JTC in second phase of floating storage study

Source : Business Times - 20 Nov 2008

SINGAPORE is pushing ahead to build more oil and petrochemical infrastructure - the latest being floating storage for oil traders - to prepare for the eventual economic rebound and shore up the oil refining and trading activity here.

After a phase one study established that very large floating structures (VLFs) are technically feasible in Singapore waters, JTC Corporation called a tender yesterday for the first part of a phase two study to assess the possible environmental impact.

‘The VLFs will be used for storage of oil and petrochemicals with a quick turnaround time,’ a JTC spokeswoman said yesterday.

Later phase two studies will cover the engineering design, business operating model and security of the VLFs, each of which would store as much oil as a very large crude carrier.

JTC is clearly fast-tracking the VLF plan, even as it aims to award by next month the main construction contract for the estimated $700 million first phase of the Jurong Rock Cavern (JRC), intended more for longer term, or strategic, storage of oil and petrochemicals.

Volatile oil prices and falling demand have hit Singapore refineries and oil trading companies, with the latter complaining that volumes have halved in the past few months. But there are hopes that a recovery could come late next year or in early 2010.

JTC estimates have shown that even with 3.5 million cubic metres of new oil storage added recently by private investors such as Hin Leong Trading and Emirates National Oil Company to Singapore’s existing 4.6 million cu m of storage capacity, there will still be a shortfall of at least three million cu m.

The phase one study showed that for a VLF to be viable, it should have a minimum storage capacity of 300,000 cu m, equivalent to that of a big tanker.

A VLF would comprise two rectangular modules, each measuring 180 m by 80 m by 15 m and with 150,000 cu m of storage capacity. Preliminary cost estimates came to at least $180 million, which is comparable to the cost of onshore storage.

But in terms of land use, the 300,000 cu m VLFs would need only five hectares of foreshore, compared to 20 hectares for a facility built on land.

The VLFs, which could be built in a relatively quick 18-24 months, will complement the underground JRC being built beneath Jurong Island. The main construction contract for JRC phase one - comprising five caverns to hold 1.485 million cu m of crude oil, naphtha, condensate and gas oil - is expected to be awarded ’soon’, with work proper starting next year, the JTC spokeswoman said.

JTC has taken slightly longer than expected to evaluate construction tenders, given JRC’s demanding design and engineering requirements, as the facility will be more than 100 m below ground.

JRC phase one is targeted to be operational by end-2010, with a planned phase two adding a further 1.3 million cu m of storage.