Business Times 7 Jul 09;
Hyundai unit has its work cut out in this large and challenging project, which will ease oil storage shortage, reports EMILYN YAP
IN four years, Jurong Island will be home to Southeast Asia's first underground oil storage facility - Jurong Rock Cavern. Marking a milestone in the project's progress, industrial landlord JTC Corporation awarded an $890 million 'design-and-build' contract to South Korea's Hyundai Engineering and Construction in April.
The contractor - which has experience with underground projects in Taiwan and South Korea, and is involved in other projects in Singapore - will design the caverns and begin construction of the first phase at the end of this year.
The facility, under the Banyan Basin, will be completed in stages. By the first half of 2013, it will have two caverns providing 480,000 cu metres of storage. And by 2014, there will be five caverns offering 1.47 million cu m of storage in all.
The project will free about 60 hectares of surface land for higher-value manufacturing operations. It will also 'provide strategic storage for better fuel security' and give Singapore 'a competitive advantage to attract more investors', a JTC spokesman said in April.
The development will be welcomed by the oil industry, which has been looking forward to more storage.
The Jurong Rock Cavern project broke ground in early 2007 but ran into delays early on because of its complexity.
Safe storage
As a major oil refining and distribution centre, Singapore has about 4.6 million cu m of independent petroleum storage, and the private sector is constructing a further 3.5 million cu m. But even then, industry feedback points to a shortage of at least 3 million cu m, which would occupy more than 100 hectares of surface land.
Sites at Jurong Island, in particular, are typically reserved for companies that carry out higher value-added activities such as oil refining and petrochemical production. It would be hard to secure land for more above-ground oil terminals.
Today, the island is home to more than 94 petroleum, petrochemical, specialty chemical and supporting companies, including big names such as Chevron Philips, ExxonMobil and Shell.
Jurong Rock Cavern will not only solve the island's space crunch but provide safe and secure storage for liquid hydrocarbons such as crude oil, condensate, naphtha and gasoil. But the project is large and challenging, and Hyundai Engineering and Construction - which beat fellow South Korean bidder SK Engineering - will have its work cut out.
The cavern will be more than 100 metres below the seabed. Workers will have to drill and blast through layers of reclaimed sand, marine clay, residual soil, weathered rocks and fresh rocks such as sandstone, siltstone and limestone to build it.
Mega project
Phase one will involve 8km of tunnels and five caverns comprising nine storage galleries. Each gallery will be 340m long, 20m wide and 27m high. Put another way, each gallery will be about nine stories high and could hold the water from more than 64 Olympic-size pools.
Each cavern will be able to operate independently, to accommodate differing user needs concurrently.
Hyundai Engineering & Construction will also have to continue building two access shafts to the caverns. These shafts are 1.1km apart and extend 132m below ground. Their diameter ranges from 18m at the bottom to 24m at the top.
To facilitate construction, Japanese firm Sato-Kogyo built the shafts, with start-up galleries, at a cost of about $50 million.
The total investment committed to Jurong Rock Cavern is $940 million - up more than 30 per cent from an earlier estimate of $700 million.
But the price will be well worth it, as the project will be crucial to Singapore's development as an oil hub. There are already plans for a second phase, which will add a further 1.3 million cu metres of storage.
However, the current downturn has affected the project's momentum. Because potential users have pushed their plans back, JTC Corporation has called off its tender for an operator to run the facility. A spokeswoman said the agency will revive the tender nearer completion of the first two caverns in the first half of 2013.
Bidders to operate the project include Royal Vopak of Holland and Emirates National Oil Company, both of which run above-ground oil terminals on Jurong Island.
Delays aside, the facility will be much needed when economic recovery comes - and this is something JTC recognises.
Besides Jurong Rock Cavern, it is exploring the use of Very Large Floating Structures for storing oil products and petrochemicals. A few months back, the agency started looking for a consultant to explore and identify sites for these structures in Singapore waters.
The government has not only expressed its commitment to developing Jurong Rock Cavern, but also to exploring other creative solutions to resolve land shortage issues on Jurong Island.
