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The fifth StocExpo attracted delegates from around the globe and served to reassure attendees of the security of the storage market in an uncertain climate
This year’s StocExpo Europe kicked off in style with a pre-show tour of the Port of Rotterdam, the home of the storage industry.
To mark the beginning of the fifth European event dedicated to bulk liquid storage, the Port of Rotterdam Authority showed guests key sights including building work on the new Gate LNG terminal, construction of Spanish biofuel producer Abengoa's ethanol plant, and storage tanks belonging to major terminals in the port, such as Vopak, Rubis, Odfjell and LBC.
Throughout the tour Ronald Backers, business development manager for bulk cargo and shipping at the Port of Rotterdam Authority, gave visitors an update of the surrounding activities.
One of the features the port is most proud of is its buoys and dolphins, which increase the speed and efficiency of ship-to-ship transfers. These have been so popular that the port has introduced a pilot scheme so that terminals can now view their availability online.
With all the hype surrounding the outcome of the Buncefield High Court ruling in March, Backers was also keen to explain what measures Rotterdam has in place to prevent such a situation occurring there.
The port has a dedicated fire brigade service, and every terminal pays a fee to have access to this. There are six mobile foam units, which are available for immediate response, and a water-based service, meaning that the maximum response time for an incident is only 15 minutes.
Only a few weeks prior to the show, in February, a fire broke out at Kuwait Petroleum's Europoort refinery at the port, in one of the plant's desulphurisation factories, but because of the swift response time, a major disaster was averted.
The port is currently undergoing expansion to add 1,000 hectares of much needed capacity from reclaimed land and is also changing in other ways. Backers noted an increase in large ethanol tanks, something which was unexpected, but necessary due to the large quantities of ethanol coming from Brazil.
He also added that the port, like most business activities, is changing in response to the economic climate. Now that fuel demand is not rising as quickly in Europe as it has in the past, the large refineries such as BP and Shell are investing billions to switch their focus to the export market.
Although the Buncefield Board's final report into the incident was published at the end of last year, many companies are continuing to investigate why and how the explosion occurred, in the hope of preventing a similar disaster in the future.
During day one of the conference delegates heard from both Taf Powell,chief inspector and investigation manager for the Buncefield Major Incident Independent Investigation Board and Chris Hunt, director general for the UK Petroleum Industry Association on the latest updates of the incident.
One of the issues that remains unexplained at Buncefield is why the explosion was so severe. There are two known mechanisms for generating an explosion in a relatively unconfined vapour cloud. Shell Global Solutions is looking at the possibility that deflagration occurred, where the explosion started in the treeline next to the tanks, and accelerated to high speed.
The second theory, supported by global engineering consultancy Advantica, is that detonation occurred, which if sustained, can be much more damaging.
This may arise from the coalescence of a strong shock wave and a fast-moving chemically reacting front. Together, this can undergo a transition to propagation faster than the speed of sound and produce over-pressures at the front in excess of 10 bar. It can also arise from the high temperatures and pressure generated by a shock wave in a confined, high flame speed deflagration or directly from strongly focused shock waves in a very reactive mixture.
This theory holds the most weight, explained Hunt, because of the speed and pressure of the explosion, which can be assessed from the impact on nearby cars.
What they cannot explain, however, is that if there was such a short, high pressure explosion, how are some of the nearby buildings still standing?
The results from this extended research will be announced in June this year. Phase two of this research will then look into advice and guidlines for terminals, including whether the treeline around Buncefield served to accelerate the flames. The report will also issue advice on landscaping and which type of trees are most suitable for minimising damage in an explosion.
Other issues covered at the event included process safety, oil trade flows and unsurprisingly the effects of the economic downturn on the storage sector. All speakers had a very positive outlook for 2009 with one event stating: 'Tank storage has stability in an uncertain world.'
Although it is very clear product demand will continue to drop this year, this should not have a negative effect on terminal operators.
'In 2009 global demand for oil will drop by 1.7 million barrels a day,' predicted Ben Holt, president of downstream oil at leading consultancy Wood Mackenzie.
But independent terminal operators can still benefit from contango. OPEC has shown that it is willing to defend the oil price, and cut production to ensure price increases, while has shown no desire to put a ceiling price on how low it can go. Oil prices, therefore, have a larger chance of being in contango than backwardation in the future, Holt explained.
Storage terminals remain a good investment because unlike house prices, demand for storage remains strong, so asset prices are not falling. On the other hand material costs for construction are, as well as the profit margins competing construction companies will accept, so terminals should be able to expand at a lower price that in the past.
The difficulty that remains is accessing the finance needed for projects in 2009, and for seeking out the right opportunities. Holt advises closely examining where the trade flows are, as although positive trade flows continue, these have changed from a year ago.
Nervousness post-Buncefield is also having an effect on gaining necessary permits to construct and expand terminals in built-up areas.
The underlying theme to come out from day one is that storage remains a very safe prospect. Globally there are 2.75 billion m3 of capacity, and with such a high demand in the current market contango, terminals stand to do well from the recession.
But, Hunt emphasised, process safety must remain the most important consideration. Even in a recession operators cannot put increased productivity and survival before safety.
Next year’s StocExpo will move to Antwerp from 30 March until 1 April 2010.
