Need for floating oil storage in Singapore gets more pressing

Ronnie Lim, Business Times 17 Feb 09;

LAND-SCARCE Singapore's push to build floating structures for oil and petrochemical storage is becoming more pressing, with the government now identifying potential offshore sites.

The move will help address the urgent issue of no space being available on Jurong Island for activities such as oil storage - which has led international traders to set up terminal and blending facilities in neighbouring Johor.

In September last year, Europe's Vitol Group said it would spend RM1 billion (S$419 million) on the first phase of a 750,000 cubic metre terminal at Tanjung Bin to blend and store crude oil, petroleum and petrochemical products.

'Vitol wanted to build its facility here, but unfortunately we had no more space on Jurong Island,' an official told BT.

Other Singapore-based players that store oil in Johor include European trader Trafigura and Titan Petrochemicals.

Singapore - the world's third-largest refining and oil trading hub - is set to start building the Jurong Rock Cavern soon. But this will be more for strategic oil storage. The push to build offshore storage facilities will benefit international oil traders that want their own terminal facilities.

Signalling increased momentum, JTC Corporation is seeking a consultant to explore and identify sites for very large floating structures(VLFS) in Singapore waters. The tender closes this Friday, Feb 20.

The site study is part of a study that kicked off in November last year to assess the environmental impact of VLSFs.

This followed the completion of a study in late-2007 that showed such structures are technically feasible and comparable in cost to land-based oil storage.

In the site study, the consultant will conduct initial screening of available water space followed by detailed screening, ranking the sites based on usage constraints.

The study will cover anchorage and navigation areas, pipeline and cable routes, wave height, wind speed, coral reefs, mangrove stands, recreational areas and aquaculture facilities.

JTC wants the study completed in six weeks. So despite the economic slowdown, it clearly sees the need to beef up infrastructure to support the oil and gas industry.

Its earlier estimates show that even with 3.5 million cu m of new oil storage to be added to Singapore's existing 4.6 million cu m of capacity, there will still be a shortfall of at least 3 million cu m.

For VLFS to be viable, the minimum storage capacity should be 300,000 cu m - equivalent to that of a big tanker.

A VLFS 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 are at least $180 million, comparable to the cost of onshore storage.

See also Very Large Floating Oil Storage in Singapore on the wild shores of singapore blog for a summary of project details and more links