Bulk liquid storage will play a key role in the energy transition

Peter Davidson, Executive Director, Tank Storage Association, proposes that a clear strategy be developed for the bulk liquid storage sector to meet the future challenges of energy transition. It is important to ensure that the sector continues to provide a transparent and seamless supply chain for fuels, chemicals, agriculture and food sector, whist also providing the necessary resilience in these supply chains.

IBT: What is your outlook on the global bulk liquid storage market, its potential and growth drivers vis-à-vis other markets across the world? How is this potential distributed across key segments?

Peter Davidson: The outlook for the bulk liquid storage market remains strong, with continued demand for chemicals, transport and heating fuels, animal feed and foodstuffs. In many regions, hydrocarbons remain the dominant substance handled by bulk liquid storage facilities, and this demand is likely to see an upturn in the short-to-medium term followed by a decline, as the next phase of the energy transition starts.

Conversely, growth in overall global oil demand will be supported by the petrochemical sector. Looking ahead, we may start to see a shift away from the storage of traditional hydrocarbon-based fuels to other liquid energy sources, including biofuels. This will result in a wider range of substances being stored, providing the essential components for future blended fuels. In the longer term, there is likely to be a focus on the storage and distribution of hydrogen, with analysts estimating that this could meet 24% of energy world demand by 2050.

Against this background, the European Commission has also recently published a clean hydrogen strategy. This will undoubtedly require significant investment and development of new assets and infrastructure.

IBT: What are the challenges to growth and the ways in which countries can expand their capacity for bulk liquid storage by addressing these challenges?

Peter Davidson: Bulk liquid storage providers will need to balance investment in the storage and distribution of traditional liquid fuels, such as gasoline and kerosene, while also addressing the availability of infrastructure against a growing demand for alternatives such as biofuels. This will mean maintaining assets for current inventories whilst releasing capex for future storage capability. Consideration will also need to be given to the long-term viability of providing storage and distribution facilities for legacy fuels, as demand declines.

Bulk liquid storage facilities also facilitate the storage of chemicals, an area which is expected to rebound sharply following its most recent dip and continue growing, animal feed and foodstuffs – these supply chains will also need to be maintained and improved as we look at the next phase of the energy transition.

IBT: What are the business opportunities and potential that the sector offers for the private sector; be it the entry of new domestic players or MNCs? What are the major entry barriers for new players entering this market, and how can they be eased?

Peter Davidson: With regard to energy sources, these may become more de-centralised – providing opportunities for more localised storage and distribution – particularly where these are produced locally (for example, through recycling activities). Legislative requirements, particularly with regard to health, safety and environmental legislation will be challenging for new players in the market.

These necessitate a high degree of competence and new players will need to demonstrate the same levels of competence and controls as existing operators. Requirements are also likely to become increasingly more stringent in response to environmental challenges.

IBT: What has been the major disruptive impact on the liquid storage business post-COVID-19? 

Peter Davidson: The tank storage sector is essential to maintain our day-to-day life, providing the critical link in the transportation system for liquid products, from foodstuffs and animal feeds, to fuels and chemicals. As much as any other sector, bulk liquid storage has also felt the impact of the coronavirus (COVID-19). During this challenging time, the industry and associated logistics have continued to work tirelessly to keep critical infrastructure operating.

Against the background of increased demand for petroleum storage globally and a decline in oil demand due to the COVID-19 pandemic, the critical importance of bulk liquid storage terminals in responding to market fluctuations and in improving the flexibility of the entire supply chain has undoubtedly come to the fore. The current crisis has not only highlighted the extent to which the economy we live in is global, but also the need to ensure flexibility and resilience of the supply chain while prioritising safety.

Most recently, with the lockdown easing in the UK, transport fuels’ demand, for instance, is slowly increasing with government figures indicating that road fuel sales are now at around 88% of a typical week before lockdown.

IBT: What are the opportunities that the post-COVID period presents for the bulk liquid storage industry? What kind of policy push and industry initiatives are required to tap these opportunities and bridge the demand-supply gap? 

Peter Davidson: Looking further ahead, the focus of the industry has been clearly set on the energy transition. To that end, earlier this year, the TSA set out its vision for the future in a report titled Enabling the energy transition: the role of the bulk liquid storage. The vision foresees an important role for the bulk liquid storage sector in energy transition and in unlocking future opportunities.

The sector will play this pivotal role by supporting access and provision of traditional as well as alternative energy source and by creating the necessary flexibility to manage change while ensuring that critical bulk liquid products continue to flow efficiently to meet changing demand. It is also important to point out that enabling the transition for our sector will also involve investment in innovation and knowledge as critical inputs for change.

Against this background, the Tank Storage Association calls for a clear strategy to be developed with the bulk liquid storage sector to set a joint vision and goals on how we can successfully meet the future challenges of the energy transition, ensure that the sector continues to provide a transparent and seamless supply chain for the fuels, chemicals, agriculture and food sectors, whist also providing the necessary resilience in these supply chains and drive forward progress by building on UK’s existing strengths and skills base.

IBT: How is the role of new age technologies like automation, IoT, AI, etc evolving for the bulk storage industry? What are the major competitive dynamics that players need to be wary of going forward?

Peter Davidson: Bulk liquid storage operators are continually seeking to innovate in order to improve efficiency, while maintaining and improving safety for both people and the environment. Traditionally, bulk liquid storage terminals have not been heavily manned and, as such, rely on automation. It is therefore within the context of maintaining and improving safety that many new technologies are developing – particularly with regards to inspection, removing people from potentially hazardous environments.

Remote robotic inspection is becoming more common, and it is likely that this will expand into other tasks, such as small repairs and analysis. Augmented reality is also likely to become more commonplace in the training of personnel, particularly in relation to safety critical tasks.

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Peter Davidson is the Executive Director of the Tank Storage Association, representing the interests of over 60 companies who operate around 300 terminals in the UK or provide equipment and services to the sector. He is responsible for all aspects of advocacy and lobbying on behalf of the sector, and with promoting process safety leadership, helping members achieve excellence in this area and work toward becoming high reliability organisations. Peter works in close collaboration with the UK Government and Regulators and is a leading member of a number of cross-industry committees, Process Safety groups and the Federation of European Tank Storage Associations.

 Prior to joining TSA in April 2016, Peter was the Director of Safety, Commercial and Projects at the UK Petroleum Industry Association and formerly the Regulatory Compliance Manager for ABB Automation in the UK, specialising in the delivery of automation systems to highly regulated industries, including the Oil and Gas, Petrochemical, Pharmaceutical and Nuclear sectors.