of the greatest engineering feats of modern times, yet in many respects trailing well-behind the technological curve. Post-trade processing is precisely one such area. For all the advanced trading technology at the front-end, once the trade is done it’s left to various stakeholders to pick up and reconcile the various pieces of the trade using cumbersome, error-prone and fraud-vulnerable manual processes. For physically delivered commodities trades, all stakeholders including buyer, seller, inspector and terminal must all coordinate and arrive at the same data for accurate trade reporting. When that is done using a complex web of emails it becomes very easy for mistakes and delays to add cost and risk to the process. It only takes one discrepancy to grind everything to a halt until it is reconciled. It seems surprising that in 2020 the industry is still labouring under such a manual and time-intensive process. This is what VAKT set out to rectify. DIGITISING THE POST-TRADE VAKT’s blockchain-based platform reimagines this process entirely. Through the platform, all participants have access to an immutable, single source of truth covering all aspects of a trade. There is no need to manually re-enter data at each stage, and – because it is shared – no need to check the outputs of different participants and reconcile them. Participants can reconcile their trade data, share digital documents and transparently manage trade logistics and settlement. For example, counterparty A agrees a deal to physically deliver a quantity of crude oil to counterparty B. Both counterparties enter the trade into their E/CTRM systems, which are connected to the VAKT shared ledger via APIs. Here, a single source of truth is created, which both parties refer to throughout confirmation and contract negotiation. Counterparties may then nominate third parties such as banks, inspectors, terminals
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and shippers to access the data and enrich it with new data and documents, e.g. bills of lading. Terminals can use their own system to receive standardised nominations from their customers and send them actuals. They keep their data private and choose the customers they want to share information with, keeping a time stamped audit trail of every action on the blockchain. The process drives standardisation and reduces manual input, bringing time savings and efficiency and reducing the risk of human error. WHY BLOCKCHAIN? There has been a lot of hype about blockchain in recent years, and its understandable that many might be sceptical about what the technology truly offers. We may ask: where can blockchain really deliver on its revolutionary promise, and where is it a forced fit? With its initial application in cryptocurrency, blockchain felt like a kick away from the physical, analogue world towards a more digital future. Yet now, as we start to see mature, commercial blockchain applications, we find ourselves very much back in the physical world, physically delivering commodities trading in this case. There is a temptation with blockchain – as with all exciting new technologies – to rush to apply it to anything and everything if there is potentially a practical application. A more considered approach involves going back to basics. This means looking at the fundamental characteristics of distributed ledger technology: it is decentralised, immutable and tamperproof by design. To pair it to the right usecase, we must look for applications and industries that mirror those structures and where the most pressing needs match those characteristics. In particular, the strength of blockchain is that it is highly resistant to manipulation. To add a doctored block to the chain would require control over an impractically large share of the network. A lone or group of errant blocks would quickly be rejected. Once a block is added, it is immutable – there is no editing after the fact. This makes it effectively impossible for a bad actor to seize control over the information. Additionally, in many physical
commodities industries – from crude oil to gold and diamonds – fraud and corruption remain serious challenges. A blockchain solution makes it much harder to insert false information about, for example, price or provenance. So, physical commodities post-trade processing and blockchain are a perfect match. Blockchain respects the underlying infrastructure and needs of the industry: a square peg and a square hole. As such, oil trading – specifically post-trade processing – is therefore a strong candidate for a relevant and revolutionary application of blockchain. It is a decentralised market where consistency and availability of data are crucial and which stands to gain significantly from improvements to efficiency, accuracy and fraud protection. It is an industry that has long looked for a better way of doing things, but could only ever pose a centralised solution that was a poor fit for a highly competitive, sensitive and dispersed industry. VAKT: TODAY AND TOMORROW The VAKT team have successfully pioneered the release of the world’s first enterprise grade, production blockchain system for commodities trading, completed in an extremely short timeframe to MVP launch. The company is backed and used by the likes of BP, Equinor and Shell, Gunvor, Koch Supply & Trading, Mercuria, ABN Amro, ING and Société Générale. VAKT has not just processed a handful of trades, it handles the post trade for all of the North Sea BFOET oil trades that these giants make every day. VAKT is now concentrating on expanding to both new physically delivered commodities markets, and broadening its ecosystem to relevant third parties. Ultimately, VAKT’s vision is to digitise the global commodities trading industry, creating a secure, trusted ecosystem, powered by blockchain. For more information This article was written by Stephanie Trabia, head of European sales, VAKT. www.vakt.com
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TECHNICAL FEATURE SPILL CONTROL
ENSURING RAPID RESPONSE TIME FOR EFFECTIVE SPILL CONTROL WHEN petroleum spills happen, every minute is critical. Especially when that spill hits a body of water. Not only does it spread exponentially faster, the potential for impact to the environment is much greater.
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THE CHALLENGE We have all seen it. A few drops of oil or fuel hit a body of water, and the sheen spreads like wildfire. What may have only been a few drops, looks like a few gallons, due to the surface area it covers. Now, what happens if those few drops were hundreds or thousands of barrels? In the blink of an eye, the spill could cover acres of water or travel miles downstream. In this scenario, time is money. As soon as the oil hits the water, the clock starts. The effectiveness of oil spill response always lies in the time it takes from the initial spill until it is contained.
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On top of this, conventional methods for containing and cleaning up these sorts of events do not help this problem. Traditionally, responding to spills on water requires large, bulky equipment and trained personnel. It may take hours before trained personnel can respond. And, that is just to get them on site. Add to that the time it takes to deploy their equipment, once the spill has had an hour or two to spread. Challenges to quickly containing the spill include: • On-site employees are typically not skilled in deploying traditional spill response equipment. • Even if employees are trained, conventional containment booms and spill materials are heavy, bulky and slow to deploy. • If equipment is not on site, transporting off-site equipment to the spill site could take an hour or more. • In addition, you must wait for a specialised crew to arrive. • Once the specialised crew arrives, it will still take significant time to deploy the large and heavy equipment. • A lot of these spills happen in hardto-reach areas, which takes even longer to access with trailers full of equipment and products.
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Add this all together, and the costs start to add up, and can include: • Time and material costs to properly clean up the spill • Remediation costs of impacted shorelines • Disposal costs of used product • Public relations (PR) costs THE POWER OF TIME Because bulk liquid terminals are often located along major bodies of water, they’re at a particular risk of spills spreading due to the volume of petroleum product they are handling and their location. In addition, a lot of these locations are remote and difficult to reach quickly. If there are personnel
on site, it may only be one or two individuals, who are not trained to be oil spill response professionals. Ultimately, a lot of companies are making sure that they have plans and equipment in place in order to provide the best possible response – however, a lot of these limitations prevent them from being effective during the first hour of the spill. On the other hand, if responders can get equipment in the water faster and stop the spread of oil, they can drastically reduce damage, use less resources, and improve clean up effectiveness. Investigating and adopting new technology that can potentially boost overall effectiveness can be key to moving industry standards forward and promoting safety wherever possible. Not to mention, limit the cost and damage of a spill that has reached a waterway. NEW TECHNOLOGIES Various technologies have been developed in recent years that can quickly help to limit the damage of a spill that has reached a body of water. Addressing the downfalls of traditional products, these new technologies: • • • •
Take up approximately 80% less space Deploy up to 40 times faster Weigh significantly less Do not require a team of trained professionals to deploy • Contain and start cleaning up spills in the critical first 30 minutes
TECHNICAL FEATURE SPILL CONTROL
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SPILLBOA RAPID-DEPLOYMENT ABSORBENT BOOM Most spill response materials are bulky and take up too much space and the first person on the scene rarely has enough supplies to hold the spill in check. So, the spill spreads until help arrives. To solve the problem, product developers at HalenHardy took a novel approach. ‘We’ve always known that bulky spill control products took up too much space to be stored in vehicles and equipment. We decided to search for oil/ fuel sorbent materials that were able to be compressed by at least 75%,’ notes HalenHardy CEO Donny Beaver. ‘The sorbent also had to rebound to its original size once unpacked.’ After an exhaustive hunt, the team found the ideal fiber compound that enabled the users to store 400% to 1,000% more materials than traditional spill products. For example, the patented SpillBoa absorbent boom is a 5-inch by 25-foot ‘flat boom’ that coils up into a compact 16” diameter, and the roll weighs just four pounds. Its flat profile allows more surface contact, which helps each SpillBoa barrier absorb oils/fuels 300% to 500% faster than traditional ‘overstuffed’ booms and socks. Plus, the innovative design holds back many more gallons of spilled material until cleanup crews arrive. SpillBoa barrier also floats to contain oil spills on water. ‘As a spill-response professional, I’m always looking for ways to help our customers save time and money. As soon as we saw the SpillBoa boom in action, we recommended it to all our clients to keep in their vehicles and equipment as a first line of defense. It deploys up to 40 times faster than traditional products and helps mitigate the impact of oil and fuel spills,’ says Tim Acri, senior vice president, HEPACO. HARBO T-FENCE HARBO Technologies released a product in 2018 that overcomes many of the problems associated with traditional containment boom and helps to
tackle the critical few minutes after a spill occurs. The T-Fence oil spill first response system enables companies to contain spills faster and stop the spills from spreading. The product is a lightweight, portable boom that is packaged in cartridges the size of suitcases. Each section is 82 feet and weighs 50 pounds, making it compact and manageable for a single person to carry and two people to deploy. The T-Fence can be used for any size spill because each 82-foot section is fastened with connectors on each end that can be connected during deployment. The T-Fence system is lightweight and compact as it is stored flat inside the cartridge prior to deployment. As soon as it hits the water, it expands to a 12.5-inch system – a 4.5-inch draft above the water and 8-inch skirt below. The 82-foot boom is built of small sections that are connected together with flexible material, enabling it to easily follow the curvature of the water. In other words, it doesn’t fight the waves, but rather rides them. The above and below water sections, along with its unique aerodynamic and hydrodynamic design make the T-Fence a lightweight, portable and easy-to-use boom with equally heavyduty containment capabilities. ‘We believe that this system is a game changer, finally adding a long-anticipated layer of protection to oil spill response the ability to block spills right when they start, wherever they occur and with local operators,’ says Boaz Ur, co-founder and CEO of HARBO. ‘In oil spill response, it’s all about time. By keeping a spill from spreading in the first 10-30 minutes after it happens, we will multiply the recovery rates seen today and prevent disastrous consequences.’ WATERGATE INSTANT UNDERFLOW DAM Traditionally, when a spill reached a ditch or stream, a lot of times it would require responders to build a traditional underflow dam. This typically consisted of a lot of sandbags and dirt, pipes and significant manpower. The time it would take to
construct meant that crews had to get far enough ahead of the spill, in order to have enough time to build the dam before the spill spread further downstream. The WaterGate Instant Underflow Dam solves all of these problems and gives responders a simple and effective tool to rapidly dam up streams, small rivers and ditches. Key attributes include: • Installation takes only minutes with just two people • Flexible material allows it to adapt to most stream and ditch bottoms • No special equipment needed and no filling with water or inflating with air. Simply unroll the dam, unfold the upstream flap and let the flow of the stream fill it • No anchoring needed – use the weight of the water, as it flows into the dam, to weigh it down to the stream bottom • Underflow holes built into the downstream side, so that you can regulate the flow on the upstream side and keep the spill contained • Multiple units can be attached together to make unlimited lengths When petroleum spills come in contact with water bodies, rapid response time is of the essence. Compact, lightweight, state-of-the-art spill response tools can contain spills quickly and mitigate the cleanup costs and environmental impact. For more information This article was written by Troy Beaver, partner at HalenHardy. TBeaver@HalenHardy.com
01 Patented SpillBoa response booms require 400% less storage space than traditional sorbent booms 02 HARBO containment boom is easily deployed by on-site workers in critical first 10 minutes after spill 03 Flat, low-profile SpillBoa design allows more water-surface contact and faster containment 04 The Instant UnderFlow Dam for streams allows clean water to flow beneath and captures floating oil on top
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TECHNICAL FEATURE CYBER SECURITY
PREPAREDNESS AGAINST CYBER ATTACKS ONE thing is certain, cyber incidents are a daily occurrence and the response from the public is to generally scorn the organisations involved. For most it seems incomprehensible that such an organisation apparently did not learn from previous incidents or seems to not take cyber security seriously. THREATS Cyber security threats for tank terminals are present in all forms. Threats can originate from inside and outside the organisation and are continuously evolving, therefore any tank terminal operational technology (OT) domain cyber security should adjust to the changing threats. Operational personnel must be aware of the latest threats and know what to do in case of an attack. Preparation is key in order to minimise the business and operational impact of a security related incident. Therefore, cyber security should be well integrated in the operation of any tank terminal. Only then, when cyber security has been addressed within the organisation, can you ensure that cyber risks, including disruption in operations (loading/unloading), financial gain (stock manipulation) or industrial espionage (access to confidential data) as well as storage spoofing, ransomware, data leaks and CEO fraud, are managed appropriately. Besides these targeted attacks, organisations often are ‘collateral damage’ of an attack and not the intended target of the attack. This is especially the case in industrial chains where one organisation is dependent on another. STORAGE SPOOFING One of the threats almost specific to tank terminals is storage spoofing. Storage spoofing is the sale of storage capacity or stock of resources and materials at a tank terminal that do not exist. Storage spoofing attacks are mainly aimed at national and multinational companies that either operate or are looking to acquire storage facilities, but it also targets potential buyers of goods stored
at these facilities by masking themselves as legitimate sellers. These goods are offered under false pretences but turn out to be non-existent. Often fake websites that look almost identical to real tank terminal websites are set up to lure potential ‘targets’ in. RANSOMWARE Ransomware is in the news daily and poses a major threat to tank terminals operations. It is a type of malware that threatens to publish the victim’s data or perpetually block access to it unless a ransom is paid. This can severely impact a tank terminal’s operations and as shown in similar attacks on other sectors, can lead to a situation where the organisation cannot recover from such an attack. HACKS Although less common, hacks pose a threat to tank terminals since hacks can have direct an impact on operations. Often hacks are used to take control of or manipulate operations or to steal data and sensitive information. Hacks are more often used to infect organisation’s infrastructure with malware, causing a disruption (in the best case) of the primary process. CEO FRAUD The threat of CEO fraud is increasing and as such need to be considered by tank terminals since the financial consequences are significant. This is a form of Business Email Compromise attacks (BEC) which use email fraud to attack commercial and other organisations with the goal of obtaining money fraudulently. This type of attack typically targets specific employee roles within an organisation by sending spoof emails that fraudulently represent a senior colleague (CEO or similar) or a trusted customer. Such emails contain instructions to approve payments or release sensitive information. They use social engineering to trick the victim into making money transfers to the bank accounts of the attacker.
HEALTH, SAFETY & ENVIRONMENT (HSE) HSE risks are an important factor when constructing and operating tank terminals. Tank terminals are built so that HSE risks are minimised. Recent incidents show that even safety systems, used to bring the tank terminal into a safe state in case of an incident, are vulnerable to attack. Once the safety systems are compromised the tank terminal will not be able to return to a safe state in case of an incident. This means that in case the infrastructure is compromised by a hack, a hacker can cause irreparable damage to a tank terminal. In order not to be detected the hacker will, after a successful breach, manipulate existing infrastructure so that the breach is not detected. Based on the point of entry, the malicious hacker has direct access to the OT domain or uses various systems in the IT domain to reach the OT domain. TAKING CONTROL OF CYBER SECURITY Tank terminals should be prepared, both on organisational and technical level, for the latest threats and perform cyber security checks regularly. To manage cyber security within a tank terminal organisation, industry derived cyber security standards are frequently used as a basis. For example, the ITenvironment can use a cyber security standards framework like the ISO 27000 series while the OT-environment can use the international Industrial Automation & Control Systems (IACS) cyber security standard IEC 62443 as a basis to incorporate cyber security within the organisation. The IEC 62443 standard specifically provides guidance, based upon industry best practices, to manage cyber security within an OT-environment using a cyber security management system (CSMS). These cyber security standards consider security measures that address the three areas of cyber security: people, process and technology. Tank terminal organisations that have
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TECHNICAL FEATURE CYBER SECURITY already considered cyber security in the IT-domain can choose to incorporate cyber security for the OT-domain rather than reinventing the wheel. As such, cyber security should be considered as part of existing processes, HSE measures, policies and procedures. A CSMS as specified in the IEC 62443 should be aligned with the organisation’s vision and goals. An effective implementation determines the right balance of security measures that address people, process and technology. IEC 62443 addresses each of these, for example: training and awareness addresses people, policies and procedures address the process and system requirements address technology. Hudson Cybertec has a thorough experience supporting organisations with the development and implementation of a CSMS which is tailored to each organisation’s specific cyber security requirements. KNOW YOUR INFRASTRUCTURE Decisions on how to implement cyber security within a tank terminal can only be made if the organisation knows where it stands regarding cyber security. Organisations often overestimate their own cyber resilience level since most of their cyber security measures are taken in
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the IT-domain. Cyber security measures taken in the OT-domain, if any, are often only of a technical nature. As such, there is often a gap between the current and the desired situation. Therefore, as the first step to take control of an organisation’s cyber security, a baseline assessment should be performed. The baseline assessment provides the tank terminal organisation with a clear view of the cyber security situation. Hudson Cybertec often performs a baseline measurement in form of a cyber security assessment as a starting point to improve cyber security at a tank terminal. This gives the organisation a clear overview of its challenges in the area of cyber security. It allows the organisation to define and focus on those aspects of cyber security that have the highest priority for the organisation or need to be remediated first. In addition, it allows the organisation to identify so called ‘quick wins’ that can be easily implemented without too much effort. ONGOING PROCESS Tank terminal organisations shall be aware that the implementation of a CSMS is not a one-off exercise. Once a CSMS has been established, it needs to be maintained in order to stay effective. There is no need to establish a CSMS
if the management system is not used or supported by the organisation. If a CSMS is not used it does not add to the overall security of the tank terminal organisation. If a CSMS does not grow or change with the organisation and does not adjust to changes in legislation, threats and new insights, the CSMS will lose its effectiveness over time. To ensure that the CSMS stays relevant and changes with the tank terminal organisation, metrics (including KPIs) need to be defined and the CSMS needs to be reviewed on a regular basis or when internal or external factors warrant such a review. The implementation of a CSMS helps tank terminal organisations to manage, integrate and maintain cyber security within their organisation and as such comply with current and future regulations and the organisation’s vision. To ensure that a tank terminal organisation has a flying start and avoids costly mistakes when implementing a CSMS an external expert can support the organisation. For more information This article was written by Ilya Tillekens, senior security consultant at Hudson Cybertec. www.hudsoncybertec.com/en/tsm/
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TECHNICAL FEATURE CYBER SECURITY
CYBERSECURITY: A GROWING CONCERN FOR MARITIME
THE PORT ecosystem has traditionally been quite a complex one. The complexity and the diversity of the port ecosystem varies from various operational and economic models to different governance structures, large typology of stakeholders involved, responsibilities shared between stakeholders, etc. Additionally, the unicity of each port is reflected in a very diverse approach to information and operational technology (IT/OT) systems management. From one port to another, IT and OT systems are not the same, are not operated and managed by the same types of stakeholders and not implemented in the same way. The port ecosystem and, particularly, the ICT environment of ports have become even more complicated as the sector has been undergoing a digital transformation for a number of years. This digital transformation, best exemplified by concepts such as that of the Smart Port1, is centred around inter-connectivity and brings together a number of innovations and initiatives related to Internet of Things (IoT), cloud, blockchain, automation, artificial intelligence and many more. The overall objective of course is to meet business requirements in a more efficient, automated and cost-effective way, to enable entirely new functions and processes and to pave the way for further innovations to come, such as autonomous shipping. The examples of this transformation are numerous: IoT is being used to improve competitiveness and performance and to allow monitoring of port infrastructure to prevent security or safety incidents. Applied to maritime traffic surveillance, infrastructure management and terminal operations on goods or passengers, an IoT platform could monitor the port environment and operations, collect data
to optimise processes and improve the decision-making process. This would be possible through the implementation of sensors and RFID technology on port assets2. Cloud is being used to coordinate all the stakeholders of the port ecosystem and enable efficient and real-time exchange of data in a centralised way. Relevant use cases to improve operations efficiency include the development of ‘Port Single Window’ systems, central systems to manage all data exchange related to the port operations and mandatory declarations. However, this digital transformation has led to a change in the risk profile of the sector. The increase in the cyber-attack surface in ports – a direct result of more and more assets becoming accessible via networks – has increased the likelihood of incidents while the growing reliance of port operations on IT and OT assets has increased the potential impact of such incidents. As cyber security in the port ecosystem has not necessarily kept pace with the overall digital transformation, this has left ports as a potentially vulnerable target and a quite attractive target at that. In order to document the cybersecurity challenges that ports are facing today and propose actionable recommendations to address them, the EU Agency for Cybersecurity (ENISA), published in November 2019 a report focusing on port cybersecurity3.
scale targeted attack at one of Antwerp’s port terminals4. A drug cartel took control of containers movement over a two-year period from June 2011 and retrieved the data needed to collect it before the legit owner. In June 2017, a large-scale ransomware attack (NotPetya) led a total paralysis of the Maersk terminal in Rotterdam, with high risks of security and safety incidents5. The ransomware was quickly spread on all networks and encrypted all systems and devices, including backups. Port terminal operations were managed manually for more than two weeks. In September 2018, the port of Barcelona suffered a cyberattack6. Several servers were impacted, and the IT department launched a contingency plan so that the maritime operation would not be affected. In a similar attack against the port of San Diego7, the port was forced to use alternative technology systems. In July 2018, a ransomware attack disrupted electronic communications of COSCO Shipping Lines8. The US operations of the company, especially in the terminal of Port Long Beach, were affected. This list is only indicative of some wellpublicised incidents though many more cases have occurred without necessarily becoming public. A good example of this is a survey by Danish Shipping of its CEO panel, which showed that 69% of companies had experienced cyberattacks in 2017.
INCIDENTS A number of cyber-attacks in the maritime sector, including specific incidents involving ports have already occurred in the past few years, many of which have been well-publicised. A well-known incident involved a large-
CHALLENGES In this rapidly changing environment, ports are confronted with a number of challenges when it comes to maintaining a good cybersecurity posture and meeting cybersecurity objectives. These
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TECHNICAL FEATURE CYBER SECURITY challenges are related to a number of factors, from the complexity of the port ecosystem and the IT/OT environment, to the dynamics of the threat landscape and the lack of awareness and resources to actively address cybersecurity. Some of the main challenges include: • Lack of time and budget allocation to cybersecurity • Lack of user awareness and trainings; lack of human resources and qualified personnel • Complexity of port ecosystem in terms of stakeholders involved and technical complexity of co-existing IT and OT systems • Lack of cybersecurity certifications for ports products and services • Low and uncontrolled cybersecurity level of supply chain risks • Difficulties in staying up to date with the latest threats due to rapid growth of innovation in port ecosystem • Strong interdependencies between port systems and services and external services from other sectors EU AGENCY FOR CYBERSECURITY STUDY ON PORT’S CYBERSECURITY The study that the EU Agency for Cybersecurity (ENISA) published in 2019 aims to build a baseline of good practices to ensure cybersecurity of port systems and services, while mapping the relevant cybersecurity challenges and threats and highlighting some attack scenarios. The report intends to serve as a reference point to promote collaboration on maritime port ecosystem across the European Union and raise awareness of the relevant threats. An additional important element of the study is to
map port services and systems through a high-level reference model to set the scope of the work to be done and serve as a basis for future developments. The ENISA report lists a taxonomy of port assets that are relevant from a cybersecurity perspective. The asset categories identified include: • • • • • • •
Fixed infrastructure Mobile infrastructure OT systems and network OT end-devices associated IT systems IT end-devices associated Networks and communications components • Safety and security systems • Information and data • People The report also proposes a threat taxonomy to identify the threats that port ecosystems are exposed to. Based on the report findings, such threats are not limited to eavesdropping, interception, nefarious activity and abuse of systems and data by malicious outsiders, but also cover system failures, disasters, unintentional damage to systems and data, physical attacks and outages. ENISA also identified several attack scenarios that could take place in the port ecosystem. Such a scenario could be the propagation of ransomware leading to total shutdown of port operations. In this scenario, the hackers can develop a ransomware, exploiting different vulnerabilities to spread into the port networks and encrypt the different systems and devices such as workstations, servers, etc. This could lead to the destruction of the infected systems and the potential loss of backups, within servers, which could be encrypted. Another attack scenario focuses on the
compromise of OT systems with the aim to create a major accident in port areas. This scenario is specific to the OT world and the ICS specificities. Indeed, similar attacks have been publicly documented in other critical sectors, especially in the energy sector. This kind of attack doesn’t need to be generally sophisticated to be impactful and the major risks remain the connection with external networks and systems, especially the internet. The specificities of such attacks are the close link between the physical and logical world: the attack usually begins in the logical world (from the IT component) and has impacts in the physical world (damage to OT systems and end-devices, safety and security incidents, etc.). In order to face these challenges, implementing security measures both at organisational and technical level is essential for ports. Ports should define policies and governance covering both IT and OT, enforcing cybersecurity best practices, especially for the most critical assets, with a risk-based approach. It is also vital for ports to define relevant practices and processes regarding IT and OT management, to be followed by all port employees or more specifically by IT and OT teams in their daily operations within the port ecosystem. In addition, ports should enforce several technical measures in order to prevent cyber-attacks on ports IT or OT systems, detect and react to any attack and be resilient in case of a major impact from a cyberattack. Within the Agency’s study, the development of security measures for ports was one of the focal points. The study provides guidelines and recommendations for port authorities, private companies operating in ports and other stakeholders involved in the port ecosystem to help prevent or properly respond to potential cyberattacks on the port systems. In summary, the key security measure proposed by ENISA include: Policies such as: • Implementation of security policy and organisation • Processes and measures for risk and threats management • Security and privacy by design and throughout the lifecycle of systems and processes • Asset inventory and management • Security measures to ensure cyber resilience Organisational practices such as: • Endpoints protection and lifecycle management • Vulnerabilities management • HR security
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TECHNICAL FEATURE CYBER SECURITY • Supply chain management • Incident detection and response • Control and auditing • Physical security for IT and OT Technical measures such as: • Network security • Access control • Administration and configuration management • Threat management • Cloud security • Machine-to-machine security • Data protection • Update management • Detection and monitoring • ICS security • Backup and restore THE WAY FORWARD Considering the complexity of both the port landscape in terms of involved stakeholders and communication flows and system interactions, but also in terms of the evolving IT and OT environment, this is by no means an easy or straightforward endeavour. From a regulatory perspective, the EU has taken the first necessary steps towards addressing maritime cybersecurity by including key operators of the maritime sector in general and
the port ecosystem specifically in the Directive on the Security of Networks and Information Systems (NIS Directive). The development of the relevant regulatory and policy framework supports cybersecurity in the sector by introducing security and incident reporting requirements for operators and by improving national capabilities and enforcing cross-border collaboration. The EU Agency for Cybersecurity will also continue its work on the topic of maritime cybersecurity to provide relevant stakeholders with additional recommendations. Good practices referred to in ENISA’s study such as awareness raising about cybersecurity at board and staff level, sharing information on threats, incidents and good practices, addressing cybersecurity in the supply chain including cybersecurity certification of critical components, and integrating interdependencies risks in the overall cyber risk management process are key in improving the overall cybersecurity posture of the sector. References 1 See SmartPort definition: http:// parisinnovationreview.com/articlesen/what-is-a-smart-port 2 https://www.researchgate.net/ publication/261343481_Intelligent_
3
4 5
6
7
8
ports_based_on_Internet_of_Things and https://www.forbes.com/sites/ stevebanker/2016/04/01/thehamburg-port-authoritys-impressiveiot-project/#50f7ac776c64 https://www.enisa.europa.eu/ publications/port-cybersecuritygood-practices-for-cybersecurity-inthe-maritime-sector https://www.bbc.com/news/worldeurope-24539417 http://fortune.com/2017/06/27/ maersk-petya-ransomware-cyberattack/ https://www.securitynewspaper. com/2018/09/26/hacking-attack-inport-of-barcelona https://www.darktrace.com/en/ blog/troubled-waters-cyber-attackson-san-diego-and-barcelonas-ports https://portswigger.net/daily-swig/ chinese-shipping-company-coscohalts-operations-after-ransomwareattack
For more information This article was written by Dr. Athanasios Drougkas, NIS expert, EU Agency for Cybersecurity and Anna Sarri, NIS officer, EU Agency for Cybersecurity. The EU Agency for Cybersecurity (ENISA) has been working to make Europe cyber secure since 2004. www.enisa.europa.eu.
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TECHNICAL FEATURE STORAGE AUCTIONS
COMMODITISING A STORAGE ASSET Matrix Global is instigating a new energy market paradigm to transform how energy customers can transact for storage that results in better risk management, enhanced transparency and reduced credit exposure THE COMPANY behind the world’s first futures contract on crude oil storage capacity has ambitions to globalise the concept that transforms how energy customers can transact for storage. The concept of making storage capacity a tradable commodity through an online auction process is the brainchild of Matrix Global, a company comprising preeminent experts from the energy industry with extensive experience in trading, logistics and commodity financing. The company’s first initiative in 2015, was the successful launch of the first futures contract on crude oil storage capacity at the Louisiana Offshore Oil Port, the largest import facility in the US, along with leading derivatives marketplace CME Group. The initiative allows qualified entities to purchase storage during a once-a-month online auction. Qualified participants have the right, but not the obligation, to store one month of LOOP sour crude at the LOOP Clovelly facility. Each month, LOOP auctions storage capacity for commingled LOOP sour crude using the matrix auction programme. Monthly capacity is available for any one month can be up to 7.2 million barrels. Through the auction programme, LOOP has sold more than 400 million barrels of storage capacity. Additionally, exchangetraded futures and physical forward agreements have increased demand by opening the market to new participants. Since then, the concept has been expanded to include storing one month of WTI CME deliverable grade crude at the AMID facility in Cushing, Oklahoma. Since November 2019, the Cushing auction has sold 8.3 million of storage capacity. In an interview with Tank Storage, Richard Redoglia, CEO of Matrix Global Holdings and Matrix Auctions, says: ‘On Tuesday, March 17, to take advantage of the dual supply demand shock that has caused spreads to move into major contango, Matrix will be offering a total of 11.85 million barrels from May to June of 2021 in Cushing. ‘This highlights the adaptability the Matrix programme gives storage owners. Having
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the flexibility to act in real time to market conditions, without having to go through time consuming negotiations, levels the playing field.’ Redoglia explains how changing market dynamics means the industry needs to embrace new business concepts. ‘In the late 1980s there were four active future and derivative contracts that were utilised by the upstream and downstream sectors, now there are over 4,000. Radical changes have taken place in global energy markets and have challenged conventional trading models. ‘The way legacy storage assets are having to price their capacity is changing. Persistent backwardation and a collapse in forward volatility is making it necessary to look for new innovative ways of marketing storage capacity. ‘Our success with LOOP and Cushing provides the innovation that the market needs. Traditional storage customers have readily adopted the electronic storage auction programme and have been active participants in auctions. ‘Our auction methodologies increase participation, reduce credit exposure and improve liquidity and provide certainty to the asset owner that their capacity has a market value and gives the participant access to capacity when needed.’ The benefits of the auction process include increased participation of non-core players, a significant reduction in credit and legal costs as well as more optionality for operators by being able to manage the facility in a more robust manner.
Redoglia says that the portfolio theory to storage pricing considers storage as a portfolio and offers the option to diversify in order to maximise returns. A percentage of capacity is sold to term customers and a percentage is sold through the auction model that allows storage asset holders to participate in the volatility of the market. A new version of the Matrix Auction Programme allows the offering of storage capacity in increments determined by the facility. Multiple potential buyers can bid on individual tanks, and the best bid will win the capacity. Additionally, Matrix Global is looking to collaborate with terminal management and staff on the development of a bilateral contract programme for specified facility as well as looking at providing access to the Matrix Auction Platform to operators and their clients. ‘We understand our methodology is a challenge to the conventional way of doing business in the storage sector. Nothing is a total panacea for changing market structure. ‘Our view, though, is that we are another arrow in the quiver for storage facility owners to help meet the challenges that they are facing and will continue to face in the future. The current market movements, which have seen Brent spreads moved to historically wide levels of contango, proves the value of our methodology.’ For more information www.matrix.global
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Congratulations to all the winners at last night’s awards! Nuria Blasco Fujairah Oil Terminal FZC (FOT) Re-Gen Robotics TWTG CLH Sprague Operation Resources LLC Union Maritime et Fluviale Marseille-Fos (UMF) John Reynolds CMIOSH TECAM Toptech Systems Diakont - see full details on all the winners in the next edition of Tank Storage Magazine
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Throwback to this year’s Tank Storage Awards - it’s going to be a long time until we’re drinking champagne again... Hope allour friends & clients are keeping well and and adjusting to working from home. I look forward to seeing you all again in the (hopefully) not so distant future!
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It hasn’t been easy breaking the habit of a lifetime and avoiding handshakes this week, but after a day of ‘elbow tapping’ yesterday, we’re getting used to it! A big thank you to Karthryn Clay and the International Liquid Terminals Association (ILTA) for showing your support to StocExpo and Tank Storage Magazine this week! #safetyfirst
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Tank Storage Magazine, (ISSN 1750-841X) is published seven times a year (in February, March, May, August, September, October and November) by Easyfairs UK Ltd, 2nd Floor, Regal House, 70 London Road, Twickenham, TW1 3QS, UK. The US annual subscription price is $243. Airfreight and mailing in the USA by agent named WN Shipping USA, 156-15, 146th Avenue, 2nd Floor, Jamaica, NY 11434, USA. Periodicals postage paid at Jamaica NY 11431. US Postmaster: Send address changes to Tank Storage Magazine, WN Shipping USA, 156-15, 146th Avenue, 2nd Floor, Jamaica, NY 11434, USA. Subscription records are maintained at Easyfairs UK Ltd, 2nd Floor, Regal House, 70 London Road, Twickenham, TW1 3QS, UK. Air Business Ltd is acting as our mailing agent.
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EVENTS 2020/2021 CALENDAR
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