In the Summer 2020 issue of Tanks & Terminals, we published a Guest Comment from the President of the International Liquid Terminals Association (ILTA), Kathryn Clay, which outlined the vital role that liquid terminals played during the early months of the COVID-19 pandemic. The piece also explained why governments had deemed terminal workers essential employees while large swathes of the population worldwide were subject to stay-at-home orders: “The reason is simple,” Clay wrote. “Without terminals, there is no way of ensuring adequate supplies of gasoline, diesel and jet fuel so that emergency supplies and food can be delivered by plane or truck, and emergency personnel can travel to work. Without terminals, we can’t manufacture sterile surgical gowns, masks, the N95 respirators, IV lines, and intubation equipment. All of these products are made from petrochemicals, derived from oil and gas, and stored and transported through terminals.”
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While the storage sector has certainly played a crucial role during the crisis, it has also faced an array of challenges that extend far beyond the safety precautions (outlined in Clay’s piece for us) that workers and contractors have had to take in order to continue their work in a COVID-secure manner. In written testimony submitted back in June to the US Senate Subcommittee on Energy and Natural Resources, the ILTA described the “perfect storm” that dramatically increased demand for petroleum storage during the pandemic. Gasoline demand fell due to reduced economic activity caused by lockdown orders, while markets were simultaneously flooded with supply by producers such as Russia and Saudi Arabia. These events resulted in record levels of crude oil storage inventories across the US (and worldwide), leaving little to no extra storage capacity available.
This dearth in storage capacity was widely reported. However, the ILTA’s testimony interestingly pointed to other “unforeseen regulatory burdens” that had been placed on the industry by the pandemic. The unprecedented demand for storage has meant that terminal operators have been unable to take tanks out of service in order to conduct essential out-of-service inspections, which are due on tanks every 10 years. The ILTA called upon the US Environmental Protection Agency (EPA) to provide clearer guidance and certainty for terminal operators in light of this challenge. The testimony also notes that an even bigger concern for operators is what will happen when oil and refined product markets come closer into balance: “While it will then be possible to take tanks out of service to perform the required inspections, there will almost certainly be a substantial backlog of tanks requiring these decadal inspections. Depending on how [the] EPA approaches this problem, it could cause additional hardships for the industry.”
Clear and transparent guidance will be absolutely essential in the months ahead to ensure that the liquid terminals sector can effectively play its essential role in not only helping us to navigate through the current crisis, but in helping to shape a return to normality beyond it.