Tank Storage Magazine December 16/January 17 by Tank Storage Magazine

The voice of the storage terminal industry

DECEMBER 16/JANUARY 17 Volume 12 Issue No.6

STORAGE FOR THE INLAND ENERGY MARKETS

Vivo Energy Kenya is expanding its storage offering on the back of a strong economy

NEW BEGINNINGS IN TANK STORAGE

Contanda Terminals want to significantly increase its petrochemical & hydrocarbon storage portfolio

REGIONAL FOCUS: AFRICA

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CONTENTS

Contents News TERMINAL NEWS 09

The Americas

Africa & Middle East

16 Europe 19 Asia 20 Global 21

Incident report

Storage in Africa 25

Tank terminal update: Africa

Storage for the inland energy markets

Africaâ&#x20AC;&#x2122;s storage potential waits to be tapped

Africa: a growing clean product short

Oil storage opportunities amid Africaâ&#x20AC;&#x2122;s soaring energy demand

Market analysis

DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

Tough times ahead for oil

Marine fuel sulphur limit: a significant change for all supply chain players

Inspection and maintenance failure led to West Virginia chemical leak

CONTENTS

Contents

Profiles 31

New team, new energy

An appealing energy storage solution

New beginnings in tank storage

Technical features 52

Technical news

Welding: from hours to minutes

Digitalisation: the future for tank storage

Evolving into steel solutions for storage tanks

Protecting your storage tanks from the inside out

Transforming operations with the Industrial Internet of Things

Meeting the challenges of lifting tanks

Getting your arms around functional safety

Events 76

Africa: Is it worth the risk?

An active expansion and investment market

Upcoming events

Advertisersâ&#x20AC;&#x2122; index

DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

CONTENTS

DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

CONTRIBUTORS

DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

CONTRIBUTORS

Contributors DECEMBER 16/JANUARY 17 Volume 12 Issue No.6

The voice of the storage terminal industry

DECEMBER 16/JANUARY 17 Volume 12 Issue No.6

STORAGE FOR THE INLAND ENERGY MARKETS

Vivo Energy Kenya is expanding its storage offering on the back of a strong economy

NEW BEGINNINGS IN TANK STORAGE

Contanda Terminals want to significantly increase its petrochemical & hydrocarbon storage portfolio

REGIONAL FOCUS: AFRICA

Front cover courtesy of TF Warren

PUBLISHER Margaret Dunn t: +44 (0)20 3551 5721 e: margaret@tankstoragemag.com

ONLINE & CONTENT EDITOR Jasmin McDermott t: +44 (0)20 8843 8159 e: jasmin@tankstoragemag.com

INTERNATIONAL SALES MANAGER David Kelly t: +44 (0)20 8843 8161 e: david@tankstoragemag.com

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Tank Storage Magazine (ISSN 1750-841X) is published six times a year (in February, March, May, August, October and November) by Easyfairs UK Ltd, 2nd Floor, Regal House, 70 London Road, Twickenham, TW1 3QS, UK. The 2016 US Institutional subscription price is $240. Airfreight and mailing in the USA by Agent named Air Business, C/O Worldnet Shipping USA Inc., 155-11 146th Street, Jamaica, New York NY11434. Periodical postage pending at Jamaica NY 11431. 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.

DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

Part of

COMMENT

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COMMENT

New beginnings

t will be hard to forget the events of 2016. The UK’s decision to withdraw from the EU and the surprise election of Donald Trump as the next US president are just some of the highlights from quite a surprising year. Despite the price of oil rebounding slightly from the historical lows seen at the beginning of the year and evidence of markets slowly rebalancing, there are still tough times ahead. We could even enter a new period of price volatility as supply and demand economics seek an equilibrium. Against this backdrop, OPEC voted to implement the ‘Algiers Accord’ – an agreement to limit crude oil production in 2017 to accelerate the rebalancing of global markets. This is the first production cap that OPEC has imposed since 2008 and clearly reflects the considerable strain that the market is under. The significant investment cuts, resulting in a slowdown in new upstream projects, underpin the real risk that supply may not meet demand in the future. However, 2017 still holds a lot of potential for the industry. Demand for oil in aviation, road transportation and as a feedstock for chemicals will continue to grow and global oil demand is set to steadily rise according to the IEA’s World Energy Outlook 2016. One region that holds significant promise is Africa, which offers untapped opportunities for operators. Despite contending with insufficient infrastructure, the continent has 8% of the world’s proven reserves and its customer base is

expected to double by 2050. On the back of a surge in demand for diesel and petrol products and a blossoming economy, Vivo Energy Kenya has expanded capacity at its Mombasa terminal to keep up with demand. We speak to Henry Mwangi about Kenya’s growing potential. Additionally, Gulf Petrochem’s Thangapandian Srinivasalu explains more about why the time is now right to explore African assets and how it is becoming an increasingly competitive space. Away from Africa and across the pond, Westway Terminals has emerged with a new name – Contanda Terminals – and an ambition to focus more on the flourishing petrochemical and hydrocarbon market. We find out more about the company’s plans from president and CEO G.R. ‘Jerry’ Cardillo. Next year is an exciting one for the Tank Storage Magazine team as we host our inaugural Tank Storage Awards gala dinner and ceremony at the Floating Pavilion in Rotterdam. The response to these awards has been impressive – two thirds of the tables have already been sold and nominations continue to come in from across the industry. We look forward to celebrating industry excellence with many of you next year. So here is to a new year and new beginnings. With best wishes and a happy new year, Jasmin

An unexpected meeting

You never know who you are going to meet in this industry and a visit to a loading company in August was no exception. Myself and my StocExpo colleagues Nick and Matthew met Monty – a Ugandan, lowland, silverback gorilla previously from Longleat Zoo. During his time at the Zoo, Monty lived on an island in a lake. One day, he spotted a female gorilla on a nearby island and was determined to be with her. Sadly, his pursuit of love ended in tragedy and he fell into the water of the lake and drowned in 1986. Determined that his legacy will live on, he has been immortalised and taken in by his new family who are keen for any pictures of him during the early and mid-1980s.

DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

TERMINAL NEWS l CONTENTS

Terminal news All the latest terminal storage news from around the globe

17 VTTI & ENNA to operate new Adriatic storage terminal

12 Federal court intervention sought in Dakota Access Pipeline project

The Americas 09 NuStar buys terminal assets from Martin Midstream Partners

Enterprise: Energy industry survived harshest part of market volatility

American Midstream and JP Energy merge

10 Buckeye to acquire 50% interest in VTTI

Trumpâ&#x20AC;&#x2122;s election could have significant effect on global oil industry

14 Vopak Horizon Fujairah commissions extra storage capacity

Europe 16 Four people die following BASF explosion 17 VTTI & ENNA to operate new Adriatic storage terminal

Inter Pipeline reports strong liquid storage segment

HES Wilhemshaven starts LPG storage facility

11 Magellan focused on key infrastructure projects

18 Odfjell Terminals earning slightly down

ExxonMobil and Sunoco combine crude oil assets

12 Worker dies following Colonial Pipeline explosion

Sunoco to acquire Energy Transfer Partners

Federal court intervention sought in Dakota Access Pipeline project

AFRICA & MIDDLE EAST

Chevron to build storage facility in France

ASIA 19 Storage facility planned for Pakistan port

Puma reports sales and volumes growth in downstream business

Ergon expands with new storage terminal in South Korea

13 SOCAR reaches agreement to acquire Turkish terminal

Odfjell sells ownership in Oiltanking in Oman

Global

Ivory Coast plans significant investment in pipelines and storage

20 Global energy demand set to peak before 2030

14 Vopak Horizon Fujairah commissions extra storage capacity

OPEC cuts production to ease global oil glut

Oil & gas majors to invest $1 billion in low emissions technologies

Platts appointed to distribute weekly storage inventory data

For the latest news and developments visit www.tankstoragemag.com 08

DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

TERMINAL NEWS l THE AMERICAS

NuStar buys terminal assets from Martin Midstream Partners Martin Midstream Partners plans to sell some of its Corpus Christi terminal assets to NuStar. The company is selling its 900,000 barrel crude oil storage terminal, known as the Corpus Christi crude terminal, its refined product barge terminal, certain pipelines and related easements as well as dockage and trans-loading assets for a gross consideration of $107 million. Martin Midstream expects to receive net proceeds of around $93 million after transaction fees and expenses. The transaction is expected to close prior to year-end 2016. Ruben Martin, president and CEO, of Martin Midstream, says: ‘This sale of assets is a significant positive event for the partnership and a necessary first step to ultimately returning Martin Midstream to a growth trajectory. ‘While these assets have historically performed well for the partnership, they are not critical to its success moving forward. Given our focus on reduction of leverage, we feel this asset sale and distribution right-sizing are prudent moves for the partnership at this time.’

Enterprise: Energy industry survived harshest part of market volatility Enterprise Products Partners says the energy industry will have a firmer foundation in 2017 as the gap between supply and demand narrows. In its third quarter financial report Enterprises’ general partner CEO Jim Teague believes that the energy industry has ‘weathered the harshest part of this cycle’ as the company reported its adjusted EBITDA for the third quarter was $1,259 million compared to $1,310 million in the same period in 2015. Its capital investments were $621 million in the third quarter and it currently has $5.6 billion of growth capital projects under construction that will begin commercial service between now and the end of 2018 including a crude oil pipeline and a natural gas processing plant. Teague says: ‘While the industry may still experience bouts of commodity price weakness and volatility, we believe it has a firmer foundation going into 2017 as the gap between supply and demand has narrowed and should continue to do so. ‘We are seeing significant ‘green shots’ of producer activity as a result of the opportunity to hedge future sales of crude, NGLs and natural gas at economic levels. ‘In additional to the acceleration of investment in the Permian Basin, we are seeing activity attributable to new discoveries, deployment of new technology, including in well-established areas such as the Eagle Ford and Haynesville, and changes in ownership of acreage as some producers emerge from restructuring.’ He adds that during the third quarter, Enterprise transported more than five million barrels per day through its liquids pipelines and handled more than 1.2 million barrels per day at its marine terminals. A construction project at Enterprise’s EFS Midstream assets added more than nine million barrels of additional storage capacity at the ECHO, EHT and Beaumont facilities since the third quarter 2015. The new tanks contributed a $13 million increase in gross operating margin in the 2016 third quarter compared to the same quarter in 2015.

DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

American Midstream and JP Energy merge A transformational merger between American Midstream Partners and JP Energy Partners will create a diversified midstream business in leading North American basins. The combined partnership will have an estimated enterprise value of $2 billion and the improved scale and financial flexibility will result in investment in growth projects, third party acquisitions and potential drop downs from ArcLight Capital, which is the sponsor. The combined entity is expected to generate pro-forma adjusted EBITDA of approximately $185 million. The merged midstream business will operate in the Permian, Gulf of Mexico, Eagle Ford and Bakken. Lynn Bourdon, chairman, president and CEO of American Midstream says: ‘The merger elevates and reshapes our two businesses into a new platform that we expect will allow for higher growth, new business opportunities and a stronger financial position than either company could achieve. ‘This transformational combination is the next logical step in expanding services from the wellhead to the end user market.’ The midstream infrastructure comprises, amongst others, more than 3,100 miles of gathering and transportation pipeline, over six million barrels of above-ground liquids storage capacity and the third largest wholesale propane business in the US. Dan Revers, managing partner of ArcLight, adds: ‘We believe the merger between American Midstream and JP Energy makes a tremendous amount of sense, offering all stakeholders a solidified financial profile on a stronger, more diversified platform with multiple avenues for growth.’ The merger is expected to add complementary assets by leveraging combined positions in the Permian, crude oil, liquids, logistics and terminals in addition to $10 million of run-rate synergies. The transaction is expected to close in late 2016 or early 2017.

TERMINAL NEWS l THE AMERICAS

Buckeye to acquire 50% interest in VTTI

Trump’s election could have significant effect on global oil industry

Once the transaction is complete, VTTI will be 50% indirectly owned by Buckeye and 50% indirectly owned by Vitol. The move is expected to add greater strategic value to VTTI and will further strengthen VTTI’s position as an independent provider of energy storage. VTTI owns and operates approximately 54 million barrels of petroleum product and crude oil storage capacity across 13 terminals on five continents and it is this significant international footprint that Buckeye will access and leverage. Buckeye currently has 6,000 miles of pipeline and a terminal network in the US comprising more than 120 liquid petroleum products terminals with capacity of over 110 million barrels. VTTI will continue to be run as an independent, standalone company under the leadership of CEO Rob Nijst. Nijst says: ‘Through this transaction, VTTI will have two strong shareholders that will support VTTI’s continued growth as an independent global terminal operator.’ The transaction is expected to close in early January 2017.

Some of the policies laid out during his election campaign contain elements that could have notable impacts on regulation, tax and investment opportunities in the sector. An analysis by Will Scargill, GlobalData’s senior oil and gas analyst says that Trump’s domestic energy policy statements during the campaign suggest a positive outlook for the oil and gas sector. He has indicated that he would approve the Keystone XL pipeline project, which President Obama denied a presidential permit for in 2015, if the operator reapplies for approval. Scargill says it could improve supply side economics on heavy crude for US refiners by increasing supply capacity from Alberta, where production is expected to increase by approximately 500,000 barrels per day by 2020. This would also suggest strong prospects for the North Dakota Access pipeline, which provides additional lower cost takeaway capacity from the Bakken, as federal agencies have requested a construction pause.

Buckeye Partners has signed an agreement to buy a 50% stake in VTTI for $1.15 billion.

The election of Donald Trump as the next US President could have a profound effect on the global oil and gas industry.

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TERMINAL NEWS l THE AMERICAS

Magellan focused on key infrastructure projects

Magellan Midstream Partners has allocated $1.4 billion on construction and expansion projects until 2018. In its third quarter financial results, it says it remains focused on expansion opportunities and continues to identify new opportunities for future growth. It expects to spend $850 million in 2016, $300 million in 2017 and 250 million 2018 to complete its current slate of construction projects. These estimates include an incremental $100 million of spending for new growth projects, such as construction of additional storage at the partnership’s Galena Park, Texas terminal and along Magellan’s refined product pipeline system as well as a new Wyoming origin for the Saddlehorn pipeline. Construction is almost complete for its Corpus Christi condensate splitter and significant progress has been made on its HoustonLink and Seabrook Logistics joint ventures. The company says it is evaluating well in excess of $500 million of other potential growth projects in earlier stages of development and acquisition opportunities. Its net income for the third quarter was $194.6 million compared to $251 million for the same quarter the previous year. This decrease was due to reduced profits from its commodity-related activities due to market pricing adjustments for related hedging positions.

Michael Mears, CEO says: ‘Magellan continues to deliver solid financial results while maintaining our focus on developing opportunities to grow our business in a disciplined manner. During the third quarter of 2016, we successfully started operation of the Little Rock and Saddlehorn pipelines, representing key infrastructure projects to deliver refined petroleum products and crude oil to important demand centres.’

ExxonMobil and Sunoco combine crude oil assets Sunoco Logistics and ExxonMobil have formed a joint venture to combine some of their key crude oil logistics assets. The companies will form Permian Express Partners, with Sunoco contributing its Permian Express 1, Permian Express 2 and Permain Longview and Louisiana Access pipelines. ExxonMobil will contribute its Longview to Louisiana and Pegasus pipelines, Hawkins gathering system, an idle pipeline in southern Oklahoma and its Patoka, Illinois terminal. The move will create a stronger crude oil logistics network to meet market demand, provides additional take-away opportunities for shippers and expands ExxonMobil’s options to supply its network of refineries.

DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

Sunoco will be the majority owner and operator of the joint-venture’s assets and ExxonMobil and its affiliates will enter into a preferred provider agreement. Michael Hennigan, president and CEO of Sunoco, says: ‘This combination of certain strategic crude oil assets, together with our existing and recently acquired Midland Basin assets, greatly enhances our service capabilities for the Permian Basin, one of the most prolific shale areas with incredible growth opportunities. ‘We expect to achieve significantly greater long-term accretion as domestic crude oil production grows over time.’

TERMINAL NEWS l THE AMERICAS

Worker dies following Colonial Pipeline explosion

A worker who was part of a crew working on Colonial Pipeline’s petrol pipeline died after part of the line exploded. On October 31 the trackhole used by the contract crew hit the line and the petrol ignited and caused a fire, which was allowed to burn out under the supervision of local fire and emergency management personal. One worker died and five people were taken to hospital for treatment and pipeline 1 along with pipeline 2, which transports distillates, were shut. The company says in a statement: ‘Our deepest condolences go out to the family and loved ones of the deceased, and our thoughts and prayers remain with the four individuals who were injured and continue to receive care at area hospitals.’ A containment boom was deployed at two different locations on the Cahaba River. Line 1 was shut for the week and line 2 was restarted eight hours after the fire. Line 1, which transports petrol, has been described by Schneider Electric’s Brian Milne as an over-subscribed, and heavily used pipeline, with a flow rate of 1.37 million barrels per day. As a result of the incident, futures contracts spiked by 18 cents – hitting a five month high. The incident followed an almost two week shutdown and restricted service of Colonial’s petrol pipeline in September following a leak, which saw 252 gallons of petrol leak from the rupture. As a result, some stations ran out of fuel and, coupled with the impact following Hurricane Matthew, East Coast petrol supply was drawn down from a more than 26-year high.

Sunoco to acquire Energy Transfer Partners Sunoco Logistics has entered into a merger agreement to acquire Energy Transfer Partners to create the second largest master limited partnership as measured by enterprise value. The deal will provide greater opportunities to more closely integrate Sunoco’s natural gas liquids business with Energy Transfer’s natural gas gathering, processing and transportation business. It is expected that the transaction will allow for commercial synergies and cost savings in excess of $200 million annually by 2019. Both companies have spent approximately $15 billion in organic growth capital over the past few years, and these expenditures, combined with the completion of other major capital projects currently in progress, are expected to continue to generate strong distributable cash flow growth.

Federal court intervention sought in Dakota Access Pipeline project

Energy Transfer Partners and Sunoco Logistics Partners have made two federal court filings following the postponement of an easement decision related to the Dakota Access Pipeline.

The companies are seeking a judgement ‘declaring that Dakota Access Pipeline has the legal rightof-way to build, complete and operate the pipeline without any further action from the Army Corps of Engineers’. This follows a decision from the Corps that additional discussion and analysis is needed before making a final decision on whether to grant an easement over construction, which would cross underground part of Lake Oahe and impact the Standing Rock Sioux Tribe. It says in a statement that while these discussions are ongoing, construction on or under Corps land bordering Lake Oahe cannot occur because the Army has not made a final decision on whether to grant an easement. In its court filings, Dakota Access Pipeline is requesting the court to confirm that the Corps has already granted all of the relevant authorisations and given the pipeline its right-of-way to finish it beneath the federal land that borders the lake as a result of its prior actions in granting a permit to allow the pipeline to cross the Missouri River at Lake Oahe. Kelcy Warren, CEO of Energy Transfer Partners, says: ‘Dakota Access Pipeline has waited long enough to complete this pipeline. [The pipeline] has been grated every permit, approval, certificate, and right-of-way needed for the pipeline’s construction. ‘It is time for the courts to end this political interference and remove whatever legal cloud that may exist over the right-of-way beneath federal land at Lake Oahe.’ He adds: ‘This action is motivated purely by politics at the expense of a company that has done nothing but play by the rules it was given. To propose, as the Corps now does, to further delay this pipeline and to engage in what can only be described as a sham process sends a frightening messages about the rule of law.’ A series of protests have taken place against the controversial pipeline and a UN human rights expert has called for a halt to the construction of the pipeline – citing significant risks to the drinking water of the Standing Rock Sioux Tribe and the potential destruction of their burial grounds and scared sites.

DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

TERMINAL NEWS l AFRICA & MIDDLE EAST

SOCAR reaches agreement to acquire Turkish terminal SOCAR is set to acquire the Aliağa Storage Facilities owned by OMV Petrol Ofisi following an agreement with OMV Aktiengesellschaft. The facility comprises around 200,000 m3 of fuel storage capacity and is located near Izmir in Turkey. In addition, the terminal also has LPG storage facilities with 45,000 m3 capacity. Following the agreement, with a group of international investors led by SOCAR, the facility will be used for storage and will be used as shipping points for STAR refinery, which is due to be fully operational by 2018. The acquisition of the terminal is part the logistics strategy of the refinery project. SOCAR Turkey CEO Zaur Gahramanov says the acquisition will further enhance the effectiveness of STAR refinery operations as well as improving co-operation with distribution companies using the same facility. He adds there is also a possibility of increasing capacity up to 700,000 m3 and capacity at the LPG storage facilities could also be increased. As part of the long-term storage deal and for the duration of the agreement, OMV Petrol Ofisi will continue to use the oil and LPG tanks in Aliağa. The deal will also provide OMV Petrol Ofisi with the rights to use the terminal for imports and shipping.

Odfjell sells ownership in Oiltanking in Oman Odfjell Terminals has entered into an agreement to sell is 29.75% indirect ownership in Oiltanking Odfjell Terminals in Oman for $130 million (€118 million). Marquard & Bahls Group – the parent company of Oiltanking – has acquired 21.99% of the ownership, making it the indirect majority shareholder of the terminal. The transaction will result in a net gain of approximately $90 million for Odfjell. The terminal, which has been operational since late 2008, is the only liquid storage provider in Sohar Port and Free Zone, with a capacity of almost 1.4 million m3 and operates six deep water berths. The facility is a joint venture of Oiltanking Odfjell Terminals Oman (70%), Oman Oil Company (25%) and a private investment company (5%). Following the acquisition, Marquard & Bahls’ total indirect holding will be 51.74%. Frank Erkelens, CEO of Odfjell Terminals adds: ‘This divestment is in line with our strategy to focus on the terminals where we have managerial control of the assets and to further invest in growth opportunities in our core markets, such as Houston and Rotterdam.’ Julio Tellechea, COO of Marquard & Bahls, says: ‘We are convinced that this acquisition will strengthen our group’s leading position in providing exceptional storage services in a strategic location.’

DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

Ivory Coast plans significant investment in pipelines and storage

The Ivory Coast plans to invest almost $1 billion in a series of oil product pipelines and storage to create the largest fuel hub in sub-Saharan Africa.

According to Reuters, the country’s energy minister says the energy company will be tasked with constructing 1.5 million m3 of storage by 2020. In a statement, the energy ministry said this would make the Ivory Coast ‘the Rotterdam of Africa and the biggest oil product market in sub-Saharan Africa’. The storage company will invest $718.46 million and the transport company will invest $256.59 million. Demand for fuels is strong in Africa, especially for transport fuels, diesel and petrol due to a rising population. Currently, these fuels are imported due to limited refining capacity. The statement said that a dozen investors have shares in the two new companies, including Total as well as Vivo, Puma, Oil Libya and IPSL.

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TERMINAL NEWS l AFRICA & MIDDLE EAST

Vopak Horizon Fujairah commissions extra storage capacity A total of 478,000 m3 of capacity has been commissioned at Vopak Horizon Fujairah, bringing overall capacity at the site to 2.6 million m3. The 7th phase of the Project Black Pearl expansion is the first crude oil capacity in the Middle East for independent storage purposes with open access and VLCC access. The open access functionality means capacity for all parties that need to store crude oil. A statement

from Vopak says that it is one of the largest independent oil storage terminals in the world. The expansion comprises five storage tanks, one manifold and a pipeline connection to the VLCC jetty as well as to other jetties in the Port of Fujairah. All crude handled in the new tankage will be loaded and

discharged through the jetties of the Port of Fujairah, which opened a new VLCC jetty in September. Vopak is the launching customer for this new jetty. H.E. Saif Humaid Al Falasi, group CEO for ENOC, says: ‘Fujairah will further boost its influence as an oil-trading hub with the addition of the region’s first crude-shipment jetty and expanded storage facilities. Vopak Horizon Fujairah will be an integral part of that growth over the next few years.’ Eelco Hoekstra, chairman of the executive board and CEO of Royal Vopak, adds: ‘We are very excited that, with this open access crude oil capacity, we are together laying the foundation for Fujairah to also become a trading hub for crude oil in the important Gulf region.’

Platts appointed to distribute weekly storage inventory data

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Fujairah Oil Industry Zone (FOIZ) has appointed S&P Global Platts to distribute the emirate’s weekly storage inventory data starting in early 2017. The data agency was awarded the mandate to distribute weekly inventory storage data as part of efforts to position Fujairah as a global oil and trading storage hub. The published data will include an aggregate breakdown of fuel oil, middle distillates and light ends. The FOIZ has also created the Fujairah Data Committee to collect, verify and distribute inventory data to replicate the data sets that are provided in other hubs such as Singapore and Rotterdam. Dr Sheikh Rashid bin Hamad Al Sharqi, vice chairman of FOIZ and chairman of Fujairah Cult and Media Authority, says: ‘[This] is another step forward in the right direction towards transforming Fujairah into a major global hub for the storage and trading of petroleum products.’

DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

TERMINAL NEWS l AFRICA & MIDDLE EAST

BROADEN YOUR HORIZON FOR SUCCESS.

YOUR PARTNER IN ENERGY Femke Brenninkmeijer | Cluster Manager Energy femke.brenninkmeijer@portofamsterdam.nl +31 6 51 89 84 12 www.portofamsterdam.com

DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

TERMINAL NEWS l EUROPE

Four people die following BASF explosion Four people have died and seven were severely injured following an explosion and fire at BASFâ&#x20AC;&#x2122;s biggest production site in Ludwigshafen. accident, which will look at the sequence of events and the cause of the incident. It involves the investigation of the safety of the affected pipelines and the occupational safety measures. Additionally, BASF has commissioned a report by an independent expert for the safety-related assessment of the long-distance pipelines. Experts from the state criminal police are looking into the circumstances of the accident. Their investigations centre on the maintenance procedures and the safety measures that were carried out prior to the maintenance work. The company is in the process of restarting all plants that were halted following the incident. Individual pipelines are still sealed off and the main parts of the harbour are still not operational as repair and remediation work at the North Harbour will take several months.

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12.08.16 12:30 DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

Picture credit: Reuters/Kai Pfaffenbach

Two employees of the BASF fire department and an employee of a tanker, which was anchored in the harbour, died as a result of the fire and explosion on October 17. Another employee of the BASF fire department who was severely injured in the explosion died on October 29. Seven people were seriously injured and another 22 suffered slight injuries. Four of the seriously injured have been released from hospital. The fires took 10 hours to extinguish and resulted in the closure or partial closure of more than 20 facilities, including two steam crackers. The District Attorney of Frankenthal/Palatinate and the Police Headquarters of Rheinpfalz found that a cut was made in a pipeline with a cutting disc. Maintenance work using an angle grinder was in progress on an adjacent pipeline and the cut pipeline was not part of this work. BASF says that according to the current, preliminary evaluation, the possible chain of events could be that the butylene mixture in the cut pipeline leaked out and ignited due to the sparks produced by the angle grinder. This could have lead to the fire and the resulting explosion. BASF has commissioned an independent expert to analyse the

TERMINAL NEWS l EUROPE

VTTI & ENNA to operate new Adriatic storage terminal A newly built terminal in the Adriatic’s main deep-water port will be jointly expanded and operated by VTTI and Energia Naturalis Holding (ENNA). Both companies have signed an agreement for VTTI to purchase 70% of Adriatic Tank Terminal in the Port of Ploče. Under the agreement, VTTI will manage the newly-completed tankage for clean petroleum products and will construct and operate further tank capacity alongside a significant new LPG storage capability. Phase one of the terminal has already been constructed. In September 2016, construction of 50,000 m3 capacity for clean petroleum products was completed. The second phase will deliver more than 200,000 m3 of petroleum storage, as well as up to 60,000 m3 of LPG storage. It will be the largest new LPG storage project in the heart of the Adriatic. Additionally, extra space at the site will allow the option of a phase three project for further storage of a minimum of 100,000 m3 of petroleum products. The terminal will play a strategic role in strengthening the region’s security of energy supply. Rob Nijst, CEO of VTTI, says: ‘VTTI is very pleased to enter the Adriatic market, supported by our joint venture partner. The facility will enable the region’s energy trade by developing a safe and efficient terminal facility. The growth of the city of Ploče and the region will gather even more speed in the near future, and we are there to support it.’

HES Wilhelmshaven starts LPG storage facility LPG storage and handling operations have started at HES Wilhelmshaven’s terminal following an upgrading project. The company refurbished and upgraded six existing LPG spheres with a total capacity of 16,480 m3, jetty infrastructure, fire fighting system, pipelines and rail loading infrastructure. The spheres are supported by a long-term agreement. Sven Partzsch, managing director of HES Wilhelmshaven, says: ‘We are existed to further develop and diversify HES Wilhelmshaven as a

prime independent storage terminal. The infrastructure has been modified and upgraded according to our high standards for safety and flexibility.’ Paul van Poecke, head of liquid bulk terminals at HES International adds: ‘We are very pleased with the truck and railcar distribution function into the northern German markets that HES Wilhelmshaven has built up over the last few years for petroleum products and LPG.’

Inter Pipeline reports strong liquid storage segment Inter Pipeline’s storage segment Inter Terminals has recorded strong third quarter financial results and record high utilisation rates. Its European bulk liquid storage segment generated funds from operations of $30.2 million in the third quarter of 2016, compared to $29 million in the third quarter of 2015. Inter Terminals executed two long-term contracts to provide a total of 175,000 barrels of new chemical storage capacity at its Seal Sands Terminal in the UK. Five new storage tanks will be constructed for $25 million and are due to be complete by mid-2017. The company reports that utilisation rates were at record highs, with an average of 98% compared to 93% in the same quarter last year. Utilisation rates were higher in all operating countries predominately due to increased storage demand and stronger contango pricing relationships in certain petroleum product future markets. Inter Pipeline’s funds from operations in its oil pipeline’s business remained stable and throughput decreased by 8%, driven by a reduction in product drilling and development activity due to low commodity prices, natural production declines and weather related disruptions.

DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

TERMINAL NEWS l EUROPE

Odfjell Terminals earnings slightly down

Odfjell’s tank terminals segment continues to deliver stable results despite signs that storage markets are weakening in some areas. Odfjell Terminals delivered an EBITDA of $11.6 million in the third quarter – slightly down from $12.1 million in the previous quarter. The occupancy rate of commercially available

capacity was 96% and available capacity amounted to 3.9 million m3 – a slight reduction from the last quarter mainly due to regular maintenance of large tanks in Rotterdam.

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Distillation volumes in Rotterdam continued to increase in the third quarter. The terminal in Rotterdam has now delivered positive EBITDA for four consecutive quarters and the company expects stable performance for the fourth quarter. Additionally, the operator’s terminal in Tianjin China has obtained its operating approval both for the jetty and the tank farm and is due to start operations shortly. The financial performance for the last quarter of 2016 is expected to be stable or marginally reduced, as ‘the storage markets are showing some sign of weakening, most notably in the US’. Kirstian Mørch, CEO of Odfjell, says: ‘Our markets continue to be challenging, but we continue to see improvements in our competitiveness, which softens the impact on the Odfjell results. The sale of the Oman terminal at an attractive valuation shows some of the underlying value in our terminal business.’

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Chevron to build storage facility in France Chevron plans to add additional storage for Group II base oil in Le Havre, France.

The location is the fifth Group II supply hub in Europe for the Chevron base oils network, which has facilities in Belgium, England, Germany and Turkey. Initially, grades inventoried at the facility with include Chevron neutral oil 100R and 220R. Chevron neutral oil 600R tankage could be added at a later stage. The storage, owned by LBC Sogestrol Le Havre, is located near to the mouth of the Seine River. The location provides easy access to the many lubricant blenders and additivity companies upstream. According to F+L Daily, Cary Knuth, Chervron’s VP of base oils, says: ‘We chose Le Havre as our next hub in Europe because we can offer customers along the Seine a shorter supply chain. With regular, reliable delivery, customers can minimise their base oil inventory while blending higher performing lubricants.’

DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

TERMINAL NEWS l ASIA

Storage facility planned for Pakistan port

A $25 million storage facility by Fauji Oil Terminal and Distribution Company and Trans Group is planned for Port Qasim in Pakistan.

The facility will have capacity to store 100,000 tonnes according to the Express Tribune and in the second phase storage capacity may be expanded to 280,000. COO Hasan Sobuctageen says that six tanks are under construction for the joint venture terminal called Fauji Trans Terminal Limited. Sobuctageen adds that storage capacity has been needed for a while and that the import of petrol has increased by 40% in the last four years.

Puma reports sales and volumes growth in downstream business Storage capacity and volumes have increase in Puma Energy’s downstream segment according to its third quarter financial results. Its gross profit and EBITDA was impacted by a slowdown of activity in some countries, a shift in the geographical and segment mix as well as currency fluctuations. However, it reported a 14% growth in sales volumes powered by higher UK volumes and organic growth in Americas and Asia Pacific. Additionally, both its midstream and downstream business segments experienced volume increases. Puma also increased its storage capacity to a record 7.9 million m3 following its latest acquisition of BP’s storage terminal in Norther Ireland. CFO Denis Chazarain says: ‘Although we faced the headwinds of currency fluctuations and a slowdown of some economies, we have increased our storage capacity to a record 7.9 million m3 following the latest acquisition of BP’s storage terminal in Northern Ireland. ‘Looking forward we will continue to execute on our proven strategy through investments in key markets, disciplined financing and focus on driving the Puma Energy brand in our core markets.’

Ergon expands with new storage terminal in South Korea

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A new bulk liquid storage terminal in Ulsan, South Korea has been announced by Ergon International. The company, which is the world’s largest producer of naphthenic specialty products, is also launching a new regional office in Singapore. Ergon’s new bright stock along with most of the company’s naphthenic grades and transformer oils, will be available in the Asian market by early 2017. Per Klintstam, president of Ergon, says: ‘The additional of this storage terminal and office to Ergon’s global supply and distribution network allows for improved service and accessibility for clients throughout Asia.’

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DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

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TERMINAL NEWS l GLOBAL

Global energy demand set to peak before 2030 The demand for gas as an energy source it set to increase by 2060, with demand for oil reaching a peak by 2045.

According to a report by the World Energy Council, oil will continue to play a significant role in the transportation sector, representing over 60% of the mix to 2060 in three exploratory energy scenarios, which were developed with Accenture Strategy and the Paul Scherrer Institute. Per capita, energy demand will peak before 2030, which is in contrast to historic growth levels where global demand for energy has more than doubled since 1970. Technologies innovation, government policies and lower growth expectations will have a significant impact on the sector in the coming decades. Ged Davis, executive chair of scenarios, World Energy Council, says: ‘It is clear that we are undergoing a grand transition, which will create a fundamentally new world for the energy industry. Historically people have talked about peak oil but now disruptive trends are leading energy experts to consider the implications of peak demand. ’ Nuri Demirdoven, managing director at Accenture Strategy adds: ‘By 2060, all scenarios point to an increase in demand for gas, as well as possible peak demand for oil within the 2035 to 2045 timeframe. Misspending including misallocation of capital has always been a risk for energy assets, and will continue to grow due to fundamental shifts in the industry.’

Oil & gas majors to invest $1 billion in low emissions technologies

A $1 billion (€904 million) investment has been agreed between the Oil and Gas Climate Initiative (OGCI) and ten oil and gas majors to develop low emissions technologies. Each of the ten member companies, which include BP, Shell, Total, Repsol, CNPC, Statoil and Saudi Aramco, have pledged investments of $100 million into the commercial deployment of these technologies. OGCI Climate Investments will aim to launch successfully-developed new technologies among the member companies and beyond. It will also identify ways to cut the energy intensity of both transport and industry. The investment represents an unprecedented level of oil and gas industry collaboration and resource-sharing. This additional investment will complement the companies’ existing low carbon technology programs and will draw on the collective expertise and resources of the member companies.

OPEC cuts production to ease global oil glut

OPEC members have agreed to limit crude oil production in a bid to accelerate the rebalancing of the global markets. During the 171st meeting, members decided to implement a new OPEC-14 production target of 32.5 million barrels per day - a reduction of 700,000 barrels per day. This will help accelerate the ongoing drawdown of the stock overhand and bring the oil market rebalancing forward. This cuts will be effective from Jnauary 1, 2017. Additionally, a high-level monitoring committee, consisting of oil ministers and assisted by the OPEC Secretariat, to monitor the implementation of the agreed targets. In a press statement, the conference said: ‘It was vital that stock levels were drawn down to normal levels. The conference also noted the drop off in investment levels in both 2015 and 2016 as well as the huge layoffs the industry has witnessed in recent years.’ Over the past two years, challenges have emerged from the supply side of the global oil market and as a result, prices have more than halved and volatility has increase. There have been deep cuts in investments as well as layoffs and OPEC said that this has led to a potential risk that oil supply may not meet demand in the future. It represents the first production cap imposed since 2008. In a press statement OPEC says its objective is to stabilise the oil market and avoid the adverse impacts in the short- and medium- term.’

DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

INCIDENT REPORT

Incident report

A summary of the recent explosions, fires and leaks in the tank storage industry

31/10/2016

17/10/2016

Helena, Alabama Colonial Pipeline

One person died and five were taken to hospital after part of Colonial Pipeline’s line exploded. The trackhole used by the contract crew hit the line and petrol ignited, causing a fire. Pipeline 1 was shut for the week while pipeline 2 reopened after eight hours and a containment booms was deployed. The fire was allowed to burn out under the supervision of fire crews and emergency management personnel. The company expressed its deepest condolences to the family and loved ones of the worker who died.

23/10/2016

Cushing, Oklahoma Seaway Pipeline Company

Part of a pipeline controlled by Seaway was temporarily shut down near to the Cushing storage hub following a crude oil spill. All of the spilled product was contained in a retention pond at Enbridge’s facility and vacuum trucks were used to recover the crude and return it to storage tanks. The affected part of the legacy pipeline has a capacity of 50,000 barrels however no figures were available for the amount of crude released. Service on the pipeline resumed the following day.

Ludwigshafen, Rhineland-Palatinate, Germany BASF

Four people died and seven were severely injured following an explosion trigged by work on a pipeline that resulted in fires. The fires took 10 hours to extinguish and resulted in the closure and partial closure of more than 20 facilities. Two firefighters died as they responded to a fire in the north harbour of the site and an employee of a tanker anchored to the harbour also died. Another employee of the BASF fire department who was severely injured later died. Seven people were seriously injured and another 22 suffered slight injuries. Investigations are underway to establish the cause of the incident and BASF have commissioned a report into safety-related aspects of the pipelines.

8/11/2016

Warri, southern Niger Delta

Nigerian National Petroleum Corp Militants attacked contractors equipment as repairs were being undertaken on the pipeline that feeds the Forcados terminal in the energy hub. The repairs followed an earlier attack on the pipeline a week previously. It has been reported that some equipment include a barge and crane had sunk. The previous attack resulted in a serious fire and closure of the Trans Forcados Pipeline.

DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

19/10/2016

Alwsea’ area, Riyadh, Saudi Arabia Phillips 66

Several people were injured following a fire that broke out close to a tank at a crude oil processing facility. All the injured were treated and an investigation was launched into the cause.

TERMINAL NEWS l ASIA

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TERMINAL NEWS l ASIA

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DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

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DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

TERMINAL NEWS l TANK TERMINAL UPDATE

Tank terminal update: Africa Puma Energy Location:

Products: Capacity:

Construction/ expansion/ acquisition: Comment:

Burgan Cape Terminals Matadi, Democratic Republic of Congo Petrol, jet fuel, gasoil 26,000 m3

Location:

Products: Capacity:

The new terminal is an important hub for the shipment and distribution of petroleum products and provide security of product supply to the country

Construction/ expansion/ acquisition:

The facility and floating jetty & pipelines will provide strategic vessel reception capability for the Congo and sub region

Investment:

Completion date: Comment:

OVH Energy Location:

Products: Capacity:

Construction/ expansion/ acquisition: Comment:

Nigeria Refined products, LPG, lubricants 84,000 tonnes OVH Energy comprises Oando Marketing, Oando Supply and Trading, Apapa SPM and Oando Trippmark and is Nigeria’s second largest downstream fuels company Other assets comprise 350 service stations, a newly built inbound logistics jetty and LPG filling and distribution as well as lubricants

Ghana Oil Company Location:

Products:

Construction/ expansion/ acquisition: Completion Comment:

Takoradi Port, Ghana Marine gas oil The 4.5 million capacity tank facility will act as a supply point for vessels at the port End of 2016 It will serve as a bunkering terminal, which will berth import tankers with bunker fuel for vessels at the port

Oiltanking Mozambique Location:

Construction/ expansion/ acquisition: Comment:

Port of Matola and Beira, Mozambique Oiltanking has bought a stake in Galana Mozambique, making it an indirect shareholder in two storage terminal projects The terminal in Matola was completed in the second quarter of 2016 with an initial capacity of 51,000 m3 and has land available for further development

DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

Port of Cape Town Diesel, petrol, fame and ethanol for blending 118,000 m3 Construction work on the storage and distribution facility started in December 2015 and it will be used for the storage and distribution of locally produced and imported fuels R650 million (€43 million) Mid 2017 The facility is a strategic project under the South African Government’s Operation Phakisa & is the first under this programme to be implemented

Vopak South Africa Location:

Products: Capacity:

Construction/ expansion/ acquisition: Comment:

Durban Island View, South Africa Petroleum products 234,200 m3 The expansion programme saw 19 small tanks removed and replaced with 8 larger tanks

The project will facilitate the supply of South Africa’s growing demand for petroleum products and improve the security of fuel supply

Engen Location:

Products: Capacity:

Construction/ expansion/ acquisition: Comment:

Mozambique Petrol, diesel and lubricants 24,000 m3 Beira Terminal will boost security of supply in Mozambique as well as other countries in southern Africa The facility will be able to take pressure off the company’s Durban Refinery and supply Botswana and Zimbabwe directly from the depot

Taleveras Group, Gunvor Group, Equatorial Guinea, Strategic Fuel Fund Location:

Products:

Construction/ expansion/ acquisition: Comment:

Equatorial Guinea Crude oil and petroleum products The Ministry of Mines, Industry and Energy says the terminal will include a significant amount of storage space It will serve the Gulf of Guinea region and will facilitate the processing and export to consumers both in the region and globally

TERMINAL NEWS l TANK TERMINAL UPDATE

Tank terminal update: Africa Vivo Energy Kenya

Kenya Port Authority

Location:

Products: Capacity:

Construction/ expansion/ acquisition: Comment:

Mombasa, Kenya Diesel, petrol 87,625 m3 The company has opened a 23 million litre diesel storage tank and a 5 million litre petrol tank following growing demand for more fuel storage The investment allows the company to support inland and Vivo Energy Uganda business

Products: Construction/ expansion/ acquisition:

Completion date: Comment:

Kenya Port Crude oil, heavy fuel oil, three types of white oil products The project involved the relocation of the Kipevu Terminal and will expand Kenya’s oil handling and storage capacity by almost 400% Construction of the new jetty will take 30 months The new facility will have sub-sea and land-based pipelines connecting it to the storage facilities in Kipevu

This list is based on information made available to Tank Storage Magazine at the time of printing. If you would like to update the list with any additional terminal information for future issues, please email: jasmin@tankstoragemag.com.

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DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

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DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

PROFILE l VIVO ENERGY KENYA

STORAGE FOR THE INLAND ENERGY MARKETS A strong economy and a growth in development projects in Kenya has provided the ideal platform for Vivo Energy Kenya to expand its storage offering

surge in demand for diesel and petrol products driven by a blossoming economy has spurred Vivo Energy Kenya to expand its midstream assets to reach more inland energy markets. The company, which distributes and markets Shell-branded products and services in Kenya, has been on a growth trajectory over the past four years as a result in a surge in demand for diesel products at service stations as well as in manufacturing and agricultural sectors. In 2015, the company expanded petrol storage at its Shimanzi facility in Mombasa with two fuel storage tanks with a total capacity of 14 million litres of petrol. Additionally, in September 2016, a 23 million litre diesel storage tank and a five million litre petrol tank were also commissioned. INFRASTRUCTURE TO MEET DEMAND This additional capacity means the operator can transport fuel faster from the constrained Kenya Pipeline Company, which is the main pipeline for fuel transportation from Mombasa to inland regions, into its terminals in Mombasa and Nairobi and keep the country well supplied. This investment will also serve as an avenue to supplement the current ullage received from the pipeline and allow the company to support inland markets as well as Vivo Energy Uganda. In an interview with Tank Storage Magazine distribution manager Henry Mwangi explains that markets in Kenya as well as wider East Africa are growing as economic activity continues to expand and that Vivo Energy Kenya is well placed to support this growth by facilitating faster product delivery. ‘The economic growth has increase demand for petroleum products, hence the need for more storage and infrastructure.

VIVO ENERGY KENYA AT A GLANCE: Its Nairobi Terminal has an overall capacity of 17,023 m3 while its Mombasa Terminal has 107,121 m3 and both can store petrol, diesel, kerosene and Shell V-Power It provides aviation services at Jomo Kenyatta International Airport, Wilson Airport, Mombasa International Airport and Malindi Airport, has a lubricants blending plant in Mombasa and has LPG storage and filling facilities The company has increase the number of Shell service stations in Kenya by 54% from 112 to 172

‘The general economic growth in the country has been very positive – it has been growing at 5% GDP and we see this continuing in the future. ‘As a result more infrastructure is being built and people are buying more vehicles and this has created a greater demand on our products and services. ‘We have seen a growth in our retail network as well as in the wider commercial sector. Over the last three years we have grown the company footprint and as a result the number of Shell service stations in Kenya has increased by 54% from 112 to 172.’ STORAGE FOOTPRINT The commissioning of this extra capacity at its Mombasa facility increases the company’s overall diesel storage capacity to 53 million litres and its petrol capacity to 29 million litres. ‘Increasing diesel storage to this enormous amount is a sign of growth in the industry,’ says Mwangi.

DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

PROFILE l VIVO ENERGY KENYA

01 The additional storage consists of 23 million litres of diesel and 5 million litres of petrol 02 Vivo Energy Kenya’s MD Polycarp Igathe with Andrew Kamau, principal secretary, State Department of Petroleum, Kenya, during the storage commissioning 03 Christian Chammas, CEO of Vivo Energy, with Polycarp Igathe, Vivo Energy Kenya MD during the commissioning of the petrol storage tank

‘With this increased storage capacity we will also utilise the railway more, to transport fuel from Mombasa to Nairobi. ‘Our Shimanzi Terminal in Mombasa is located in a coastal town near to the Kenya Ports Authority, which is the main port in Kenya where all imports and exports are delivered from. Also, our Mombasa terminal is strategically located near the main pipeline in Kenya for the Nairobi Terminal so we are well placed to serve the market’s needs.’ APPETITE FOR GROWTH Vivo Energy Kenya’s parent company was established in 2011 to distribute and market Shell-branded fuels and lubricants and has ambitions to grow each of its 16 businesses spread across the continent by investing in new sites and facilities as well as injecting new capital. At the heart of these growth projects is the ambition to remain a crucial link in the country’s supply chain. Mwangi adds: ‘We want to open up more Shell service stations and continue growing the commercial business, as well as creating more employment for Kenyans, and whilst ensuring security of fuel supply for our customers.’

DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

PROFILE l PORT OF AMSTERDAM

NEW TEAM, NEW ENERGY I

n November 2016 the Port of Amsterdam marked its first LNG bunkering of an ocean going vessel. The truck-to-ship bunkering took place on the Groene Kade, a temporary facility in the Amerikahaven, The Port is now looking to create a more permanent bunkering facility, which is both safe and efficient, along with various partners such as Titan LNG. This is expected to be ready in 2018. The Port also looks at other small scale applications for LNG. The Port of Amsterdam is western Europe’s fourth largest port and a global hub for light and middle distillates. The port is the world biggest petrol hub, having more than 6 million m3 tankage capacity available. The Port is highly specialised in blending, having the most flexible blending capacity. It is also focused on driving new initiatives and investments. ‘We have a new team, which understand the clients we work with,’ Femke Brenninkmeijer, cluster energy manager at the Port of Amsterdam explains. ‘We work hard with our terminals in improve efficiency and bring more tankage online. ‘Our multi-user facilities and buoys are proving extremely popular so we are also looking to expand and improve these in the short term,’ Brenninkmeijer explains. NEW INVESTMENT Last year the Port’s throughput was 40 million tonnes of oil products and it has an ambitious growth plan to increase volumes up to more than 50 million tonnes. This is partly due to the amount of investment being poured into the port to make terminals and the port more efficient, flexible and creating more state-of-the art terminals and infrastructure.

In April this year Zenith Energy bought BP’s storage terminal at the Port and is now working hard to add more tankage to the existing plot. Another of the Port’s customers, Hydrocarbon Hotel, has been at the Port since 2010. It has a total capacity of 148,500m3 and has just been acquired by GPS Group, an independent storage and logistics company, formed in 2016. GPS is backed by funds managed by Blue Water Energy (BWE) and White Deer Energy (WDE). BIO-BASED AND CIRCULAR FOCUS The Port of Amsterdam is an important energy port; big in fuel trading, diesel, kerosene and the transhipment of coal. Its main goals are to: • strengthen its networks (the terminals are the backbone of the port) • to diverse and innovate (by facilitating start- and scale ups), and • the development of the port of choice (to attract business like new economy biobased and circular activities). SEA-LOCK PROJECT A new large sea lock is being constructed at the entrance of the North Sea Canal at IJmuiden that will provide access to the Amsterdam port region. The new lock will be 500 metres long, 70 metres wide and 18 metres deep, making it the world’s largest sea lock. Construction began this year and the new lock will be available for shipping at the end of November 2019. The sea-lock project will enable larger and wider ships as well as 24/7 access as it is independent. This shall provide more flexibility to the users of the port as well as making it much more accessible.

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DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

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MARKET ANALYSIS l WORLD ENERGY OUTLOOK 2016

TOUGH TIMES AHEAD FOR OIL As the oil markets start to slowly rebalance, the 2016 World Energy Outlook says a new period of price volatility could be on the horizon as supply and demand economics seek an equilibrium

espite a fairly tumultuous year for oil markets, there are clear signs that the market is slowly rebalancing – but there are still tough times ahead for the industry. The International Energy Agency’s World Energy Outlook 2016 warns that the shortterm risks to oil markets comes from the significant cuts in upstream spending, resulting in a slowdown in the emergence of new projects.

Previouly, the IEA said in their 2015 outlook that cuts above 20% in upstream investment by many companies fed through into lower medium-term projections of production in Canada, Brazil and Russia. The 2016 report says: ‘There is a threat on the horizon on the ‘baseload’ of oil output, the conventional projects that operate on a different rhythm, with lead times of three to six years from investment decision to first oil.

‘We estimate that, if new project approvals remain low for a third year in a row in 2017, then it becomes increasingly unlikely that demand (as projected in our main scenario) and supply can be matched in the early 2020s without the start of a new boom/bust cycle for the industry.’ However, the long-term forecast paints a more positive picture for oil demand – especially in aviation, road transportation and as feedstock for the chemicals industry where alternative fuels are scarce. It is these three sectors that account for all of the growth in global oil consumption. Despite total demand from OECD countries declining by almost 12 million barrels per day to 2040, this reduction is offset by increases in India, the largest source of future demand growth, where oil consumption will rise by six million barrels per day. INSATIABLE CONSUMPTION The 684 page document predicts that consumption of all modern fuels will continue to grow in the period to 2040 in their new policies scenario – their central scenario that accounts for policies and measures that will affect the energy markets going forward. Oil demand will rise steadily to 103.5 million barrels per day, while coal as a fuel source slips away, with a growth of only 0.2% per year on average. However, the main energy source that is a key focus in this year’s

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MARKET ANALYSIS l WORLD ENERGY OUTLOOK 2016

outlook is renewable energy – supported by significant commitments born out of the Paris climate change talk, which came into force in November. But oil still remains a pivotal fuel source for energy security despite natural gas and electricity security being pushed forward as a result of changes in global energy use.

starting to have an effect on non-OPEC output, which is expected to decline by 0.9 million barrels per day in 2016. But overall, global inventories remain at record levels. The report warns that during this rebalancing period, the oil market could enter a new period of price volatility as it seeks a new equilibrium.

RE-BALANCING The oil markets have swung between extremes in recent years. The 2015 outlook focused on the start of rebalancing the fragmented oil market following the dramatic decline in the global oil price at the end of 2014 - leading to a contango market. In fact, the collapse in prices stimulated the largest annual boost in 2015 for global oil demand in the past five years. This robust growth is expected in 2016. This year’s report says there are signs in the last quarter of 2016 that this rebalancing is underway, albeit at a slow pace. Against the historical output highs seen earlier in the year by Saudi Arabia and other key OPEC countries, oil demand growth has remained strong and is anticipated to reach 1.2 million barrels per day for 2016. As mentioned earlier, investment cuts are

THE RISE OF THE MIDDLE EAST Oil supply is strongest in the Middle East, despite a strong outlook for US tight oil thanks to expansion in Iran and Iraq as well as continued output from other parts of the region. Overall, OPEC sees its share of global oil production rising close to 50% by 2040. Iran’s production levels are expected to reach six million barrels per day in 2040 while Iraq is due to hit seven million barrels per day by the same date. The report notes that a shift is underway towards reliance on lower cost producers in the Middle East – a key theme in their low oil price scenario. Another feature of this particular scenario is the fact that the Middle East’s share in global output will rise to 35% – a level that has not been experienced since the late 1970s. This is against the backdrop of OPEC’s

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agreement to cap crude oil output – the first such cut since 2008. At the time of printing, the finer details of this agreement, how it will be implemented and its impact on the market, were still being discussed. OUTLOOK For many countries, economic prospects have dimmed and many have announced their intentions to reform energy prices – muting prospects for strong demand growth. Therefore, over the next five years, the rate of global oil demand growth is expected to slow. In China, which has been the engine of global growth in recent years, the government is focusing more on less energy-intensive economic growth. In other non-OECD countries, the report expects demand growth to be curtailed because of pricing reforms as governments reduce the subsidies that have become burdensome to some countries.

FOR MORE INFORMATION www.iea.org/newsroom/news/2016/ november/world-energy-outlook-2016.html

20/10/2016 13:48

MARKET ANALYSIS l SULPHUR EMISSIONS

MARINE FUEL SULPHUR LIMIT: A SIGNIFICANT CHANGE FOR ALL SUPPLY CHAIN PLAYERS

landmark decision to significantly reduce the sulphur content of bunker fuel by 2020 presents an unprecedented change for refiners and will significantly affect all links in the supply chain. The International Maritime Organisation’s (IMO) agreement to implement the global sulphur cap of 0.50% mass/mass by January 1, 2020 is a significant cut from the current 3.5% m/m global limit and highlights the importance shipping is placing on meeting its environmental obligations. The 2020 date was agreed in amendments in Annex VI to the International Convention for the prevention of Pollution from ships. The annex sets progressively stricter regulations to control emissions from ships, including sulphur oxides and nitrous oxides. It was agreed in this amendment that a review should be completed by 2018 to assess whether enough compliant fuel oil would be available to meet the 2020 date – if not the date could be deferred to 20205. The

The IMO has agreed to implement the 0.5% bunker fuel sulphur cap by 2020

review, CE Delft, concluded that sufficient compliant fuel oil would be available. However, the International Bunker Industry Association (IBIA) has warned that there are still ‘several unknowns’ about this new limit and the argument that there will be sufficient low sulphur fuel available by the implementation date could be based on optimistic forecast evidence. According to the IBIA, a supplemental marine fuel availability study was also conducted by EnSys/Navigaistics, which concluded that implementing the 0.50% sulphur limit in 2020 looked unworkable. That is because it uses two scenarios assuming the 0.50% limit would be met by either 90% or 50% traditional marine diesel oil as defined in ISO 8217, unlike the CE Delft study, which assumed that bunker fuels between 0.10% and 0.50% sulphur will consist of a wide range of blends, as opposed to traditional marine distillates. IBIA says: ‘It would appear that the studies

had limited impact on already cemented political positions. Signals in advance that the entire European Union bloc wanted 2020, combined with the release of a new study suggesting delaying the sulphur cap to 20205 would cause more than 570,000 additional premature deaths globally made it politically very difficult to ask for a delay. ‘Even so, several countries did say 2020 would be too soon and wanted a 20205 implementation date.’ Other countries support a phased introduction of the limit, as proposed by the IBIA. IBIA IMO representative Unni Einemo says that the significant change in sulphur limits is ‘change on a completely unprecedented scale for the refinery industry, as well as a major logistical undertaking for all links in the supply chain’. She says: ‘Although the compliance date itself will be known well in advance, simple market economics lead us to believe that owners will not switch to far more expensive lower sulphur fuels before they have to, resulting in a virtual overnight shift.’ NEW FUEL BLENDS IBIA predicts that there could be new types of fuel blends to meet the limit from professional blenders and refineries. It says that there will be more widespread use of vacuum gas oil and very low sulphur HFO while suggesting some other blends. Einemo adds: ‘The official availability study states that it is expected that refineries across the world will go through a product technology development process to ensure the low sulphur marine fuels perform appropriately. ‘Indeed the market will try to produce appropriate and safe to use fuels as we have seen with the new fuel formulations introduced for ECAs, but we should not stick our heads in the sand about the fact that refineries across the world may struggle to provide sufficient tried and tested blends that both perform appropriately and meet all safety requirements from day one.’

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MARKET ANALYSIS l SULPHUR EMISSIONS

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PROFILE l UNITED RIVERHEAD TERMINAL

AN APPEALING ENERGY STORAGE SOLUTION

One of the largest facilities on the US East Coast reveals how it is looking at alternative energy storage to maximise its attractive business offering

nited Riverhead Terminal boasts several impressive features that have ensured its success since it was bought four years ago. The facility, located 80 miles east of New York harbour, has the only deepwater off shore barge and ship loading and unloading platform on the US East Coast, which sits in the deepest shipping channel on the East Coast. With petroleum storage capacities exceeding five million barrels, it is ranks as one of the largest storage terminal facilities in the region and in the country. Capitalising on this attractive proposition, the company is currently examining several different projects, which support the need for alternative energy. In an interview with Tank Storage Magazine, Scott Kamm, general

01 The facility is one of the largest in the region 02 It has the only deep water platform (64’ operating draft) on the US East Coast 02

03 Capacity has increase from 25% to 100% over the last four years

manager of United Riverhead Terminal, explains that the facility sits within a 286 acre parcel of land in Suffolk Country, New York, offering potential to grow the business further. He says: ‘We have the room to expand and some of the projects we are considering are alternatives to the products we currently store, such as more niche blends of fuels and certain derivatives and other forms of alternative energy. ‘We are looking at all aspects of fuel and energy including petrol and solar for example. We are examining projects that benefit from our strategic location, that would benefit our customers and that would also benefit and complement our business. Alternative energy sources – such as a greater focus on power generation – are a key focus of the 2015 New York State Energy Plan, which says that renewable sources have the potential to meet as much as 40% of its energy needs by 2030. Kamm adds: ‘We have lots of room to expend but any expansion depends on the appetite for expansion and location. ‘We are looking at having a mixed offering and also offering storage for alternative energy – we need to be even more flexible depending on demand.’ The facility’s 20 storage tanks regularly receive Suezmax vessels and is capable of handling VLCC tankers carrying crude, petrol, diesel and heavy fuel. Delivered product is then stored at the terminal and is reloaded onto ocean-going barges and ships for distribution throughout the US East Coast and Europe. ‘The terminal’s eastern Long Island location is significant as the Atlantic Ocean is approximately 30 miles to the east. This allows large ships to come from the Atlantic from all points of the globe – avoiding the Port of New York and the Port of New Jersey.’ ‘Ships going into New York harbour need to unload their volumes outside of the harbour as the draft isn’t deep enough and that is where we have a competitive advantage because of our 64 foot draft.’ FAVOURABLE CLIMATE The low cost per barrel of oil has understandably had a positive impact at the terminal – with companies capitalising on these low prices by storing oil and waiting for the price to rebound. ‘There has also been an increase in trade as a result of the lifting of the export ban,’ explains Kamm. ‘But the biggest form of storage that took off was the low oil price. We can be more competitive in our pricing in comparison to those in eastern Long Island because of our location from New York harbour. ‘Over the past four years United Riverhead Terminal has gone from 25% capacity to 100% capacity because of the low cost per barrel as well as competitive storage rates.’

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MARKET ANALYSIS l STORAGE IN AFRICA

AFRICA’S STORAGE POTENTIAL WAITS TO BE TAPPED Despite the headwinds, the continent offers promising, untapped opportunities for storage operators. Criselda Diala-McBride reports

itting on 128 billion barrels of oil, or 8% of the world’s proven reserves, and with a consumer base that is expected to double by 2050, Africa appears to be a haven for oil storage terminals. But the headline numbers of significant crude deposits and robust population growth rate fail to mask a sense of frustration that has clouded the continent’s very promising, yet underserved, bulk liquid storage sector. Africa’s role in the global oil trade – while admittedly not as hefty as its Middle Eastern neighbours – remains significant. Five of the 14 countries that make up OPEC are from the continent and collectively, they supply 4.92 million barrels per day (bpd) of crude, or more than 12% of the oil trade bloc’s total output in October 2016, according to the International Energy Agency’s (IEA) latest Oil Market Report. The report notes that oil consumption in the region has also been growing steadily from 3.8 million bpd in 2013 to 4.3 million bpd in 2017, although Audrey Dubois-Hebert, analyst at energy consultancy FGE, says this figure represents barely 5% of total global oil demand and will unlikely change anytime soon. ‘That being said, there are regional differences within Africa [that] are worth noting,’ she says. ‘For instance, west Africa punches above its weight in global crude trade. ‘Nigeria and Angola are important crude exporters, currently [accounting] for 3.2 million bpd of production, cumulatively, and therefore able to influence global balances. Needless to mention, Nigeria’s supply problems have been on everyone’s mind this year.’ On the other hand the less affluent east Africa offers untapped opportunities for investors looking to capitalise on the global demand for oil. ‘Ports like Djibouti and Mombasa have identified this, and in anticipation of the higher import volumes this could generate, are pushing ahead to increase terminal capacity,’ adds Dubois-Hebert. LOW REFINING UTILISATION According to Alan Gelder, VP refining, chemicals & oil markets at Wood Mackenzie, the annual oil output levels of Africa’s three main producers – Angola, Libya and Nigeria – for 2016 stand at 1.7 million bpd, 0.4 million bpd and 1.6 million bpd, respectively. However, most of these are exported due to the region’s lack of domestic refining capacity. ‘A lot of the crude is often produced on floating production plat-

forms, which makes it relatively easy to export, [while crude] oil demand within Africa itself is relatively small,’ he says. Joe Willis, senior research analyst at Wood Mackenzie, cites the lack of infrastructure as reason behind the low utilisation in the domestic refining system, which is one of the biggest problems facing the African oil market. ‘To give you an idea, Nigerian [refineries have an installed] capacity of 445,000 bpd, of which only 5% was used in 2015,’ he says. ‘Average utilisation for sub-Saharan Africa as a whole in 2015 was 43% of the 1.5 million bpd [capacity], but producers have to export the crude because their refining capacity is no way near their [production] level.’ As a result, the continent has to rely heavily on imports of refined products such as petrol (for Nigeria), diesel gasoil and fuel oil (for South Africa). Traditional source markets for petrol are mainly the Netherlands and Belgium, which have high surplus. ‘South Africa tends to import the majority of its petrol and distillates from Asia, but in 2015, when [global demand for] petrol was very strong, European refiners ran harder and processed more crude. Europe placed more petrol barrels into South Africa in 2015 due to a tighter petrol balance in Asia. But that’s a one-off and something that we’re not expecting to continue,’ Willis points out. DEFYING THE CONTANGO CURVE A protracted decline in oil prices and increased crude production have become a recipe for contango success in regions such as the Middle East. However in Africa, Dipo Salimonu, CEO of Moteriba Terminals & Logistics, says oil traders are singing a different tune. ‘Theoretically, a reduction in [oil prices] translates into lower costs for refined products and [consequently] an increase in demand for these products. This eventually leads to higher throughput in storage tanks, particularly coastal tanks,’ he says. ‘The reality, however, has been very different, particularly in Africa’s oil-producing countries.’ A slump in oil prices has shrunk the foreign exchange earnings of major oil producers, greatly affecting the ability of importers to access ‘USD letters of credit’ from local banks in order to buy cargoes, which are traded in US dollars, from international suppliers and refineries, according to Salimonu. ‘The decline in government revenues in countries, such as Ghana, Angola, Nigeria, has also made it necessary to remove or decrease government fuel subsidies,’ he says. ‘This has increased the price of finished products, dampening demand, and greatly affecting the profit margins of importers, with quite a few of them suspending or stopping importation activity.’

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MARKET ANALYSIS l STORAGE IN AFRICA

Because many of these importers are either customers or owners of storage terminals, the surplus capacity and reduced earnings have put mounting pressure on their operations, he went on to say. Even with an oil price recovery in the offing – especially after OPEC agreed to reduce their output – Salimonu is not optimistic African terminal operators will get to heave a sigh of relief. ‘Given the above situation, it is clear that an increase in oil price would bring even greater pressure to bear on the margins of importers, especially in regimes in Africa where the price is capped, and most countries have some sort of regulatory intervention fixing the prices at which these products can be sold,’ he comments. This observation is, again, in stark contrast to the contango phenomenon. Salimonu explains: ‘Usually, the expectation of a rising price brings about a market in contango, but this historically has not been the case in many markets in Africa. A chief reason is that gains [go towards] international traders, which largely hold their stocks off-shore on floating storage and not in coastal tanks on shore.’ STORAGE CAPACITY Sub-Saharan Africa has often been described as a challenging region for supplying oil products due to the lack of infrastructure to support fuel import and distribution logistics, an observation that Gerrit Venter, senior downstream research manager at Wood Mackenzie, shares. ‘In order to bring greater volumes [of refined products] from overseas, Africa needs oil storage and distribution infrastructure,’ he says. ‘Port facilities are the most important and what we’ve seen, particularly over the past five to ten years is plenty of new oil product storage capacity being built and commissioned around sub-Saharan Africa.’ South Africa, for example, is building a 13.2 million-barrel commercial crude oil blending and storage terminal, with 12 in-ground concrete tanks, in Saldanha Bay. The terminal, which is set to be completed by 2017, will help ease congestion in the port, where the state-run Strategic Fuel Fund Association (SFF) also operates a crude reserve depot with a capacity of 45 million barrels. In 2015, the facility was reportedly filled to the brim, as oil traders took advantage of the contango. Marion Bruns, associate director, consulting oil & gas at Deloitte Consulting in Johannesburg, says other facilities that have helped beef up Africa’s tank storage capacity include the Matola bitumen and fuel terminals in Mozambique operated by Puma Energy, with a capacity of 275,500 m3. Vopak is also planning to construct a multi-product chemicals terminal, complete with a LPG storage facility, in Richards Bay, South

What we have seen, over the past 5 to 10 years is plenty of new oil storage capacity being built around subSaharan Africa

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Africa. The facility will have a capacity of 234,000 m3. Bruns mentions another project, the Burgan Terminal in Cape Town, a storage and distribution facility planned for 2017, with a capacity of 118,000m3. ‘Chevron’s divestment in South Africa also includes its 110,000-bpd refinery,’ she says. According to media reports, US oil giant Chevron announced in January 2016 plans to sell 75% of its stakes in its South African unit to counter the impact of a drop in oil prices. Dubois-Hebert says the growing demand for oil products in the continent is making a strong case for expanding the region’s storage capacity. ‘One example that comes immediately to mind is in the LPG market. An oversupplied East of Suez market this year paved the way for higher consumption across East Africa (+15% y-o-y), undercutting suppliers there,’ she explains. ‘South African demand alone surged by 38% y-o-y in 1H 2016, a sign of strong potential for additional fuel usage in the medium-term. This could not have come at a better time for the country, which is set to inaugurate its first standalone LPG terminal and storage facility on its west coast in 2017.’ Gelder says that Africa’s oil trade balance could significantly change when the Dangote refinery in Lagos comes online. Set to become Nigeria’s first private crude oil refinery by 2019, the facility is expected to cost $12 billion and will have a capacity of 650,000 bpd. It will also contribute to quenching Nigeria’s thirst for fuel, 80% of which are imported despite the country’s daily crude production of more than 1.7 million barrels. INDUSTRY HEADWINDS Insufficient infrastructure, however, is not the only problem Africa has to contend with. Political tension and terror attacks on oil and gas facilities also pose a significant challenge to the continent’s bulk liquid storage industry. According to the IEA, repeated sabotage of Nigeria’s oil sector since February had cut output to 30-year lows, with four major export streams under force majeure. A particular attack on the Trans-Forcados pipeline in November, has forced the facility’s closure. ‘In a bid to regain its market share, the Nigerian National Petroleum Corp (NNPC) cut the price for all of its November crude exports,’ the agency notes. In Libya, the oil ports of Es Sider and Ras Lanuf were seized by terror

MARKET ANALYSIS l STORAGE IN AFRICA

forces early this year and authorities were only able to regain control in September. The country, which is producing below the 1.6 million bpd level seen before the so-called Arab Spring, had to suffer repeated shutdown and restart of terminals and oil fields due to militant attacks, according to Reuters. Aside from these threats, Salimonu believes the biggest challenge facing the continent’s oil storage sector lies with the regulators – ‘whether in the form of regulatory uncertainty, or regulators that react too slowly or too heavily to market conditions’. However for Dubois-Hebert, economic risk is the most critical challenge facing the African oil market today. ‘This has long been true for oil-producing countries like Angola, Nigeria or even Algeria, which have seen their foreign reserves shrink following the mid-2014 price drop,’ she says. ‘Increasingly, economic risks have also expanded to non-oil producing countries like South Africa and Egypt. The latter has been particularly hard hit from a collapsed tourism industry, and despite addressing IMF requirements in return for loans (reducing fuel and electricity subsidies, introducing a flexible exchange rate), it could take at least a year and a half to see a turnaround in its economic prospects.’ Until then, she adds, demand growth could be more constrained, with an upside only supported by strong population increases. In Egypt, for example, the population expands by two million every year. Other challenges that she believes would impact the sector are ‘varying standards and government red tape, which is unlikely to be phased out anytime soon’. ATTRACTING INVESTMENT In order to build a strong tank storage market, Africa must first have a good legal framework capable of attracting investment, says Gelder. ‘Africa needs to have good infrastructure and the ability to move the products easily [through a reliable] logistics system,’ he says. ‘The region also needs more refining capacity, but once it has [the facilities], it needs to be able to run them well, which means political stability and legal framework must be in place. It also needs to liberalise pricing to avoid distorting incentives, before it could attract significant investment.’ Despite the headwinds, Dubois-Hebert says she has seen a shift in investor sentiment towards the funding of oil and gas storage infrastructure in the region. ‘There has been a real push among international firms, and especially commodity traders, to acquire a network of storage and retail infrastructure to add to their portfolio in 2016,’ she says. ‘This year alone we’ve seen Puma Energy (a Trafigura subsidiary) entering both the Ivory Coast’s and Ghana’s

The potential is as vast as it has always been Dipo Salimonu, CEO of Moteriba Terminals & Logistics

fuel storage market, with Glencore, Gunvor and Total currently vying for Chevron’s 75% share of its Caltex assets.’ The Chevron deal, she points out, will not only include retail networks in South Africa and Botswana, but also the possibility of converting the existing 110,000 bpd Cape Town refinery into a major regional storage hub. OPPORTUNITIES FOR OPERATORS Asked whether he expects further investment in oil storage facilities in the region, Salimonu says the short answer is ‘yes’. ‘We in particular remain bullish on this asset class not just because it is our area of focus, but because the global drivers of storage demand growth remain present and strong in our part of the world – population growth, GDP growth, and a resulting growth in energy demand. ‘That said, investment plans have to be carefully dimensioned and structured, with due consideration to the optimal financing sources and counter-parties. The projects will need to be of sufficient scale and sophistication to make a difference in an inefficient and fragmented market,’ he says. While he believes every market has specific and compelling cases for storage development, countries such as Nigeria, Angola and South Africa, offer a strong proposition. Other aspect of the oil and gas market also offers untapped opportunities for terminal operators, according to Dubois-Hebert. ‘The most exciting change we see for terminal operators in the next five years is on the gas side. This is due to an oversupplied LNG market, with low LNG prices versus oil and petroleum product prices, which have created new opportunities for African countries to substitute towards gas, for power generation in particular,’ she says. At the moment, Egypt is the only African country to import natural gas and LNG via two floating storage and regasification unit moored at the port of Ain Sukhna. There is also possibility of chartering a third FSRU, with tender likely to be issued by the third quarter of 2017, Dubois-Hebert adds. She expects other countries to follow in Egypt’s steps, including Ghana, which has the most advanced LNG project. ‘The Ghana National Petroleum Company (GNPC) is looking to develop a terminal by mid-2017, with an import capacity of 500 mmscf/d. Benin and Morocco are also strong contenders, with the latter opting for an onshore terminal, which would take longer to charter and is forecast to come online at the earliest by 2020,’ she says. Opportunities abound in the African market, but more needs to be done to realise the region’s potential, Salimonu points out. ‘The potential is as vast as it has always been – production, storage and transfer of gas is greatly enhanced now that there exists the political and economic will to increase the insufficient levels of power production across Sub-Saharan Africa,’ he says. ‘The challenge lies in translating that potential into actually developing [those] projects. You do not get any prizes for potential; it is all about execution and results.’

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O W NE R S H I P P L AN OP

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MARKET ANALYSIS l AFRICAN PRODUCT TRADE FLOWS

AFRICA: A GROWING CLEAN PRODUCT SHORT As demand for product grows across Africa, coupled with an aging refinery infrastructure, Energy Aspects’ James McCullagh considers how this will impact the continent’s tank storage sector Heading: Market analysis | African product trade flows o understand the factors influencing African tank storage infraINTERNATIONAL FLOWS – IMPORTS structure, it is necessary to examine product trade flows through Virtually every single African country is short clean prodAfrica: A growing clean product short Africa, where the hotspots are for trade, and what the demand ucts. Chad and Niger are two notable exceptions but these for product is like. markets are small. All major regions of the continent are therefore pulling import volumes from the international As demand for product grows across Africa, coupled with an aging refinery infrastructure, AFRICAN OIL PRODUCT BALANCES IN 30 SECONDS market on a daily basis – and these volumes are growing. Energy Aspects’ James McCullagh considers how this will impact the continent’s tank storage Africa’s refining capacity (including condensate splitting and synfuels) is North Africa tends to be supplied out of the Mediterranean, sector 3.4 million barrels per day (mb/d). Demand is 4.5 mb/d – and ‘stuck’ at the Middle East and North West Europe. West African petrol

is mostly supplied out of North West Europe while distillates rising. Low complexity refineries and poor utilisation rates have resulted in fast-growing clean product imports, particularly in sub-Saharan Africa increasingly originate in India and the Middle East. East and To understand the factors influencing African tank storage infrastructure, it is necessary to examine but also, more recently, in North Africa. In most parts of the continent, the southern Africa are typically supplied out of India, the Middle product trade flows through Africa, where the hotspots are for trade, and what the demand for product forces conspiring for refinery closures continue to look stronger than those East, Singapore and Europe. In practice, clean product supply is like. seeking to defend, or expand, existing capacity. Africa is a growing clean to all major regions can come from anywhere in the world, depending on arbitrage opportunities. product short. African oil product balances in 30 seconds INTERNATIONAL FLOWS – EXPORTS THE STORAGE SITUATION Africa’s refining capacity (including condensate splitting and synfuels) is ‘stuck’ at 3.4 million barrels per As a continent, Africa is unique in that it exports virtually no clean Africa is home to 45 (mainly coastal) operational refineries day (mb/d). Demand is 4.5 mb/d—and rising. Low complexity refineries and poor utilisation rates have products (except for some jet exports out of North Africa and occasional (including synfuels and condensate splitting) and 16 closed resulted in fast-growing clean product imports, particularly in sub-Saharan Africa but also, more 500ppm gasoil exports out of South Africa). Nevertheless, the low plants. The tank farms at these sites are the backbone of complexity configuration of Africa’s refining fleet results in high exports of Africa’s storage industry, receiving the bulk of volumes delivrecently, in North Africa. In most parts of the continent, the forces conspiring for refinery closures straight-run fuel oil and naphtha, particularly out of North and West Africa. ered to the continent. continue to look stronger than those seeking to defend, or expand, existing capacity. Africa is a growing The complex refineries in South Africa export around three million tonnes Nevertheless, burgeoning commercial storage industries clean product short. per annum of high sulphur fuel oil. are springing up in a number of countries to rival refinery storage. Generally speaking, coastal storage capacity is

Clean product shortfall by region, mb/d CLEAN PRODUCT SHORTFALL BY REGION, MB/D

more than adequate in most countries and tank turnover rates are low by international standards, although there are exceptions. In many places, the more pressing challenge relates to discharge and evacuation logistics.

E ast a n d So u th e rn

0 .8

N o rth W est

0 .6

0 .4 0 .2 0 .0

(0 .2 ) 02

Source: National agencies, Reuters, IEA, EIA, JODI, Energy Aspects

KEY HUBS: NORTH AFRICA North Africa has been a net clean product importer since 2007. Today, the region imports over 0.4 mb/d of clean products. There is very little formal inter-country trade, although there are unofficial flows between Algeria and Tunisia. The Sahara desert acts as a natural barrier to onward flows to the Sahel. Egypt accounts for half of all imports, regularly organising spot and term tenders for gasoil and petrol into refinery storage in Alexandria and the Red Sea port of Suez. Morocco is the next biggest importer: since operations ceased at the 0.2 mb/d SAMIR refinery in August 2015, it has been forced to import the entirety of its 0.14 mb/d clean product requirements.

Source: National agencies, refineries, Reuters, IEA, EIA, JODI, Energy Aspects

42 International flows - exports

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ProductFLOWS flowsINTO intoNORTH NorthAFRICA Africa PRODUCT

potential to back out some product imports for a time but the plant in question is relatively small (60 thousand b/d) and is not expected to come on stream until 2022 at the earliest. In the interim, it is expected that regional clean product demand will rise by around 50 thousand barrels per day. In southern Africa, the key product entry points are Durban, South Africa, and Matola/ Beira in Mozambique. In Durban, product arriving into refinery or other (Vopak, Bidvest) terminals supplies the local market or is piped up the Durban-Johannesburg Pipeline and New Multi-Product Pipeline to Gauteng, South Africa’s key demand centre. The pipeline has a spur to Tarlton – the staging post for onward flows to Botswana. In Mozambique, terminals in Matola (Maputo), Beira and Nacala, which have attracted investment from Puma, Total, Oiltanking, BP and Glencore, serve the fast-growing Mozambique market, as well as Zimbabwe (via the old Beira-Feruka pipeline), northern South Africa, Swaziland, Malawi and Zambia.

Source: Energy Aspects

Those requirements are delivered into the mothballed refinery, in Mohammedia, but also, increasingly, into the Horizon Tangier Terminals (HTT) facility, in the north of the country. HTT is also a growing bunkering hub. In Algeria, clean product demand and supply are more closely aligned, although gasoil imports – into refinery storage in Arzew, Skikda and Algiers – have grown in recent years. KEY HUBS: WEST AFRICA The storage landscape in West and Central Africa is far more dynamic, comprised of a patchwork of refinery and non-refinery tanks. Lagos, the commercial capital of Nigeria, is the largest single import hub, absorbing close to one million tonnes of petrol deliveries per month, depending on utilisation rates at the country’s refineries, none of which are located in Lagos. Lagos alone is home to some 60 local and multi-national storage companies, including Folawiyo, Capital Oil and Gas, Oando, Sahara, MRS and Total, to name but a few. Lagos is a key supply point for the entire country, which accounts for nearly a fifth of Sub-Saharan African oil product demand. Nevertheless, oil product flows into Lagos are set to be rewritten by the commissioning of Dangote’s planned 0.65 mb/d refinery at the nearby Lekki Free Zone. The plant will make Nigeria self-sufficient in oil products and severely curtail seaborne imports into Lagos. The extent of that curtailment will be determined by the precise product evacuation mix (road tanker, pipeline, coastal tanker), details of which are beginning to emerge. The refinery was due to come on stream in 2019, but that timeline is now understood to have slipped to 2021. Nevertheless, construction on the petrochemical element of the project is already well underway. In the meantime, the future of Nigeria’s existing refinery fleet remains uncertain. In other countries in West Africa, there is a more even split between refinery and non-refinery storage. In Dakar, Senegal, the SAR refinery tank farm sits adjacent to the more recently constructed Senstock facility. In Abidjan, Cote d’Ivoire, there is a similar situation with the SIR refinery and the neighbouring Gestoci facility. In Senegal in particular, marketers and international trading companies have a growing storage presence. Both Senegal and Cote d’Ivoire serve as entry points for product bound for the hinterland markets of Mali and Burkina Faso. KEY HUBS: EAST AND SOUTHERN AFRICA In East Africa, a number of countries serve as important transit hubs for inland countries. In Djibouti, the Horizon Djibouti Terminals tank farm services local demand but also the burgeoning Ethiopian market. In Kenya, the government-owned Kipevu Oil Terminal in Mombasa plays a key role as the initial receiving point for product destined for Uganda, Rwanda and South Sudan. The old TIPER refinery in Tanzania plays a similar role in supplying Burundi, eastern DRC, Zambia and Malawi. Product delivered into Mombasa and Dar es Salaam is evacuated to marketer depots or, in the case of Kenya, pumped up the KPC pipeline to Nairobi and beyond. As in Nigeria, a proposed greenfield refinery in Uganda has the

DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

PRODUCT IMPORT FLOWS INTO EAST AFRICA

Source: Energy Aspects

OUTLOOK High-volume storage opportunities will continue to present In southern Africa, the key product entry points are Durban, South Africa, and Matol themselves as downstream players move to leverage Mozambique. In Durban, product arriving into refinery or other (Vopak, Bidvest) term multi-country marketing operations, respond to the challocal market or is piped up the Durban-Johannesburg Pipeline and New Multi-Produc lenges facing local refineries, meet the continent’s growing Gauteng, South Africa’s key demand centre. clean product shortfall, and optimise blending and import/ The pipeline has a spur to Tarlton–the staging post for onward flows to Botswana. In re-export opportunities. Niche opportunities will also continue terminals in Matola (Maputo), Beira and Nacala, which have attracted investment fro to abound. The latter include dedicated tanks for power Oiltanking, BP and Glencore, serve the fast-growing Mozambique market, as well as generation and mining projects, the rehabilitation of existing old Beira-Feruka pipeline), northern South Africa, Swaziland, Malawi and Zambia. infrastructure in lesser known countries, and government Outlook attempts to stimulate fuel availability via the construction of secondary distribution depots in less developed areas of a High-volume storage opportunities will continue to present themselves as downstrea leverage multi-country marketing operations, respond to the challenges facing local given country. continent’s growing clean product shortfall, and optimise blending and import/re-ex Niche opportunities will also continue to abound. The latter include dedicated tanks generation and mining projects, the rehabilitation of existing infrastructure in lesser and government attempts to stimulate fuel availability via the construction of second FOR MORE INFORMATION depots in less developed areas of a given country. This article was written by James McCullagh, oil products analyst, Energy Aspects. www.energyaspects.com For more information

This article was written by James McCullagh, oil products analyst, Energy Aspe www.energyaspects.com 43

MARKET ANALYSIS l WEST VIRGINIA CHEMICAL LEAK

INSPECTION AND MAINTENANCE FAILURES CRUCIAL IN WEST VIRGINIA CHEMICAL LEAK The final US Chemical Safety Board report into the Elk River chemical spill reveals lessons to be learned by water companies and local authorities

reedom Industries’ failure to inspect or repair corroding steel tanks contributed to the leak of hazardous chemicals into the Elk River, which resulted in a string of federal environmental charges brought against several officials. The final US Chemical Safety Board (CSB) report into the incident additionally concluded that as the chemicals flowed into the Elk River, water company West Virginia American Waters and local authorities were unable to effectively communicate the looming risks to hundreds of thousands of affected residents, who were left without clean water for drinking, cooking and bathing. The incident spurred the creation and implementation of the Aboveground Storage Tank Act, which created a new section of state code and a new regulatory system including permits, performance standards, leak detection systems, recordkeeping requirements, corrective action requirements and financial assurances. On January 9 2014, approximately 10,000 gallons of crude Methylcyclohexanemethanol (MCHM) mixed with propylene glycol phenyl ethers (PPH Stripped) leaked out of an old, 46,000 gallon storage tank at the Freedom Industries site, pooled behind a poorly maintained secondary containment wall and leaked through and below the wall into the Elk River. As it entered the river, it flowed towards West Virginia American Water’s intake, which was located 1.5 miles

downstream and serves Charleston and parts of nine West Virginia counties. The leak was discovered when residents complained of a strong liquorice odour. The CSB investigation found that Freedom’s inability to immediately provide information about the chemical characteristics and quantity of spilled chemicals resulted in significant delays in the issuance of the ‘do not use order’ and informing the public about the drinking water contamination. The company initially reported that 1,000 gallons of crude MCHM had been released. Subsequently, over the coming days and weeks, the quantity increased to 10,000 gallons. Additionally, the presence of PPH in the released chemical was not made public until 13 days after the initial leak was discovered. The investigation also found that no comprehensive aboveground storage tank law existed in West Virginia at the time of the incident. There were regulations that covered industrial facilities that required Freedom to have secondary containment however, the company ultimately failed to maintain adequate pollution controls and secondary containment as required.

The CSB’s investigation found fundamental flaws in the maintenance of the tanks involved Vanessa Sutherland, CSB chairperson

LEADING REFORM A technical analysis revealed that the MCHM tanks had not been internally inspected for at least 10 years before the incident, however it was noted in the report that since then there have been a number of reforms, including the new storage tank legislation. CSB chairperson Vanessa Allen Sutherland says: ‘Future incidents can be prevented with proper communication and coordination. Business owners, state regulators and other government officials and public utilities must work together in order to ensure the safety of their residents. The CSB’s investigation found fundamental flaws in the maintenance of the tanks involved, and deficiencies in how the nearby population was told about the risks associated with the chemical release.’ The report recommends that the American Water Works Company establish nationwide requirements for all of its treatment plans to inventory potentially hazardous chemicals stored in vulnerable water source areas, assessing the dangers and developing contingency plans to respond to contamination events. The company developed such a plan for the Kanawha Valley, which will act as a model for other plants.

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MARKET ANALYSIS l WEST VIRGINIA CHEMICAL LEAK

It also highlights lessons learned, including: • Aboveground storage tank owners should establish regular inspection and monitoring and coordinate with nearby water utilities and emergency response organisations to ensure that they provide adequate information about their stored chemicals for effective planning in the event of a leak • State governments should act immediately to protect source water and the public from unknown and potentially hazardous chemicals • Water utilities should engage with their local emergency planning committees and/or state emergency response commission to obtain Tier II information • Water utilities should assess the capabilities of their water treatment systems to contain potential leaks for all potential sources of significant contamination within the zone of critical concern • Water utilities should also ensure laboratory testing methods are available to detect the presence or measure the concentration of potential contaminants or classes of contaminants • Public health agencies should coordinate with water utilities, emergency response organisations and facilities storing chemicals near drinking water sources Sutherland adds: ‘The unacceptable chemical contamination of the Charleston, West Virginia drinking water system could have been prevented had the lessons and recommendations in our CSB

DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

report been adopted years ago. Public officials and water companies must work diligently to identify potential risks and assure that the public’s access to safe drinking water is protected.’ West Virginia American Water says: ‘We are pleased to see the CSB has acknowledged our source water protection activities as exceeding applicable requirements and a model for the industry.’ SETTLEMENT West Virginia American Water and Eastman Chemical, both named as defendants in the spill have agreed a settlement of $151 million. West Virginia American Water will pay $126 million while Eastman will pay $25 million. In their lawsuit, the plaintiffs said the water company never prepared for such an emergency and that as a result, it was unable to respond and minimise the impact. West Virginia American Water says that the settlement will allow it to move forward without the ‘distraction of ongoing litigation’. It adds: ‘We still firmly believe the suits brought against our company were without merit.’ An Eastman Chemical spokesperson says the company denies any liability related to the 2014 chemical spill but negotiated a settlement to provide benefits and closure to the community. Last year, Freedom Industries and six officials pleaded guilty to environmental crimes. Gary Southern, president at the time of the spill, was sentenced to one month in federal prison and was fined $20,000. Another official also received a one-month prison term while the other four were sentenced to probation. The company filed for bankruptcy shortly after the spill and was fined $900,000.

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Editorial topics to include: • Terminal outlook 2017 • Tank storage awards preview • Loading arms, racks and hoses • Fire safety • Secondary and tertiary containment • Mixing equipment • Tank cleaning and petroleum reclamation • Bottom loading • StocExpo Europe preview

Tank Storage Magazine is: The OFFICIAL publication for StocExpo Europe in Rotterdam TODAY TO SECURE The ONLY CONTACT magazine US placed in ALL delegate bags and ADVERTISING POSITION: handed to YOUR ALL visitors at the show David Kelly The OFFICIAL publication for the inaugural Tank International Sales Manager Storage Awards at the Floating Pavilion on March 29 E: david@tankstoragemag.com The ONLY T: industry audited publication – which +44 (0)20 8843 8161 guarantees our advertisers the readership they desire FOR EDITORIAL ENQUIRIES CONTACT: Jasmin McDermott 2017 MEDIA PACK Online & Content Editor OUT NOW! E: jasmin@tankstoragemag.com T: +44 (0)20 8843 8159

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MARKET ANALYSIS l STORAGE OPPORTUNITIES IN AFRICA

OIL STORAGE OPPORTUNITIES AMID AFRICA’S SOARING ENERGY DEMAND

frica’s annual appetite for gasoil and petrol is expected to climb by as much as 8%, while demand for LPG has hit double digits. The continent’s growing home-grown energy supply will help satisfy some of the burgeoning demand. Africa produced 8.4m b/d of crude last year – 77% came from Nigeria, Algeria, Egypt and Angola, according to PricewaterhouseCoopers’ (PWC) 2016 Africa Oil & Gas Review. But East Africa is elbowing its way under the spotlight and changing Africa’s energy map – a move easily justified by its wealth of oil and gas assets. For example, Tanzania hopes to use its 55 trillion cubic feet of natural gas reserves to become an LNG exporter by 2025, while Tullow and Canada’s Africa Oil have identified 600m barrels of oil reserves in Kenya’s South Lokichar basin. Many projects are still in the exploratory stage, but investors’ appetite has strengthened East Africa’s position in the global energy arena. INVESTOR POTENTIAL Tanzania, Kenya and Uganda are amongst several East African countries addressing wobbly regulatory frameworks by establishing bidding rounds – a more transparent way to allocate resources. Plus, the East African Community (EAC) hopes to invest around $1.5 billion to build 1,454 kilometers of intraregional and domestic pipelines over the next few years. The longest pipeline will be the 784 kilometer route through Kenya – Uganda – Rwanda, which should significantly bolster fuel trade between the three countries. East Africa must react quickly to satisfy the demand of its thriving middle-class. Such households in eleven sub-Saharan African countries – including Tanzania, Kenya and Uganda - are expected to more than double from 15 million people to over 40 million by 2030, according to Standard Bank’s research. The subsequent appetite for oil products is vast, with a large portion earmarked to powering personal cars on newly

paved roads. Most of the LPG demand will be absorbed by cooking to support the rapidly growing populations in Africa’s cities, which will also help boost the region’s green credentials. Robust growth, wherever it is, always attracts global investors’ attention. THE RIGHT TIME The time is right to explore African assets, with additional ports now in play in Tanzania (Tanga and Dar es Salaam), Kenya (Mombasa and Lamu) and Mozambique (Maputo and Beira). However, only the strongest players will survive in what is an increasingly competitive space. Tanzania, Kenya and Uganda are spearheading East Africa’s economic prowess, with the eastern region as a whole expected to grow by 5-8% in 2016-2017, according to the International Monetary Fund. With many energy hubs in the Middle East and North Africa (MENA) beset by political strife, the largely stable democracies in the EAC offers investors respite; the EAC demands strong governance and human rights. Plus, lower crude prices since June 2014 have triggered a rising oversupply and pushed the market into contango. This has boosted investments in oil storage and traders that have access to physical oil and storage can significantly bolster their profit margins. The outlook for higher future prices has become particularly striking in the last three months as the surplus of crude oil production has increased stockpiles worldwide, exceeding capacity in many trading ports and forcing traders to seek alternatives. The high rates for very large crude carriers means floating storage is still an unpopular second choice. GATEWAY FOR TRADE The changing market structure has presented a gateway for global trading and storage firms to enter and widen their footprint in new markets in Africa, building on already strong platforms in the Gulf, Asia and Europe. If the oversupply of oil persists, traders may become bolder and secure their own storage facilities. They may also need to incorporate more blending capabilities and roll out additional jetties to widen their mandates to help cater for future growth. Governments and national oil companies are also joining the rush to Africa’s east coast. Oman is looking to build a foothold to promote trade of fuel and crude into the vast landlocked interior of Africa via Oman Trading International with a $50 million investment in facilities to store fuel in Mozambique or Tanzania. We do not see any new refineries coming in near future in Africa, but Africa’s economy is in a growth phase and we expect good demand; it presents a good opportunity for storage terminals to cater to that demand. FOR MORE INFORMATION This article was written by Thangapandian Srinivasalu, executive director at Gulf Petrochem Group. www.gulfpetrochem.com

DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

PROFILE l CONTANDA

NEW BEGINNINGS IN TANK STORAGE

Contanda Terminals – formerly Westway Terminals – explain how their new name supports their ambition to significantly increase their petrochemical and hydrocarbon storage portfolio

ith a new name comes new opportunities to grow into flourishing product markets. Contanda Terminals, the new name for Westway Terminals, reflects the company’s ambitions to focus more on petrochemical and hydrocarbon markets by at least doubling its storage capacity over the next five years. Previously, the company was steered towards the agricultural industry but its new strategic direction has expanded and it is now broadening its product line into these markets. The availability of crude oil and natural gas in the US, spurred on by the shale oil revolution, has created long-term investment in petrochemicals – and it is this market shift that Contanda is seeking to capitalise on. In an interview with Tank Storage Magazine G.R. ‘Jerry’ Cardillo, president and CEO of Contanda, explains his ambitions for the company as well as an update on its current and future terminal developments

has expanded and the new name gives us a new beginning while leveraging the foundation that was built by Westway Terminals. The name ‘Contanda Terminals’ is a new beginning for broadening our product line to include petrochemical and hydrocarbon products, while continuing 02 to provide innovative services, and serving new and expanded markets. We will build on our legacy of safety, service and quality while we remind our existing and new customers that Contanda has the expertise to expand into the petrochemical and hydrocarbon markets. How is Contanda positioned to take advantages of the small, niche plays that have emerged as a result of the investment in petrochemicals? Contanda Terminals has recently relocated our corporate headquarters to Houston, Texas where we are closer to our customers. Our staff has been expanded to include extensive industry experience in specialty chemicals, pipeline connectivity, terminal construction and more. Our foundation of expertise remains strong and will continue to grow but this expanded knowledge base offers our customers the confidence in handling their wide

range of products by offering heating, chilling, blending, vapour controls, trans-loading and 24/7 operations. Can you provide an update on the multi-phase project in Houston to construct a petrochemical hub as well as your four additional development projects in Sioux City, Port Allen, Stockton, Baltimore and Toledo? We have completed the purchase of Contanda Steel in the Houston Ship Channel. This loca-

01 G.R. ‘Jerry’ Cardillo, president and CEO 02 Railcar loading/unloading racks equipped with efficient loading arms

Why have you embarked on a rebranding and what does this signify for the company? Prior to the name change, Westway Terminals was originally owned by ED&F Man. After the separation in 2013 the image and expectations continued to lead Westway Terminals toward the agricultural industry. Our strategic direction

03 Customised storage and blending operations are available according to customer requirements 04 The Port Allen Louisiana Terminal, located on the Mississippi River, has land available for growth

05 Houston #1 Terminal offers deep water access with two million barrels of storage capacity

DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

PROFILE l CONTANDA

Do you see any potential to add another petrochemical hub in the Mid-Continent? Contanda Terminals plans to build a stateof-the-art facility to offer efficient unit train access, pipeline access and the opportunity for customers to assist with the design of their specific system. What are your ambitions for the future of Contanda Terminals? The expanding growth in the petrochemical markets as a result of the surge in shale gas production is something that we want to focus our business growth on going forward. Our existing storage portfolio consists of 35% petrochemical and energy focused with the remaining products focused on base oils, food grade products, methanol, acids, caustics and agriculture. Over the next 5 years Contanda will significantly increase the volume of petrochemical and energy based storage through the planned greenfield and organic projects with the expectation to double or possibly triple our storage capacity. What future developments are planned for the company? We are focused on developing in areas where are customers have indicated they require storage and as such our efforts are focused on the Gulf of Mexico region. However, project discussions have started in locations in the North East, West Coast and Mexico. 04

tion will give us the opportunity to offer deep water access for specialty chemicals to include vapour controls, blending, heating, chilling and so on while continuing with the steel terminal services. We are expecting to break ground during the first half of 2017, with operations set to begin during the second half of 2018.

We have successfully completed our railcar storage project in Sioux City. Our projects in Port Allen, Stockton, Baltimore and Toledo are in various design phases and we expect to have certain projects underway by the second half of 2017 â&#x20AC;&#x201C; if not earlier in some locations.

DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

What are the strategic advantages of the locations of your terminals? In the Gulf Coast region we offer strategic locations for various production facilities, easy access to highways and deep water/river access. In the North East we offer storage opportunities outside of the congested New York Harbour region. In the South East we offer the only public terminal in the Jacksonville area servicing Florida and the lower East Coast region. In the Midwest we offer easy access to Canada at our Toledo Riverdale and St. Paul locations; our Sioux City terminal provides bulk liquid storage and extensive trans-loading opportunities and our Cincinnati Terminal offers river access from the Gulf of Mexico. Our Hamilton Canada terminal offers water access and easy access to the US and on the West Coast we offer deep water access with access to Canada and an alternative to the congested West Coast port markets. All of the markets we operate in are competitive but we see that tank and dock availability continue to be in demand in various Gulf Coast and West Coast markets.

FOR MORE INFORMATION www.westwayterminal.com

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This year’s StocExpo Europe Conference has a brand new format to encourage networking and learning, consisting of seven panel discussions and over 30 speakers. The three day event will also incorporate speed networking events and multiple networking receptions to ensure delegates get a chance to interact with their peers.

Panel sessions include: Tuesday 28 March, 10am Operational excellence: how to optimise terminal performance Martijn Notten, CEO, Vesta Terminals Laurent Hatzopoulos, Manager Third Party Storage, Shell Trading Walter Wattenberg, Group CEO, LBC Tank Terminals Peter van Wessel, Managing Director, Oiltanking Europe Abel Noordanus, Commercial Manager, Odfjell

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TECHNICAL NEWS

Technical news

All the latest terminal technical news from around the globe

Rosen launches new training programmes

A new series of training and qualification programmes for the tank storage industry have been launched by Rosen. The Rosen Education Systems and Services creates structured learning programmes that focus on the acquisition of different skillsets, subject knowledge and practical experience. The company provides training courses, education programmes and the relevant qualifications needed to demonstrate competency. The programmes have been designed by experts in various areas of asset management according to industry-specific requirements. A qualification panel made up of independent industry authorities supervises and certifies the entire process. Rosen Education Systems and Services helps professionals acquire competence in their fields of expertise and enables them to demonstrate this competence with a corresponding certificate from a reputable panel.

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DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

TECHNICAL NEWS

UK distributor appointed for VOC emissions analysers

Emerson and Flexim combine flow portfolio

SK Elektronik has appointed Quantitech as its exclusive UK distributor.

Emerson and Flexim are collaborating to deliver optimised flow process design, flow meter selection and flow meter installation on capital projects to reduce execution risk and costs.

SKE is a leading global provider of gas analysers based on flame ionisation detection (FID). Key applications for the company’s analysers include emissions monitoring, process gas monitoring, and the monitoring of abatement efficiency and emissions from wastewater treatment. FID analysers provide readings of total organic carbon (TOC), and one of the key factors of the SKE instruments is their ability to measure TOC across an extraordinarily wide range of concentrations – from ppm to Vol%. The SKE range includes both portable and fixed continuous extractive gas analysers, in addition to an IP rated in-situ model which is mounted directly on a stack or duct. There is a field housing option for mounting in a convenient location on a wall close to the sampling point; reducing heated line cost and the cost of integration into a cabinet. In addition to a choice of models, customers are also able to select from a number of options including non-methane hydrocarbon measurement, internal data logging and heated sample line length. Explaining the importance of the agreement with SKE, Quantitech MD Ken Roberts says: ‘Quantitech’s MCERTS approved FTIR analysers are able to measure TOC by integrating measurements for known organic compounds. However, FID is the standard method for the measurement of TOC in the emissions of regulated processes, so in addition to stand-alone FID analysers, we will also offer the SKE FID technology as part of our integrated continuous emissions monitoring systems (CEMS).’

Emerson’s project teams, using Flexim’s clamp-on, ultrasonic flow metering portfolio in combination with Emerson’s broad, in-line flow metering offering, are able to consult early and throughout the project cycle to reduce engineering, piping and installation costs as well as schedule risk. Flexim’s non-intrusive flow metering offering is the leader in the clamp-on, ultrasonic marketplace and provides the best reliability and the most advanced capability when addressing difficult applications with a non-intrusive flow solution. This joint cooperation will improve delivery of the exact flow solution needed by clients while supporting Emerson’s project certainty – a transformational approach to enabling top-quartile performance in capital projects. Emerson and Flexim will collaborate to ensure less time is spent on engineering and installation through the selection of the optimal flow solution for a given application by leveraging the most comprehensive flow portfolio available. Bret Shanahan, vice president of flow solutions, Emerson Automation Solutions, says: ‘In today’s market, we are seeing that our customers are looking for us to advise them early in their project cycle on technology to ensure streamlined and cost-effective project execution. ‘We are pleased to be working with Flexim to provide our clients with the most appropriate flow solution that can be applied and support greater capital efficiency.’

Euro Tank Terminal selects Dropboard software system

Systems Navigator’s Dropboard software has been selected by Euro Tank Terminal to optimise its jetty occupancy rate. The Dropboard platform will enhance the terminal’s stakeholder relationships and support growth by providing a digital experience to customers and users of the terminal, enabling the facility to decrease vessel and barge turnaround times, waiting times and berth occupancy thus optimising the terminal’s capacity. The functionalities of the software will deliver more capabilities and flexibility to the terminal’s business users. It uses smart scheduling technology to assist the planning in optimising schedules and provide reliable and real-time feedback to users. Rienk Bijlsma, CEO of Systems Navigator, says: ‘As the tank storage sector becomes increasingly competitive, we are seeing just how important it is to maximise infrastructure capacity, reduce waiting and turnaround times and ensure customer satisfaction. Dropboard has been designed to address these issues and provide transparency and hence trust.’ Euro Tank Terminal’s general manager Juriaan Steenland says the software allows for a significant better jetty occupancy rate and a better service without investing in more pipelines and loading arms.

DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

Meeting your LNG needs

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TECHNICAL NEWS

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TECHNICAL NEWS

Next generation of MTS Sensors’ level transmitters certified

MTS Sensors has announced the LP-Series has been certified as HART Capable under the latest interoperable test kit 7.2.

The new series features Tank Slayer, RefinedME, Chambered and SoClean models based on MTS Sensors’ proprietary Temposonics magnetostrictive sensing technology. The HART output is available on either the loop-powered single loop 4-20 mA output or the dual loop 4-20 mA output. The LP-Series targets hazardous area applications in the oil and gas, chemical and mining industries. All models in this series feature an integral display and offer intrinsically safe approval under NEC, CEC, ATEX, or IECEx. Designed for use in aboveground bulk storage tanks, the Level Plus Tank Slayer features 3-in-1 measurement of the product level, interface level and temperature. The analog output features a single temperature point for indication, whereas the existing Modbus output offers up to 16 temperature points. Tank Slayer’s ±1 mm inherent accuracy makes it highly suitable for monitoring inventory levels of refined fuels, crude oil, fuel oil, ethanol and other valuable liquids. Tank Slayer is complemented by the Level Plus RefineME level transmitter aimed at shorter process tanks in oil refineries, chemical plants and mines. RefineME has the same 3-in-1 measurement capability but offers a wider variety

SA Fire protection opens new factory

of process connections, such as ANSI and DIN flanges, as well as wetted parts including stainless steel, Hastelloy C and Teflon. Once these products are installed and calibrated there is no requirement for scheduled maintenance or recalibration work to be carried out. As a result operating costs can be significantly reduced.

Your solution provider for the LNG market

Italian-based SA Fire protection has opened a new factory in San Pier Niceto featuring a state-of-the-art CNC production centre. CNC machines use modern design software enabling designers and engineers to manufacture the most intricate design ideas without needing a prototype. The machines can manufacture top quality, high precision replicas of the original component that cannot be made by manual machines thus increasing efficiency, reducing costs and wastage. Double-chamber deluge valves (SA Fire model VDD) are best made with CNC machines, which allows the valve to combine all the functions available on traditional deluge valves with a fully redundant architecture (designed to achieve higher level of reliability, lower response time and ensure easier system operations). This new concept translates into a built-in emergency bypass line that operates on both priming chambers in hot back-up mode making the VDD valve highly unlikely to fail on demand. Technical director Valeriano Barrilà says: ‘Highly specialised markets require highly specialised and reliable solutions due to the nature and risk of fire outbreaks. Our product portfolio and engineering expertise support the development and safety of these well respected industries. ‘This new investment was a result of increased demand and so will create efficiencies in precision and delivery time while improving the product offering for customised deluge valves and monitors but to name a few.’ The factory is designed to be the centre of excellence for the manufacturing of SA Fires deluge vales and monitors.

assist@emcowheaton.com www.emcowheaton.com

@EmcoWheaton www.facebook.com/EmcoWheaton The facility was opened by the Mayor of San Pier Niceto Dr. Petro Calderone, SA Fire Protection’s CEO Mrs. Elisabetta Aricò and Manging Director Mr. Lorenzo Barrilà

DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

TECHNICAL NEWS

New tank and level monitoring solution brought to market

EEMUA launches new mechanical integrity course

The solution removes geographic barriers to monitoring assets, providing up-todate inventory information regardless of where a person is in the world. Information is also readily available to plan optimal delivery routes. Whereas before a driver stopped at each tank to check the status, key personnel now have the information required to optimise deliveries and maximise fleet utilisation. This saves time and money while ensuring customers have the product they need, when they need it. The features of Centeron LevelTrack include: • Global coverage – simplex satellite modem means personnel are no longer forced to rely on spotty or nonexistent cellular coverage • Tracking abilities – the device can detect the movement of a tank anywhere in the world • One-way device – provides maximum privacy to personnel and customers across the globe • Easy set up – simple one-time input of information, no configuration With full visibility, personnel are able to keep tabs on the location of each tank using the Centeron LevelTrack webview application. The device can detect the movement of a tank, and provide a trail by increasing reporting frequency, helping with loss prevention and theft recovery.

The course is aimed primarily those sites where COMAH regulations apply but also those outside of the scope of COMAH where there are hazardous substances present. It will also be relevant to related stakeholders, including operators who are required to be ‘intelligent customers’, inspection bodies and providers of specialist services to the process. The course is based on EEMUA Publication 231 (SAFed IMG1), which was developed and written by EEMUA and the Safety Assessment Federation (SAFed) in consultation with the British Health and Safety Executive’s (HSE) Hazardous Installations Directorate. The course is based on EEMUA Publication 231 (SAFed IMG1), which was developed and written by EEMUA and the Safety Assessment Federation (SAFed) in consultation with the British Health and Safety Executive’s (HSE) Hazardous Installations Directorate. The inaugural course took place in November in Birmingham.

A new solution by Centeron LevelTrack offers a new level of accessibility to the tank storage industry with tracking and telemetry capability.

A new one day course for ensuring mechanical integrity of a plant and its equipment has been launched by EEMUA.

Elaflex meets demand for long length collapsible bunkering hoses The growing international trend towards long length collapsible bunkering hoses has prompted the company to expand its product portfolio. The Type FHD hose range comprises various sizes up to DN 200. Following market requirements, all sizes are now available ex stock – with L15 pressure rating, in 40 meter lengths. Elaflex is capable of manufacturing safe hose assemblies including pressure tests and certificate with short lead times. With regard to the attachment of the end fittings it is important to know that due to recent changes in the marine hose standard EN 1765, reusable safety clamps with fittings to EN 14420 are now recognised as equal to to built-in (vulcanised) hose nipples and crimped or swaged fittings. Elaflex points out the advantages of reusable Spannloc clamped fittings. Spannloc safety clamps are designed to fit the company’s EN 1765 hose dimensions. If damaged, hoses with Spannloc clamped couplings can be shortened and re-assembled in the field, resulting significant cost savings for the operator. The new EN 1765:2016 also presents some changes concerning electrical continuity. For hose assemblies type S and L, the electrically continuous versions were divided into Grade M ( ‘electrically bonded’, resistance ≤ 100 Ω ) and Grade Ω ( ‘electrically conductive’ due to the conductive hose lining and/or cover, resistance ≤ 106 Ω ). The ‘electrically discontinuous’ version ( ≥ 25.000 Ω ) remained unchanged. Elaflex supplies all required grades, both for their marine bunkering and their cargo loading hoses.

DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

TECHNICAL NEWS

COMPLETE SOLUTIONS. TOTAL SUPPORT.

WE OFFER MORE THAN HIGH-QUALITY, PRECISION-BUILT PRODUCTS. SafeRack offers unmatched service and proven expertise to help businesses navigate the complexities of industrial safety systems. Our proven process starts and ends with our customers. We listen. We ask questions. And we ensure every system — from gangways and loading platforms to crossovers and safety gates — is not only OSHA compliant, but is right for your workplace, as well.

+44 1843 609672 | SafeRack.com

PHOTO: LONGEST RAILCAR LOADING PLATFORM IN NORTH AMERICA - ST. JAMES, LA

LOADING PLATFORMS MODULAR PLATFORMS AND SYSTEMS DECEMBER 16/JANUARY 17 VOLUME AND12STAIRS ISSUE NO.6

MOBILE ROLLING PLATFORMS

UNIVERSAL SWING GATES

TECHNICAL FEATURES l WELDING

WELDING: FROM HOURS TO MINUTES A

custom-made welding machine has allowed Great Basin Industrial to complete projects in colder climates - with impressive results. The company approached Koike Aronson, Ransome to adapt their automated electro-gas welding machines for field erected tanks with enhanced safety features as well as the ability to weld in colder climates but retain the same productivity and quality benefits.GBI executives also required a machine that could produce welds that would pass the stringent Charpy Impact tests – a requirement for operations in cold weather. The bespoke Vertimatic machine allows GBI to complete jobs in colder climates with a greater degree of operator safety and ease of use compared to other machines and systems currently on the market. In an interview with Tank Storage Magazine, Jeff Reading, GBI construction director explains that the two machines, which were completed and delivered in April 2016, have already been successfully used on five tank construction projects. ‘We used the machine for a tank construction project in Louisiana for a 130 foot tank. The shell thickness meant we could use it for the first three shell sections and the x-rays that we took on these wells have been phenomenal – they were very clean and required no xrepairs. ‘It saves us so much time, money and ultimately equates to less people on site. The time that we save can also be focused on other work.’ The machine can cut down welding time from several hours to minutes. For example, a one inch vertical seam on 10’ of sheet can be welded in 40 to 45 minutes – this would compare to 10 to 14 hours if welded by hands with a wire feeder and 20 to 28 hours if by stick weld. The automated welding is done in a single pass, with no need for multiple passes, back gouging or grinding.

GBI’s quality assurance/quality control director and welding engineer, Keven Henrie worked closely with Koike to develop the desired modifications to the machine. In addition, a custom enclosure was also developed to facilitate ease of transportation and storage of the units.

01 GBI custom Vertimatic welder on 2nd ring of API storage tank under construction in Anchorage, Alaska 02 GBI custom Vertimatic on 3rd ring of API storage tank under construction in Louisiana 03 GBI VUP during testing at GBI’s shop fabrication plant 04 Back side of VUP on inside of shell. This is used to help fit vertical seams 05 API tank under construction in North Dakota with VUP welding 2nd ring vertical seams

ENHANCED SAFETY One of the modifications comprised a moveable operator platform for safety and ease of operation, which allows the operator to be on top of the controls and welder to make the necessary adjustments and monitor as needed. Reading explains: ‘These machines are used at significant heights, and we wanted something that would enhance operator safety and ease of use. The previous machines required that an operator either

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TECHNICAL FEATURES l WELDING

lean out of an adjacent buggy or be consistently on an adjacent ladder in order to reach and adjust the controls.’ GBI completes work across the US and Canada, including cold-weather environments such as North Dakota, Alberta and Alaska. ‘The existing machines would have difficulty producing a weld that would pass Charpy impact tests required for cold weather operation,’ says Reading. The Charpy impact test is a standardised high strain-rate test that determines the amount of energy absorbed by a material during fracture. The units have been used in projects in Alaska, Wyoming, North Dakota and are currently being used on a project in Louisiana. Reading adds: ‘The GBI core values of safety, quality, experience, people, integrity and competitive helped drive the decision to collaborate with Koike to develop a better automated vertical welding machine.’

04 05

FOR MORE INFORMATION www.mygbi.com, www.koike.com

VAPOR PROCESSING SOLUTIONS

Complete process control for every aspect of your vapor operation. Complete line of engineered modular vents that enable you to reduce capital outlay costs up to 66%.

The Model 5200 is a pilot operated Pressure/Vacuum Vent engineered to vent the tank vapor away to a header system and to relieve vacuum pressure within the tank.

The Model 6A Flame Arrestor is one of the full line of arrestors that allows vapor to pass through so tank vessels can breathe while preventing propagation of a flame from the exposed side to the protected side. The Model 1049 Secure-Gard is a pilot-operated vent valve intended for installation on atmospheric and lowpressure storage tanks, vapor recovery systems, and process systems.

For immediate access to our product resource files, visit www.cashco.com/vapor

www.cashco com Innovative Solutions

Cashco, Inc. · P.O. Box 6, Ellsworth, KS 67439-0006 · Ph. (785) 472-4461, Fax: (785) 472-3539

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TECHNICAL FEATURES l TERMINAL AUTOMATION

DIGITALISATION: THE FUTURE FOR TANK STORAGE Holistic automated processes are essential for storage operators to offer customers greater flexibility and a greater competitive advantage in a volatile price market

n this ever volatile pricing market, the role of digital technologies to accelerate established processes and incorporate greater flexibility in less time has become crucial to allow storage operators to stay ahead of market trends. A prevailing theme is the need to reduce ‘time to market’ – from the development of an idea to the execution of plant operations - as a result of the volatile changes in material costs as well as the volatility in the price of stored products. Additionally, it has also become more important for customers to respond quickly to capitalise on new market demands and gain an advantage over their competitors by adapting more quickly. Therefore, a holistic digitalisation process is needed for tank storage operators to keep ahead of market trends. In an interview with Tank Storage Magazine, Wilfried Kleiser, senior project manager, process industries and drives, process automation at Siemens, says that a ‘modular approach’ enables operators to be more flexible, which can be customised to fit specific needs. He says: ‘A modular solution would enable the consistent automation and management of all tank farm and loading bay processes from the field device level via the automation system to the management execution level. ‘The beauty of modular systems is that they can be utilised as standalone systems that operate within existing infrastructure or as an element of a complex tank farm management solution that includes instrumentation and automation. A modular system could pave the way for excellent cost efficiency in product storage and dispatch.’

MAXIMISING EFFICIENCY Maximising efficiency through minimal downtimes and optimised production is another key consideration for operators. Again, digitalisation provides operators with the ability to enhance their operations future with additional availability and optimising control loops to reduce resource consumption. ‘We are also seeing more tank storage operators considering the enablement of remote operation of their plants in order to reduce operational costs,’ explains Adnan bin Abdul Rahman, head of automation and engineering at Siemens. ‘This translates into the supervision and control of several plants remotely from a central control station. Similarly, tank truck drivers will be able to perform the loading or unloading processes in a self-service mode without the need for additional assistance. This further amplifies the importance of digitisation, which allows such modes of operation without compromising on plant safety.’ The range of benefits from digitalisation can be achieved throughout the entire lifecycle of tank terminal operations – from the design of the facility through to the servicing and maintenance of the terminals. ‘Siemens is able to seamlessly digitalise companies’ core processes and the overall plant development process, supporting it with software tools,’ says Kleiser. ‘This seamless engineering through all lifecycle phases enables the update of an ‘as-is-documentation’ and offers the basis for efficient maintenance and modernisation in the operation phase. ‘When what you see in the virtual world is what you have in the real world and vice versa, we are able to leverage greater benefits from

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digitialsation. The intelligent collaboration of the two worlds, the digital and the physical, leads to economic advantages that are absolutely vital to maintaining competitiveness and profitability amid the changing global business landscape.’ Not only can digitalisation simplify complex operations, it can also deliver more tangible results, including increasing terminal availability and lowering operational costs. INNOVATION DRIVER The continual and rapid advancements in IT technology, coupled with shifting market dynamics, will continue to drive innovation in the tank storage sector. The requirements on what technology can do in the terminal industry will continue to grow. ‘When there is an increased number of products, the number of tanks per tank farm will increase, spurring growth and resulting in higher frequencies of loading and unloading processes,’ says Abdul Rahman. ‘As such there will be a need for IT technology to be able to handle varied scenarios for processing as requirements become more complex as tank farm operations continue to grow and grapple with ever more products. ‘The industry is also gearing towards frequency converter technologies for pumps, which are energy efficient, helping companies to save electrical energy, as well as smart sensor technologies, which serve to increase plant safety, reduce environmental impact and adhere to tightened regulations. ‘With requirements increasing for plants availability and efficiency in the industry, there is also a focus on adopting telecontrol technologies, which can enable the remote control and operation of smaller terminal plants – leading to greater efficiencies.’

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TRI-CON TRIPLE ECCENTRIC METAL-SEATED BUTTERFLY VALVES 62

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TECHNICAL FEATURES l TANK CONSTRUCTION

EVOLVING INTO STEEL SOLUTIONS FOR STORAGE TANKS

t the start of 2016, Madesta was awarded a contract to supply fully prefabricated steel plates for the construction of three A1 jet fuel tanks at 2,300 m3 each at Larnaca airport, Cyprus. Due to tight schedules all plates were containerised and shipped to the final destination using just in time shipments. Madesta’s prefabrication capacity of ca. 2,500 tonnes per month and high quality output proved to be one of the key factors in completing the project successfully and on time. In the spring of 2016, Upgrade Energy, a Belgian EPC contractor, used Madesta plates for the construction of a new tank terminal in Ghent, Belgium. The terminal is part of a larger expansion project spanning several years. For the project, 3,000 tonnes of steel were shipped using just-intime deliveries by trucks and bulk shipments, straight to the construction site. Several courses of five 50 meter diameter tanks have already been constructed. The tanks are planned to be fully operational in the spring of 2017. Along with the signature projects in western Europe, Madesta is continuing to consolidate its market position in other regions and supplied prefabricated steel plates to Sierra Leone, Mozambique, the Middle East as well as the Caribbean. The company has several projects planned for 2017 and a new steel prefabrication facility in Europe is due to be commissioned in early 2017. The plant under construction in Riga, Latvia is to be equipped with a full range of up-to-date steel processing equipment to manufacture steel parts and structures for wind power as well as storage tank construction 01 Steel plate bevelling 02 Madesta plates for construction of A1 fuel storage tanks at Larnaca airport, Cyprus 03 Madesta plates for construction of 50-meter diameter tank in Ghent, Belgium

industries strengthening company’s position on the European market. The new facility will also comprise a steel stock to cope with short project lead time for both the renewable energy as well as the storage tank construction markets. EVOLVING INTO TANK STORAGE Since entering the tank storage market in 2009 Madesta has completed a raft of steel fabrication projects across Europe, Africa, Latin American and the US. This year the company made significant progress in establishing itself further within the European tank storage construction market. It currently operates several prefabrication facilities in Europe and relies on vast number of steel suppliers and strategic partners. All of company’s facilities are certified according to ISO 9001, EN/ISO 3834-2:2005 and EN 1090-1,2 and comply with the highest standards of metal working. Having established itself as key player in the renewable energy sector, Madesta entered the tank storage industry in 2009. The first project was completed in Amsterdam, the Netherlands. In 2015 Madesta celebrated its 15th anniversary having evolved into a full-scale steel service centre and one of the key providers of steel solutions for wind power and tank storage industries.

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The company is now an approved supplier to major wind turbine OEMs as well as storage tank EPCs and tank builders. Since its creation, it has prefabricated more than 500,000 tonnes of steel and supplied projects on four continents. Madesta provides cost and time saving solutions supplying semi- and fully prefabricated steel parts delivered up to construction site ready-to-assemble. Every steel part is processed in close cooperation with the customers’ engineering staff and prefabricated in full compliance with individual technical requirements. Depending on the specifications, project and final destination prefabrication operations may entail shot blasting, cutting of plates to size, bevelling (weld-edge preparation) and rolling to radius. If required primer coatings of up to 400 micron/16 mils DFT can also be applied at the company’s painting facility. The company not only offers steel procurement and prefabrication but also provides all-over logistical support and DDP deliveries to storage tank construction sites worldwide. The company takes care of all import formalities, local import taxes, insurance, local cargo transportation and port handling operations. All bottom-, annular-, shell- and roof plates arrive on site ready-to-erect. Since its first steps in tank storage business, Madesta has become one of the major plate prefabricators in Europe and further afield the company has successfully completed projects in Africa, Latin America and the US.

FOR MORE INFORMATION Quinten Eyckmans, +32 3 545 37 91, sales@madesta.com, www.madesta.com

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DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

TECHNICAL FEATURES l COATINGS

PROTECTING YOUR STORAGE TANKS FROM THE INSIDE OUT

he importance of corrosion prevention in storage tanks, whether internally or externally, should not be underestimated. Storage tanks, particularly bulk liquid storage tanks, are subject to some of the harshest conditions of any industrial asset. As a coatings manufacturer it is important that these key challenges are understood. THE CHALLENGES Storage tanks need protection internally and externally and each surface exhibits its own set of challenges. Externally, storage tanks are under constant attack from their surroundings and this can lead to early coating breakdown and rust. Rusty tanks do not suggest a well-maintained facility, which may make it difficult for a company to lease out its storage to potential clients. As most tanks are generally coated in light colours to reflect the sunlight, early coating breakdown can be seen very quickly and so a high-performance coating solution is needed to protect the tanks for as long as possible. Safety is also an issue. If severe corrosion occurs on the outside of the tank there are safety critical elements such as stairways, hand rails and ladder rails that could fail and collapse, endangering personnel safety. In general, external corrosion is clearly visible and the problem should be easily managed, but it is important to ensure the integrity and structure of the tank is in top condition to comply with health and safety requirements. Internally the key challenge is maintaining the tank lining and preventing corrosion. If an internal tank lining begins to breakdown, the tank structure will begin to corrode and if undetected, there is a real possibility of tank bottom perforation leading to ground water contamination. This is where a high-performance coating system is needed for long-

lasting protection. As tanks are not internally inspected on a regular basis, normally every five to seven years and sometimes longer, it is vital that owners have confidence in the coating they have applied to minimise this risk. Asset owners do not want any unexpected surprises during their maintenance shutdowns. Corrosion is a changeable process but coating manufacturers should be able to give an accurate prediction of their coatingâ&#x20AC;&#x2122;s performance. In large storage tank facilities, a failed tank coating can have a significant knock-on effect for the owner. Once a failure is detected the tank must be taken out of service and the situation rectified rapidly. Delays will mean clients adjusting their delivery schedules to compensate for the tank not being in service, but the right coating solution should minimise tank downtime and reduce long-term maintenance requirements.

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Health and safety also plays a significant role when developing coatings for internal tanks. As the applicators are working in confined spaces it is best to use solvent free products. These products are the most environmentally friendly and are usually preferred by owners, however they are not always the easiest products to apply and this makes it challenging for the applicator. IMPROVED DEFENCE AND THE RIGHT SOLUTIONS External protection Hempel has developed an innovative technology called Avantguard to provide superior corrosion protection to the tank exterior. Avantguard is a zinc-rich epoxy coating that exhibits the strength of traditional epoxies alongside unrivalled anti-corrosion properties. By combining the ingredients used in traditional

TECHNICAL FEATURES l COATINGS 01 Large storage tanks can present a number of corrosion headaches for terminal operators 02 Exposure to high humidity and UV sunlight can make maintaining a storage tank’s apperance over its lifetime challenging 03 The importance of internal linings to maintaining a tank floor’s integrity is now widely understood

zinc epoxies with two new elements – hollow glass spheres and a proprietary activator – the zinc becomes much more effective in altering the electro-chemical reaction between salt, water and oxygen that allows the zinc particles to preferentially corrode. By enhancing the performance of zinc in this way – the galvanic effect – Avantguard is able to outperform conventional zinc epoxies and provide corrosion protection approaching that traditionally associated with zinc silicate based systems. Coating breakdown causes micro-cracks in the paint, which leads to real cracks and corrosion. The hollow glass spheres within Avantguard can absorb most of the stress from the initial cracks and actually prevent them from worsening. The sub-products formed during the zinc activation process then occupy the micro-crack restoring the corrosion protection, and thereby helping to ensure the coating retains its anti-corrosive properties for much longer. A coating must also be easy to apply. Often, where a coating contains a high concentration of zinc pigments, it is hard for the paint to adhere to the steel surface which can lead to ‘mud-cracking’. The activated zinc technology in Avantguard overcomes these problems and even allows a recoat interval as short as one hour (at 20˚C) which significantly increases productivity for applicators. Avantguard can be used with a wide range of midcoats and topcoats, including high performance polysiloxanes with improved colour and gloss retention. These materials can ensure coloured markings, such as logos and company names, as well as identification text, continue to look aesthetically pleasing. Internal protection Internally, the ideal coating system for tanks should deliver a balance between long-term protection, ease of application and return on investment. The Hempaline Defend range is offered as a one or two-coat system, allowing a faster application when applied as a single coat, reducing the risk of contamination between coats, or missed overcoating intervals. All single coat systems have a 100% integrity check after they have been applied. The Hempaline range includes both vinyl ester and epoxy linings to suit any stored liquid and incorporates a high crosslink density technology to give added chemical and corrosion resistance. Hempaline vinyl ester linings are formulated to have a high resistance to water

penetration as well as resistance to extremes of pH. They can be spray applied as a highbuild coating system, but are also available as trowel and reinforced systems to maximise service life and reduce future maintenance costs. Hempaline epoxies are designed to optimise performance. They allow for high-build one-coat applications and come in fast-curing versions enabling tanks to be returned to service in as little as 24-hours. They provide excellent resistance to acids, alkalis, oils and solvents, and are also available in Novolac resins for enhanced chemical resistance meaning less downtime without compromising on performance. In a recent large scale tank lining application, some 60,000 square feet were coated with a one spray applied Epoxy Novolac system. Even at the owners acceptable defect rate the large size of the tank should have highlighted hundreds of potential defects

which would have required several days to repair. The integrity test was completed with a 100% success rate and only three defects attributable to mechanical damage. The quality of the application and the cure speed of the product returned the tank to service several days ahead of schedule and additionally saved several days’ worth of application crew labour, resulting in considerable savings. The physical properties and the application process of Avantguard and Hempaline Defend offer effective solutions for each; high performing protection with easy application. By investing in the right coating solution, from the inside out, the asset owner can minimise risks and reduce the downtime and maintenance costs of their tank storage units. FOR MORE INFORMATION This article was written by Jim DeChant, group business manager, specialty coatings, Hempel. www.hempel.co.uk

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REMOTELY CONTROLLED REMOTELY CONTROLLED

REMOVAL OF SLUDGE FROM OIL TANKS REMOVAL OF SLUDGE FROM OIL TANKS

REMOTELY REMOTELY CONTROLLED CONTROLLED

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The transportable ventilated cabine, for the remote control power pack and the TVand signals from the remote-controlled vehicle. veh power pack the TV signals from remote-controlled The ventilated cabine, for the remote control of thetransportable Vehicle,safe instalation and operation of thethe hydraulic The vehicle for is certified ATEX with enviroment, Zone 0,hose 1G IIB T4 > Designed oil sludgefor removal vacuum suction The TVC cabin isthe designed safe work in Zone 2 or Zone 2 or weight 450 kg550 for of the Vehicle,safe instalation and operation ofATEX the hydraulic power pack and TV signals from the remote-controlled vehicle. Designed oillength sludge removal with vacuum suction >>Width mm, 1200 mm (with arm 1,900 mm),hose The TVC cabin is for designed for safe work in ATEX weight 450 kg ADEX TVC Zone 1 enviroment, air > For manhole 600 mm The TVC cabin designed for safe work in ATEX Zone 2 orvehicle. power pack andis1the TV conditioned. signals from the remote-controlled 450 kg length >weight Width 550 mm, 1200600 mm mm (with arm 1,900 mm), Zone enviroment, air conditioned. > Fordiameter manhole diameter The ventilated for theZone control The is certified for ATEX 1 enviroment, air The TVC istransportable designed safe work ATEX or > For manhole diameter 600vehicle mm weight 450 kg certified for ATEX Zone 1, for 2G IIB T3 or Zone 2,for 32 GZone IIB T3 > Construction material stainless steel AISI 304 /cabin certified forconditioned. ATEX Zone 1,cabine, 2Ginfor IIB T3 orremote 2, /3G IIB T3 > Construction material stainless steel AISI 304enviroment, Zone 0, 1G IIB T4 / Zone of the Vehicle,safe instalation and operation > Designed for oil sludge removal with vacuum suction hose /Zone certified for ATEX Zone 1, 2G IIB T3 or for Zone 2, 3ofGthe IIBhydraulic T3 / 1 enviroment, air conditioned. >>Construction stainless steel AISIsurface 304 For manhole diameter 600 > Hydraulic upmaterial to 100 m, with antistatic > hoses Hydraulic hoses up to mm 100 m, with antistatic surface power pack and the TV signals from the remote-controlled > Width 550 mm, length 1200 mm (with arm 1,900 mm), / certified for ATEX Zone 1, 2G IIB T3 or for Zone 2, 3G IIB T3 / vehicle. >>Hydraulic hoses up to 100 m, with antistatic surface Construction material stainless steel AISI 304 The TVC cabin is designed for safe work in ATEX Zone 2 or weight 450 kg > Hydraulic hoses up to 100 m, with antistatic surface Movable active arm, as a arm, support holder forholder the 600 suction head Zone 1 enviroment, air conditioned. > as Foramanhole diameter mmthe Movable active support for suction head Movable active arm, as a support holder for the suction head / certified for ATEX Zone 1, 2G IIB T3 or for Zone 2, 3G IIB T3 / with suction hose. with suction hose. > Construction material stainless steel AISI 304 with suction hose. Movable active arm, as a> Hydraulic support hoses holder for the suction head up to 100 m, with antistatic surface Three TV cameras with integrated lights Three TVwith cameras withlights integrated lights Three TV cameras integrated with suction hose. / /certified for ATEX Zone 0, 1G IIB T4 /1G positioned on the vehicle. Hydraulic power pack located in TVC Cabin. / certified for ATEX Zone 0, IIB T4on / positioned Hydraulic power pack located in TVC Cabin. Movable active arm, as a support holder for the suction head certified ATEX Zone 0, 1G IIB T4 / positioned the vehicle.on the vehic Three TVfor cameras with integrated lights Hydraulic power pack located in TVC Cabin. TV Control with suction hose. / certified for ATEX Zone 0, 1G IIB T4 / positioned on the vehicle. Hydraulic power pack located in TVC Cabin. Three TV cameras with integrated lights One placed inthe the manhole Stainless steel bridge to allow the tovehicle enter and exitexitand exit One camera placed in the manhole Stainless bridge to vehicle allow the toand enter Onecamera camera placed in manhole Stainless steelsteel bridge to allow the vehicle to enter / certified for ATEX 0, 1G IIB T4 / positioned on the vehicle. Hydraulic power pack located in TVC Cabin. / /certified for ATEX Zone 1GZone IIBT4 T4 the oil the storage through 600 mm manhole. / certified for ATEX Zone 0, the oiltank storage tank through 600 mm to manhole. certified for ATEX Zone 0,0,manhole 1G IIB / /1G IIB T4 / One camera placed in the oil storage tank through 600the mm manhole. Stainless steel bridge to allow vehicle enter and exit / certified for ATEX Zone placed 0, 1G in IIBthe T4manhole / the oil storage tank through 600steel mmbridge manhole. One camera Stainless to allow the vehicle to enter and exit

One / ce

inless steel bridge to allow the vehicle to enter and exit oil storage tank through 600 mm manhole.

TV TV Control TV Control Control TV Control

the oil storage tank through 600 mm manhole.

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/ certified for ATEX Zone 0, 1G IIB T4 /

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DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

EVENTS l HONEYWELL PROCESS SOLUTIONS USERS GROUP

TRANSFORMING OPERATIONS WITH THE INDUSTRIAL INTERNET OF THINGS

he Industrial Internet of Things (IIoT) has the potential to transform every facet of tank storage operations as the market moves towards more process-driven digitalisation. IIOT harnesses data, data analytics and big data analytics and applies it to streamlining industrial plant processes, making them more resilient, flexible and easy-to-use and navigate. The potential of IIoT for midstream and downstream operations was highlighted in greater detail at Honeywell Process Solutions’ EMEA users group at The Hague in Amsterdam. Vimal Kapur, president of Honeywell Process Solutions explained that the IIoT alters the basic architecture underpinning processes at terminal facilities to facilitate more effective work flows. He told delegates: ‘The work life has new challenges as a result of technology. This [the IIoT] is not a revolution, it is using what we have and getting maximum benefits from it. ‘Digitalisation is the way forward and we need to incorporate it into everything that we do. ‘Technology will always keep evolving – it has evolved from the 60s to today but for the same reason – to make products more productive. ‘The means have changed but the goal remains the same. The means is far more challenging. The pace of change has increased and you just cannot afford to live with old systems anymore.’ Another key theme was adapting technology to allow the user to access the information they need in the palm of their hand whether in an office or out in the field. Honeywell Pulse for example, allows plant managers, supervisors and others to stay connected to their enterprise through their mobile devices regardless of their location. The app brings relevant metrics and the tools necessary to resolve the issue directly. Bruce Calder, vice president and CTO for Honeywell Process Solutions says: ‘The IIoT, cloud and mobility have really supercharged our portfolio. Honeywell Pulse gives managers and supervisors peace of mind by allowing them to receive alerts and monitor performance remotely. This allows plant personnel to respond fast to situations, whether they are planned or unplanned.’ Kapur explains that as the oil and gas market undergoes more consolidation, the potential for innovative technology to deliver the high-quality performance is significant. He says: ‘All large companies are looking at lowering costs and big players are looking at diversification to allow greater capacity and more market consolidation.’ There are many different applications for the technology. Testing is underway for creating an enterprise resource planning system that harnesses the power of cloud based infrastructure to help complete certain tasks at storage facilities. Kapur adds: ‘Actionable paths to adapting IIoT solutions are not a thing of the future, they are here now and are helping manufacturers transform their operations today. ‘When Honeywell first invented the distributed control system (DCS) more than 40 years ago, it gave manufacturers the ability to better use data to operate their plants more safely and productively.

Honeywell Process Solutions president Vimal Kapur discusses IIoT

Delegates discuss storage terminal solutions during a break out session

‘The amount of data generated from today’s facilities is exponentially larger and the IIoT is allowing manufacturers to efficiently manage, gather and analyse that data across multiple operations and plants to transform entire enterprises.’ The event also featured dedicated breakout sessions on the use of IIoT in terminal operations. Senior marketing manager Frank Brooks gave an overview of remote connectivity and analytics products for the market. Additionally, Simon Cook, asset technical director at CLH-PS, which operates the UK’s pipeline network, explained how the operator is embarking on an extensive modernisation programme throughout the network – which had suffered some neglect – by introducing automated processes such as ‘switch rooms’.

DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

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DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

TECHNICAL FEATURES l TANK LIFTING

MEETING THE CHALLENGES OF LIFTING TANKS T he days of trial and error have passed and safety is of upmost importance. In 1982 it was a challenge just trying to convince clients to lift a storage tank for repairs. But where are we in 2016? Almost in the same place – convincing clients or their engineers that placing some plaster idea on the tank isn’t repairing tank problems and that lifting their tank is a proven repair method, to fix their foundation issues or replacement of the tank bottoms under the lifted tank. A lifted tank is not a suspended load, it is a supported load and working under a lifted tank is safe. As a tank owner, you must ask yourself, not why to lift a tank but when to lift. The hope of tank owners is to never have to lift or repair their tank in the first place; when built correctly together with an excellent maintenance plan, a tank should last a life time. However, this is often not the case. Some tank farms are built on reclaimed land, landfills or swamps. Some tank farms have bad drainage and not much of a maintenance plan, which is the cause of tank problems, such as tank settlement or tank bottom failures. For tank owners, tank lifting is a tool for foundation or tank repairs. Once a problem is identified (this may be foundation issues or tank bottom repairs required) a repair plan is

established, to achieve the goal of putting the tank back into service at a cost saving solution. If a tank owner has a problem with a tank it can generally be traced back to the foundation. Questions must be asked what the underlying cause of the tank problem are and how repairs to those causes can be made before repairs are made to the tank.

EACH TANK IS DIFFERENT Understanding that every tank is different is crucial – whether it is the diameter and height of the tank, the thickness of the tank bottom and shell courses, if the tank is an open top fixed roof, dome roof or has an internal or external floating roof, number of columns including if the tank is a double wall or double bottom or the tank maybe insulated. More often than not tanks are never the same i.e. no tank is like another and there are a number of considerations to think about on any one tank, let alone what type of foundation does the tank sit on. In some cases tank lifting companies such as A.R. Watson are not the first to be called. Repairs on the tanks have already started before thought goes into what is the underlining tank issue. In some incidences, the tank bottom has been removed only leaving the annular to hold the shape of the tank. Then

reinforcements are required to strengthen the annular to shell. In other incidences the new bottom has been fully replaced before foundation repairs are made. This ties the stress into the new tank bottom. In other examples, a door sheet has been cut before lifting the tank for foundation repairs, which entails temporarily replacing the door sheet for lifting the tank to fix the main cause of the problem. A.R. Watson believes like many other tank owners, that cutting a door sheet in the tank shell is like cutting into the heart of the tank, which could cause an area of a potential failure. The mind set is that tanks need to be lifted to repair the foundation problems or tank bottom replacements. Other factors in tank lifting are supporting the tank bottom or columns, including the tank roof or the internal or external floating roof. A tank bottom including column, plus floating roof can sag up to a point. Passed that point a tank bottom will need to be supported by a system of sorts, for example a cable system or welded steel system, which in turn supports the weight of the tank bottom including column and floating roof which transfers the load back to the shell. This should be proven by tank lifting engineering calculations and drawings.

TANK LIFTING TECHNICALITIES A big unknown in lifting tanks off their foundation is suction that the tank bottom may have to the foundation. Tanks that are lifted straight up from their foundation can hold suction to the ground which in turn can damage the tank upper shell course or cause failure to lift the tank off the ground. To overcome this, tanks can be lifted at one location at a maximum PSI to first free the tank bottom suction to the ground, an analogy for this is like a foot stuck in the mad. It is hard to pull your foot straight up and out as it takes a lot of force. When leaver your heel out first frees the suction, then its takes less force to remove your foot from the mud. There are a number of different lifting technologies including hydraulic jacks or airbags. Both techniques of lifting should be done right from under the shell. The ground under the

DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

TECHNICAL FEATURES l TANK LIFTING

tank can be calculated to support the tank’s weight. This is done by taking the tank’s weight plus weight of the water that was used to hydro the tank before operation, or the weight of the product in which the tank is in service, proving that the ground can support the weight of the tank when lifting. Tanks should never be lifted from outside of the tank on unproven ground, if the tank is sitting in mud double the amount of lifters All engineering calculations should cover number of support and lifting points, height in which the tank can be lifted, stress calculations on each support or lifting points, number of timbers in each timber stack and in each row. Tank weight broken down to weight of the tank bottom, shell, fixed roof and including floating roof plus a safety factor of up to 2.0. and total weight. Maximum lifting pressure for initial lift, tank bottom deflection calculated and allowable. Wind requirement while tank is at height covers overturning, skidding and action plan. In most case the wind speed to overturn a tank supported at 8ft 2.5m off the ground wind speed exceeds a category 5 hurricane which is over 156mph 251kp/h, skidding or sliding over the tank support timber is a category 4 hurricane is between 130-156 mph, 209-251

km/h, action plan i.e. to weight the tank down or cable tank to the ground while tank is on top of timber supports is a category 1 hurricane which is between 74-95 mph 119-153 km/h. Most of the rest of the calculation show the client ground support, cribbing calculation, lifting calculation, and shell compression stresses which I won’t be able to go into great detail as this is intellectual material. In the field there are two different types of setup for lifting the tank. Take the circumference of the tank and divide into four points, then divide the number of airbags into groups of four or take the circumference of the tank and divide by the number of airbags and then equally space each airbag. The idea is to lift the tank level. In most cases you find the tank is heavier on one side because of the location of the stair on one side and an extra airbag is need in this location to keep the tank level. Once the tank is at height and the repairs to the tank foundation is completed, then lowering of the tank process begins; and so the lifting technique is reversed. One of the biggest questions asked is how to get the tank lifting equipment out from under the tank. The last step once all the timber is out from under the tank and the tank sits on top of the airbags, bags of party ice

are placed next to the airbags under the tank shell to support the tank’s weight, giving time to remove the equipment. The ice just melts away leaving the tank on top of its newly built foundation. When cutting out an old tank bottom over a newly built bottom, it is like a giant jigsaw puzzle. First the center is cut out, then the annular between the supports. At the same time, the new bottom is brought up to the shell tacked together, to hold the shape of the tank. Then lift the tank under the new bottom removing the timber supports and cutting the rest of the annular away, tack and weld the new bottom and shell together. Building a new bottom helps with gaining access for laying out plate 360 degrees around the tank; no confined spaces, lighting issues, ventilation problems, columns and or floating roof legs to deal with. Representing three decades of experience supplying service to the petroleum, petrochemical and gas industries, A.R. Watson is one of the leading experts in lifting large aboveground storage tanks. Lifting a tank is easy – the fun part is moving them. FOR MORE INFORMATION This article was written by Lance Watson, www.arwatson.com

DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

TECHNICAL FEATURES l XXXXXX XXXXXX

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TECHNICAL FEATURES l TERMINAL AUTOMATION

GETTING YOUR ARMS AROUND FUNCTIONAL SAFETY

f you manage a process plant, your workforce may be about to come to you with news of the release of the new (second) edition of IEC 61511, the standard for instrumented protection systems. Although compliance with this standard is not a legal requirement, it is the accepted benchmark of good practice. It is the ruler the regulator will hold up to measure process operations by. This new edition has been long anticipated, but what are the implications for management of the process plant? In many respects the message from the second edition is ‘steady as she goes’. For the most part the changes relate to clarifications or reinforcement rather than substantive change. There is little that is really new – the explicit requirement to consider cyber security is new, but no surprise of course and always implicit in the original requirement to consider system security. Most changes are more about making explicit requirements that were previously implicit, for example; evaluation of equipment quality, and the requirement for performance monitoring during the operation phase. These requirements were always there, but they were not explicitly stated. Other requirements were immediately implicit upon the release of the second edition of the ‘mother’ standard IEC 61508: 2010. For example, the requirement for competency of all those concerned with implementing the standard, is now also an explicit requirement in IEC 61511 2nd edition. This implicit/explicit shift is certainly an important aspect of the revision, but should not trouble those that have previously acted in good faith with the first edition of the standard and the overarching IEC 61508. From a process plant management perspective there is nothing extraordinary here – this is an evolution not revolution – a refinement not a rewrite. Functional safety is not privileged beyond other aspects of process safety of course; but it is more complicated. Proper management of functional safety may be perceived as being harder to ‘get your arms around’ since there are so many aspects to address throughout the ‘safety lifecycle’. These include: hazard analysis and SIL deter-

mination, design and installation, verification and validation, and operation and maintenance. Functional safety is very much a team event. Keeping proper control of the associated documentation can be a real challenge, especially if you wish to maintain full version control, and traceability of checks and approvals to competent authorised personnel. A piecemeal approach will likely mean gaps or other deficiencies.

2. Determine the safety integrity level (SIL) target for each SIF This may be through a variety of techniques. This does need some care however; over ambitious targets or undue conservatism can quickly lead to inflated SIL targets. This can lead to unwarranted difficulty with the engineering. Conversely, improper application can give misleading under-estimates of the required risk reduction and the corresponding SIL targets. Typically most of the SIFs will not be SIL rated, many may be SIL1; you might occasionally meet SIL2, exceptionally SIL3. If you come across many SIL3 or any SIL4, the likelihood is that you are doing it wrong or that the process design is VERY seriously flawed. 3. Identify the safety requirements specification (SRS) A retrospective SRS for a legacy installation is essentially about defining just what each safety instrumented function is, and its performance requirements. For example, what SIL target is identified, what is the process safety time, is tight shut-off required, what is the trip setting, and what operational features are required, such as resets and overrides.

FUNCTIONAL SAFETY OF LEGACY PLANT

A legacy process plant is one that was designed without consideration of the requirements of the functional safety standards IEC 61508/61511. The question arises: how do you now address this? Management need to exercise professional judgement about what is appropriate in the context of their operation; there is unlikely to be just one definitive solution. The general approach is outlined below: 1. Identify the safety instrumented functions (SIF) Any instrumented trip/alarm/interlock that contributes to the safety case is a SIF, but most of them will likely fall outside the remit of the functional safety standards (i.e. not SIL rated) and for these, the requirement is simply that they be maintained, tested and inspected in accordance with good practice.

4. Verify the SIF design This essentially means; i) Undertaking a calculation of the probability of failure on demand (PFD) of the individual functions to confirm compliance with the SIL target, and; ii) Confirming that the equipment deployed on the safety function is fit-for-purpose and supports the function architecture (level of redundancy). 5. Establish proof testing procedures For each SIF an appropriate proof test and inspection regime will need to be established to maintain the required PFD of the functions and identify and address any significant deterioration that may occur. Appropriate and explicit proof test procedures need to be written. Highly generic procedures e.g., ‘calibrate and test pressure trip’ are not acceptable. 6. Maintain personnel competence Technicians (in-house or outsourced)

DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

TECHNICAL FEATURES l TERMINAL AUTOMATION

7. Implement monitoring A mechanism for monitoring the ongoing performance of the SIL rated functions and managing equipment obsolescence and ageing beyond useful life needs to be established. A simple database identifying what equipment is deployed and where, and what its age is, will be helpful. CONCLUSION For the most part, installations that have been designed in accordance with historical good practice will be largely compliant with the provisions of the functional safety standards. Good practice provisions will typically be good for up to SIL2. Likely deficiencies will be; identification of specifically what constitutes the SIFs, formal verification evaluation of the design, and explicit proof testing procedures. Typically the requirement against legacy installations would not be one of re-engineering, but rather of establishing appropriate documentation and management provisions to ensure ongoing fitness-for-purpose.

‘When rearranging the deckchairs, don’t forget to look out for icebergs! Functional Safety is just one aspect of process safety management.’

engaged in the maintenance of SIL rated functions need to be suitably competent for that purpose. If they are already generally competent in maintenance of process

instrumentation, the training requirements are relatively modest; typically a half-day awareness training course would be sufficient.

FOR MORE INFORMATION This article has been written by Harvey Dearden, director, SISSuite. www.sissuite.com

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DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

EVENTS l ARGUS AFRICA STORAGE & LOGISTICS CONFERENCE

AFRICA: IS IT WORTH THE RISK? With political uncertainty, transactions taking 3-4 years to close and trillions of dollars in investment being deferred, Africa may represent opportunity, but can this be turned into reality? Margaret Dunn reports

‘A

frica Rising’ was a term coined to describe the rapid economic growth in sub-Saharan Africa since 2000 and the belief in the inevitability of further, rapid development on the continent. It was repeatedly heard at this year’s Argus Africa Storage & Logistics Conference in Cape Town, yet often with a touch of caution. According to Rolake Akinkugbe, head of energy and natural resources at FBN Capital, the global oil price outlook has had a very negative impact on growth, investment and financing across sub-Saharan Africa. She used Nigeria as an example – a country that officially fell into recession in Q2 2016, contracting by 2.2%. The World Bank has now revised its growth rates in sub-Saharan Africa to 2.5% in 2016 from 3% in 2015, largely due to sluggish growth in South Africa and Nigeria. To put this into perspective, from 2010-2014 growth rates averaged 6%. Akinkugbe explained that the appetite for M&A opportunities has slowed, but there is still a vast amount of opportunity in the region. Sub-Saharan Africa has a diverse mix of downstream and midstream infrastructure, with at least 400 inland terminals, more than 25 refineries and at least 250 coastal storage terminals – and a need for far more. The total product demand in sub-Saharan Africa could rise to 80 million tonnes a year in five years time and a third of the demand comes from Nigeria. Nigeria itself has a serious distribution supply problem. There is very limited pipeline infrastructure in the country and its refineries are extremely inadequate. Those that do exist operate at 20-30% on a good day. As a result the country is hugely reliant on imports. But the potential is there. Nigeria is well positioned to supply petroleum products to the rest of West Africa with over 850km of coastline and five major port cities. Equally, West Africa’s petrol consumption is expected to grow by a CAGR of 11.6% between 2016 and 2020. West Africa accounts for 58% of planned refining capacity additions in Africa over the next five years. Its refining capacity of 705,000 barrels per day is expected to almost triple within the next 5-7 years. Having said that, many challenges remain for investors. Current infrastructure suffers from a lack of maintenance, sabotage and product theft. Since 2014, over $1 trillion of investments in the oil and gas industry has been cancelled or deferred. ‘THE NEED FOR INFRASTRUCTURE IS STAGGERING’ Kalim Shah, chief investment officer for the IFC echoed Akinkugbe’s sentiment that Africa represents a huge opportunity. The increasing working class population, urbanisation and the middleincome household growth will have a huge impact on product demand

and the fastest growing economies in the region are Ghana, Rwanda, Eritrea, Ethiopia and Mozambique. ‘The amount of infrastructure still required in sub-Saharan Africa is staggering,’ he said. 30% of roads are still unpaved, 13 countries don’t have railways and the global share of airline passenger traffic is only 5.2%. When it comes to securing investment, Shah couldn’t stress enough how important it is for companies to have an anchor customer. He also said that storage terminals that own or work with a retail network or the aviation industry are far more interesting for investors. A VOTE OF CONFIDENCE ‘We believe in storage,’ Paul Eardley-Taylor from Standard Bank said. ‘The typical amount required for a storage investment is around $50 million. This is not a huge amount of money – for the right project, it’s extremely financeable.’ Having said that it’s worth noting that many transactions in Africa have taken 3-4 years to close.

MASSIVE OPPORTUNITY FOR IMPORTS There are 54 countries in Africa. Africa produces 8.1 million barrels per day of oil (10% of global production), consumes 3.8% of global demand and has 3.4% of global refining capacity (which operates at 70%). In total, 57 refineries have been built in Africa, 41 are currently operational, 21 of which are in sub-Saharan Africa and 20 in North Africa and 16 have been permanently closed or converted into terminals. David Sineke, industry research & information analyst, corporate planning at Engen explained that while the global average for refinery utilisation is 79.6%, in Africa it remains 63%. Africa’s import market is estimated to be $80 billion. West Africa produces more than enough crude to satisfy domestic demand for fuel but is severely lacking in refining capacity. The clean product demand deficit (difference between refinery Graph caption: The clean product dema But out of the productionrefinery and demand) is expected to demand) rise to 156 million between production and is expected to rise to 1 tonnes a year by 2030 – up from 76 million tonnes a year in 2015 17 West African year by 2030 – up from 76 million tonnes a year in 2015.

There are only two refineries under construction in Africa – Dangote Company. ‘African product demand continue to grow DECEMBER 16/JANUARY 17will VOLUME 12 ISSUE NO.6 well ahea optimistic refinery building plans,’ Sineke explained.

There are only two refineries under construction in Africa – Da Company. ‘African product demand will continue to grow wel EVENTS l ARGUS AFRICA STORAGE & LOGISTICS optimistic refinery building plans,’ SinekeCONFERENCE explained.

Source: FBN Capital

countries, only six have their own refineries to convert crude into finished Littered with challenges products. In conclusion Africa represents a massive opportunity for investors and terminal operators – CITAC has Capital forecast a huge demand for the import of clean products Source: FBN but the challenges are even bigger. into Africa. 2.2 million barrels a day of demand has to be met by imports challenges Ending onLittered aand positive note, James Gooder, VP, Business Development at Argus Media added evenwith if every known refinery project was completed the gap would still that bottlenecks are a good sign – they show that there is a massive amount of potential Source: Engen Petroleum only halve by 2025. In conclusion Africa represents a massive opportunity for investors and terminal operators – Source: Engen Petroleum demand just waiting to be unlocked. There are only two refineries under construction in Africa – Dangote and but the challenges are even bigger. Egypt Refining Company. ‘African product demand will continue to grow well Ending oneven a positive note, James refinery Gooder,building VP, Business Development Media added – but the challenges are even bigger. ahead of the most optimistic plans,’ Sineke explained.at Argus terminal operators that bottlenecks are a good sign – they show that there is a massive amount of potential Ending on a positive note, James Gooder, VP, business development at demand to be unlocked. LITTEREDjust WITHwaiting CHALLENGES Argus Media added that bottlenecks are a good sign – they show that there In conclusion, Africa represents a massive opportunity for investors and is a massive amount of potential demand just waiting to be unlocked.

DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

TECHNICAL FEATURES l XXXXXX XXXXXX

International Aboveground Storage Tank Conference & Trade Show

April 18-20, 2017 | Orlando, Florida This conference is designed for engineers, managers or other individuals involved with operations, construction, environmental compliance, spill prevention and response or management activities associated with aboveground storage tanks.

SCHEDULE OF EVENTS:

WELCOME RECEPTION April 17, 2017

FREE TRADE SHOW ENTRY April 18-19, 2017

10TH ANNUAL GOLF TOURNAMENT April 17, 2017

AST CONFERENCE April 18-20, 2017

COCKTAIL MIXER April 18, 2017 FOR ADVERTISING, SPONSORSHIPS, AND SPEAKER OPPORTUNITIES, CALL 800.827.3515 OR 011.813.600.4024 78

NISTM

NATIONAL INSTITUTE FOR STORAGE TANK MANAGEMENT

To Register, Call or Visit the Website: 800.827.3515 | www.NISTM.org International 011.813.600.4024 DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

EVENTS l TANK STORAGE GERMANY REVIEW

AN ACTIVE EXPANSION AND INVESTMENT MARKET A shift in fund structures may not have meant much before – but the industry is now taking note of the fact that investors are increasingly interested in allocating funds to the storage market. During the 2016 Tank Storage Germany conference, delegates learnt how infrastructure investment is focusing more on tank storage as a viable investment. The role tank storage plays in the supply chain, the product mix it can accommodate and location creates an attractive business proposition by offering long-term, predictable cashflow generation. Robert Hardy, investment principal at J.P. Morgan Asset Management, explained that the traditional fund structure of 60/40 is no longer working and that people are moving to other areas such as infrastructure investment, which is a low volatile asset class. He said: ‘Investors are seriously looking at capital to allocate to infrastructure. Investor sophistication is increasing – they want the

same investment characteristics but in a different infrastructure sub section. ‘Investors have different risks and return appetites – one size does not fit all. There are a whole range of different investors on the market but they are looking to be more tailored.’ Frank Schreurs from In-Energy echoed this positive sentiment by explaining that EBITDA multiples are going up and are currently in the 7x to 12x range. He said that as a result of new players in the market, there is greater competition for some of the more mature assets, which has driven up prices. Additionally, some storage operators are backed by infrastructure investors and this is a trend that is set to continue he said. ‘Storage operators are investing in terminals and this is a growing business. Infrastructure assets are becoming more competitive – there is between 3% to 5% build up return from tank terminals.’

DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

ADDITIONAL STORAGE CAPACITY This growing investment in storage terminals has been noted in the amount of additional capacity that has been commissioned in response to growing demand from supply chain players as well as to add flexibility to changing market dynamics. Ruud van Stralen noted that over the last five years, 25% of storage capacity has been added in the ARA region. ‘The last two years have been very good for the market and this has been reflected in the rates. There is a lot happening in the market for capacity additions and acquisitions.’ And this growth trajectory shows no sign of slowing down. Van Stralen said that 3.5 million m3 of new build capacity is in the pipeline for the ARA. Focusing on tank storage in Germany, which remains a stable and steady market, a new player has emerged as a crucial link in the country’s supply chain as well as a competitor to the neighbouring ARA region. Sven Partzsch, MD of HES Wilhelmshaven, explained that the former naval base and Second World War submarine base underwent a significant redevelopment programme to make it more flexible and accommodate more customers. The facility now supplies part of the German petrochemical industry with feedstock and also has underground salt caverns, which offers additional, potential storage capacity. ‘The terminal can play a vital role to make this underground capacity usable, particularly in the contango market situation as everyone is looking for storage,’ he said. ‘The facility is a sound economical alternative for tank capacity.’ There were also presentations covering product demand, refining and trade flows in Europe, changes to the shale industry and an outlook on the global chemical market. Delegates were also given insights on the inspection and maintenance of tank farms and tank lining and coating operations. Tank Storage Germany returns to the Hamburg Messe on November 29 and 30, 2017. For more information visit www.tankstoragegermany.com.

EVENTS l CALENDER

EVENTS 2016/17 JANUARY 2017 24th – 25th January

26th-27th April OFFICIAL PUBLICATION

Platts European Oil Storage Conference Amsterdam, The Netherlands

OFFICIAL PUBLICATION

StocExpo Middle East Africa StocExpo Middle East Africa is situated at the heart of a major oil trading hub. The two day exhibition and conference is perfectly placed to allow storage professions to capitalise on this growing market and maximise their business potential. www.stocexpomiddleeastafrica.com

FEBRUARY 2017 21st-23rd February

MEDIA PARTNER

IP Week 2017

MAY 2017 10th – 11th May

London, United Kingdom

MEDIA PARTNER

FPS Expo

www.energyinst.org

Liverpool, UK www.fpsshow.co.uk 16th – 18th May

MARCH 2017 21st – 23rd March

OFFICIAL PUBLICATION

Argus Mediterranean Storage & Logistics MEDIA PARTNER

Intermodal Asia

Dubrovnik, Croatia www.argusmedia.com/events

Shanghai, China

28th-30th March

OFFICIAL PUBLICATION

JUNE 2017 12th – 14th June

StocExpo Europe

SILVER SPONSOR

ILTA

Ahoy Rotterdam, Rotterdam, The Netherlands StocExpo Europe returns to Rotterdam for 2017 after a year in Antwerp, continuing to be perfectly placed in the ARA region. The three day conference and exhibition is the largest international event for the bulk liquid storage industry. www.stocexpo.com

Houston, Texas www.ilta.org

SEPTEMBER 2017

29th March

27th - 28th September

Tank Storage Awards

Tank Storage Asia

Floating Pavilion, Rotterdam The all new global Tank Storage Awards are designed to highlight those that excel in a range of different categories relating to terminal achievements, equipment innovations, ports and individual success. Winners will be selected from a panel of impartial judges and announced on the big night www.tankstoragemag.com/awards

OFFICIAL PUBLICATION

Marina Bay Sands, Singapore The two day exhibition and conference returns to the Marina Bay Sands featuring leading international manufacturers and suppliers as well as industry experts from across the supply chain. 28th September

MEDIA PARTNER

Tank Storage Association Ricoh Arena, Coventry, UK www.tankstorage-event.org.uk

APRIL 2017 4th – 7th April

MEDIA PARTNER

GasTech

DECEMBER 2017

Tokyo, Japan

13th – 14th December

www.gastechevent.com 18th – 20th April

NISTM 2017 Orlando, Florida

OFFICIAL PUBLICATION

StocExpo China Shanghai World Expo and Convention Centre, Pudong, Shanghai, China www.stocexpochina.com

www.nistm.org

DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

EVENTS l CALENDER

ADVERTISERS’ INDEX Adrotech 67 Ametek 18 Anton Parr

Atec Steel

AUMA 19 Brodie 6 Cashco 59 CB&I 54

STORAGE IS GETTING SOCIAL What the storage terminal sector has been saying on Twitter. What the storage terminal sector has been saying on Twitter. Follow @tankstorageinfo for the latest news & developments and @TStorageAwards for more about our first awards event in 2017! @WMALHittle In summary,the agreement is OPEC reduces output “approximately” 1.2 mbd to bring its ceiling to 32.5 mb/d, eff Jan 1 2017. Press conference

Chemie-Tech 60 Emco Wheaton

53, 55

Hayward Baker

@gwestr If OPEC cuts “target” output by 1.2 million barrels a day and there’s 1.8 billion barrels in global storage, how long until oil is over $60?

Hempel 33 HMT 30 ILTA

IMHOF 77

@ronaldbackers The first of many new chemical storage tanks have arrived at LBC Rotterdam #storage #ChemicalCluster #OOTT

Implico 10 IP Week

Koike

Outside Back Cover

Marine Audit Services

Massa Sensors

Matcor 46 MFE Enterprise

Midwest Steel

@TheNamibian The oil storage facility at Walvis Bay, estimated at N$3,7 billion in 2014, will now cost Govt around N$5,5 billion

NISTM 78 Nordic Storage

Port of Amsterdam

Protego 72 Rosen 27 Roxul 37 SafeRack 57 Schneider Electric

@chris1reuters Global #oil inventories fall, led by 29.5 million barrel drop in floating storage - SEB Markets #Saudi #Iran #Libya #shale #OPEC #OOTT

@Lisa_Ward1990 #OOTT Pemex to offer companies access to oil pipelines & storage terminals in Feb 2017.

StocExpo Europe

50, 51

StocExpo Middle East Africa

Tank Connection

Tank Storage Magazine BPA Audit

Tarsco

@vexmark North Sea oil companies booked tankers to store 9 million barrels of crude as on-land storage nears capacity

Front Cover, Inside Front Cover

United Riverhead

Verwater 52

@followtheskunks Oil Abounds! Storage facilities filled to brim. Even Tankers sitting in the Bays are full. 1900 drilled wells at the ready

@Grumpy_Gandhi Crude Oil storage facilities commissioned in Vishakapatnam & Mangalore. Allows India to store 73 days worth of crude – should imports stop.

Zwick 62 Tank Storage Magazine (ISSN 1750-841X) is published six times a year (in February, March, May, August, October and November) by Easyfairs UK Ltd, 2nd Floor, Regal House, 70 London Road, Twickenham, TW1 3QS, UK. The 2016 US Institutional subscription price is $240. Airfreight and mailing in the USA by Agent named Air Business, C/O Worldnet Shipping USA Inc., 155-11 146th Street, Jamaica, New York NY11434. Periodical postage pending at Jamaica NY 11431. 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.

DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6

TECHNICAL FEATURES l XXXXXX XXXXXX

Your complete tool kit for tank fabrication. Automated welding is the way to improve your margins on field-erected storage tanks, and only Koike Aronson has everything you need to make it happen.

Koike Automatic Girth Welders perform x-ray quality welds up to 20 times faster than hand welding. That cuts in-field welding time by up to 40%. Our Vertical Up Welder is another way to get a more consistent, high-quality weld in less time. Koike also offers a full range of support equipment, like the versatile Shell Buggy for operators. And Tow Behind Power Skids that keep all of your gear where itâ&#x20AC;&#x2122;s needed. Everything you need for more efficient in-field tank construction is at Koike. Give us a call at 585-492-2400 ext. 204, or visit www.koike.com.

The compact VUP welds plate up to 2 in. thick on tanks of unlimited diameter. It can complete 10-12 vertical 8 ft. seams in one shift.

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Tow Behind Power Skids reduce wind-up problems and provide a constant ground while carrying any power source.

Koike Aronson, Inc./Ransome Arcade, NY USA 800-252-5232 Outside USA 585-492-2400 ext. 204

DECEMBER 16/JANUARY 17 VOLUME 12 ISSUE NO.6 www.koike.com

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