The digital decision

Challenges

In November 2021, work on a shipping port near Abu Dhabi in the UAE was halted due to pressure from the US. China has been developing the commercial Khalifa port for the last several years. US intelligence indicated that Chinese military vessels disguised as commercial vessels were entering the port and docking at a military facility. The UAE denies that they have any agreement with China to develop a military base, but the US is concerned with the proximity of Chinese intelligence assets to its major troop facility at a nearby Emirati air base.

Strife continues to embroil the region. A protracted civil war in Yemen, fuelled by Iran and Saudi Arabia, continues to displace millions within the country and disrupt oil and gas activities. In late August 2021, drones attacked a tanker in the north Arabian Sea off the cost of Oman, killing two. The US and UK governments condemned Iran for the attack.

The future

Fuel demand is slowly rebounding in Europe. By mid-2021, Italian regulators reported that demand for refined oil products had climbed almost 20% from the previous year, returning to pre-COVID-19 levels. Spain also reported similar increases as travel restrictions eased. In Poland, refiner PKN Orlen reported that utilisation increased to 78%, up from 70% a year prior. Austria’s OMV reported utilisation rates of 93% at its Petrobrazi refinery, and Unipetrol reported that throughput at its Czech refineries rose 108%, and utilisation by 38%.

Uncertainty regarding Russia’s export of natural gas to Europe still hangs over the continent. If Europe experiences a cold winter, storage levels could theoretically fall to zero by March 2022. Wood Mackenzie has suggested a potential solution: tap into 10% of the 150 billion m3 of ‘cushion gas’ in existing underground storage. Normally, cushion gas is not allowed to be sold as it has the potential to compromise the long-term viability of reservoirs, but if Europe is faced with such dire circumstances, regulators would be able to find a way to free up 15 billion m3 – enough to meet demand for several weeks, or more.

The future for hydrogen looks promising. Depending on the location, the cost of producing grey hydrogen from natural gas is currently around US$1/kg. Using renewable energy pushes the cost to above US$5; the US Energy Infirmation Administration (EIA) estimates that technology innovation and increased deployment have the opportunity to reduce green hydrogen costs to as low as US$1.30/kg by 2030. While bespoke tanks, terminals and pipelines already exist for hydrogen, the massive proposed increase in its use will require an expansion of greenfield infrastructure in Europe and the Middle East to handle both its domestic consumption and exports.

In conclusion, the hangover from COVID-19 persists, and is negatively impacting energy infrastructure in both Europe and the Middle East. The prospects for hydrogen look very bright, however, and portend a massive new market for terminals, tanks and related equipment over the next decade, as both regions move toward carbon-neutrality.

www.metcore.com.sg

References

1. 'The dawn of green hydrogen', Strategy&, (2020), https://www. strategyand.pwc.com/m1/en/reports/2020/the-dawn-of-greenhydrogen/the-dawn-of-green-hydrogen.pdf

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Tim Hoffmeister, Implico Group, Germany, outlines the central role of the smart tank terminal within the ongoing energy transition, highlighting its ability to reduce emissions, handle alternate products and react to new developments.

Arguably, the energy transition – which can be defined as the permanent shift away from fossil fuel energy sources to cleaner alternatives – is the most substantial movement of our time. It has a global sphere of influence, affecting each layer of society and impacting every aspect of our daily routine, be it personal or professional. In the eyes of many, it even marks humankind’s last given chance to ensure that upcoming generations will still be able to grow up in a stable, sustainable and future-ready environment.

Given its immense scope and magnitude, it comes naturally that the energy transition has a strong bearing on all sectors of the economy, too. This is especially valid for the processing, storage and trade of hydrocarbons, as the usage of petroleum products has been tightly knit into our everyday world. Hydrocarbons are used to fuel traffic and transport; to heat homes and cook meals; to create plastics and other synthetic materials; and much more.

The realisation of an event as vast as the energy shift is not a matter of simply flicking a switch. Rather, it is an elaborate transition, whereby meaningful progress is made along the way. This is happening right now: the phase-out of various emissions-heavy means of energy production, such as lignite, has already been initiated and executed in many countries around the world. E-mobility is on the rise in numerous markets (both emerging and established). The subject of alternative fuels is constantly being pushed forward, with hydrogen currently rated as a promising option for addressing and achieving the agreed-upon decarbonisation goals.

However, it is clear that traditional fuels will not disappear anytime soon, and it is important to recognise the gigantic transport fleets carrying goods across the globe on road, rail,

water and in the air, as well as the 1.2 billion motorcars inhabiting the streets across all continents.1 In order to uphold global trade and economy, society will continue to rely on classic energy sources for many more years. However, the progressive alteration and broadening of our energy mix, expanding it by a growing number of alternate sources with increasing impact and significance, is vital.

Finding new ways to meet the rising energy demand

As progress is gradually made on the journey towards sustainable energy generation and usage, there is one particularly brightly-shining beacon: the binding treaty of the Paris Agreement from 12 December 2015, whereby 196 international parties consented to limiting the rise in global temperature to well below 2°C by 2050. This is a very demanding goal, especially considering that this limitation of the global temperature rise has to happen against projections that the world population – and with it, overall energy use – will grow significantly in the next decades.

Going forwards, it is therefore crucial to ensure that the ever-rising energy demand is permanently met with carbon-neutral power sources and alternative fuels derived from clean electricity and renewables. In other words, it is essential that society finds feasible ways to get more of the good (usable energy, yielding fuel) while simultaneously producing less of the bad (eco-threatening emissions, irrevocable exploitation). This is a tough equation to solve.

Bringing the tank terminal into focus

The tank terminal will play an important role in mastering the ambitious task described above.

Since it directly resides at the junction between upstream and downstream, the tank terminal has meaningful touchpoints with all relevant industry partakers and stakeholders – from producers to forwarders, and from sellers to buyers. Consequently, every improvement made at a tank terminal will also have an effect on the rest of the supply chain, and vice versa.

As an example: if we want to propel larger parts of our economy with alternative fuels such as green and blue ammonia, it is necessary to ensure that the fuels can be adequately stored somewhere. The logical solution is to re-equip existing tank terminals in such a way that they can handle alternative fuels as well, and to design new ones in a way that they can do the same.

On a physical level, this means that certain assets (e.g. pipelines, compressors, etc.) must be outfitted in a way that secures safe and sufficient handling of additional products. On a digital level, it means that the heart of the terminal – the terminal management system (TMS) – must be smart and flexible in order to quickly adapt to altered or all-new processes. With regards to the latter, shared cloud solutions provide an advantage. Based on use cases and best practices from numerous operators, these technologies are constantly developed to ensure up-to-the-minute functionality. The monolithic individual solutions, which are still in use at many plants, do not have such agility. In order to keep up with the times, a tank terminal running on such a legacy system would usually need to maintain its own IT department and invest time and manpower into keeping the software updated. In times of strict capital discipline and hard-to-predict market development, few companies still have this luxury.

Collaborating along the supply chain

Figure 1. Tank terminal. The industry’s need to adopt shared cloud services introduces another crucial topic: collaboration.

To this day, many partakers in the hydrocarbon industry remain somewhat reluctant when it comes to sharing software, data or insights with partners or even peers. Often, even the gainful move to the cloud is questioned because companies fear that it would mean a loss of control and a risk to security.

Practical experience shows, however, that the opposite is the case. Looking ahead, the broadening of perspective and a change in mindset across the industry will become mandatory. Regardless of the size of the company or the eagerness to innovate, it is difficult for a single enterprise to master the energy transition all by itself. As such, one major success factor is collaboration along the supply chain, especially at the friction points where physical products or digital information change hands. This does not mean that energy companies should lay all of their operations bare. The market will always remain competitive. Within these confines, however, companies can work to establish and further promote a culture of transparency, interlinkage and cooperation. The industry has already reached a point in time where well-guarded silos and isolated monoliths are no longer suitable in many areas of work, and they will become increasingly obsolete in the years to come. Shared cloud