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This Week in Tank Storage

This past week has been quite rich in news of tank storage. New deals are being made that promise to increase profits and create job opportunities globally. There have been expansions and new construction that are getting companies noticed and further developing the industry. Here are a few of the more unique occurrences with insight as to how they could affect tank storage over the next few years.

1. Shell has been talking with Vopak Horizon Fujairah, located in the Persian Gulf, in hopes of expanding its storage even more. In this area, state-run oil companies usually handle the crude storage while the refined oil is stored and operated in by private companies, but Shell would change that if the company managed to lease storage space for crude oil from Fujairah. Usually, this company handles refined oil only, so these discussions with Shell came as a surprise for many. In fact, this would be the first occurrence of a privately owned company handling crude oil in at least 40 years. This would also be the first instance of a company in the region making a crude-tank deal with a foreign company. If this deal were to be made, Royal Dutch Shell would gain as much as one million cubic meters of storage space for crude oil. Jamie Webster, head energy analyst for PFC Group’s office in Singapore, expresses that this could be a very positive endeavor for the area. By constructing storage capacity that is specifically for crude oil, the oil majors will be further expanding their options for trade.

According to Salem Khalil, technical adviser for Fujairah’s government, Fujairah will add two more shipping berths for crude carriers, expecting that a need for them will be present by the time construction is complete. There is always the possibility that this deal would spark more interest in privately owned crude storage facilities should it go through.

2. On the other side of the world, Vopak Terminals North America has been granted permission to study a 28-acre site off of Pier T in Long Beach in order to construct the port’s fourth crude oil terminal. It would also be the first addition to the complex since 1983. Assuming that there are no unforeseen events, a complete environmental review, design, permit and construction of this terminal could take up to four and a half years. Also, if all plans are approved as they stand now,

Vopak is expecting to spend $157 million for the first phase of construction, $37 million of which will be spent on waterside improvements and $120 million on land-side. Of course, the company also expects to handle between 21 million and 55 million bbl of oil each year, making back their investment rather quickly. According to the current agreement, the port will receive at least $2.9 million in revenue each year, and this is all after the first phase of construction is complete. There are three phases in this project. Along with increasing revenue for both the company and the city, the project will also create new jobs and help to improve the economy. Granted, this is all currently just speculation. The environmental study must occur first. None of these plans can proceed until the environmental, safety and security issues are noted and assessed. Still, with three other terminals in the port, no real problems should arise. The port currently houses two BP terminals and one Tesoro terminal, so this addition will be much welcomed.

3. Royal Vopak is expecting to expand greatly in the next couple of years. By the end of 201, the company had increased its storage capacity across the world by 2.1 million cbm, ringing in the New Year with 29.9 million cbm. Thus far, they have commissioned new terminals in both China and the Netherlands. The Tianjin in China will receive an extra 240,000 cbm. The projects Vopak currently has under construction will give them an extra 5.2 million cbm of storage by 2015. Vopak has been very strategic in its placement of this extra storage.

The company also watches its competition very closely and strives to strengthen its competitive position. In order to do so, Vopak will keep offering reliable customer service as well as improving safety and efficiency. A few of the projects in the works will be commissioned by the end of 2013, the rest in 2014. In total, the company expects to spend around EUR 2.1 billion, leaving it with EUR 0.6 billion. Vopak expects this investment to be worth it, and intends to spread out globally to countries like Spain, China, Malaysia, the Netherlands and more. Some countries will even have two or three terminals. The company is well underway in both the expansion of existing terminals and the construction of entirely new terminals. By the end of 2015, Vopak expects all of these projects to come to fruition, and that the company will gain back all capital spent soon after.

TNphoto Tatsuya Nakagawa
Tatsuya Nakagawa is the VP of Marketing and co-founder of Castagra Products, a storage tank and wastewater coatings manufacturing company that is highly acclaimed for its sustainable coatings, cold weather tank coating applications, and its durable frac tank coatings. Castagra is used by the world’s top oil and gas field services companies.