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  Business Times 3 Oct 07
Singapore looks set to build floating oil storage
JTC Corp in talks with interested oil trading firms
By Ronnie Lim

(SINGAPORE) Singapore's waters seem set to have a new addition and Jurong Island may have a floating companion to store oil and petrochemicals.

The Republic has indicated that it will go ahead with the building of offshore floating storage terminals for oil and petrochemicals, as well as oil bunkers for ships.

'JTC Corp is already in talks with several oil trading companies who have expressed strong interest in these very large floating structures (VLFS),' Philip Su, JTC's assistant CEO said.

This follows a just-completed phase 1 feasibility study by agencies including the Maritime and Port Authority and JTC, which showed such floating structures to be both technically feasible and also comparable in cost to land-based oil storage.

JTC will, therefore, now proceed with phase 2 of the study, which will be completed by mid-2008, he said.

A push factor is the strong demand, which has far outstripped supply, for oil storage here from oil traders and oil companies operating in Singapore's oil refining/trading hub.

This could also prompt JTC to start early development of phase 2 of the Jurong Rock Cavern (JRC), with construction proper of the S$700 million phase 1 starting soon, Mr Su said.

Mr Su, who was speaking at StocExpo Asia, an oil storage conference, said yesterday that even with 3.5 million cubic metres of new storage now being built here by the private sector - adding to the current 4.6 million cu m - there will still be a shortfall of at least 3 million cu m of oil storage in Singapore.

This would translate into more than 100 hectares of land needed to build this additional tankage, he said. Demand for storage is also expected to increase as producers like Brazil and the UAE look for overseas storage for their oil, he added.

It is precisely this land shortage on Jurong Island which has prompted JTC to invest in alternatives like the underground JRC and the offshore VLFS.

Giving some details of the just-completed phase 1 study for the VLFS, Mr Su said that to be viable, the VLFS should have an initial minimum storage capacity of 300,000 cu m - or equivalent to that of a very large crude carrier.

Conceptually, it will comprise two rectangular modules, each measuring 180m by 80m by 15m, and with 150,000 cu m storage.

Together, they could cost at least $180 million, preliminary estimates suggest.

In terms of land use, Mr Su said, the 300,000 cu m VLFS would need only 5 hectares of foreshore area, compared with a land storage facility of similar capacity which would require at least 20 ha of land. This means a significant saving in land use.

'More importantly, it is also a marine-friendly eco system as the VLFS, being afloat in the sea, will allow seawater to flow underneath the floating modules and will not cause any irreversible damage to the marine ecosystem.'

The concrete VLFS is durable, fire-resistant and easy to maintain. It can be designed to store any kind of oil or petrochemical product. It is also versatile as the floating modules can either be attached to land or be stand-alones.

JTC, Mr Su said, will now proceed with phase 2 of the study - to be completed mid-2008 - covering engineering design, business operating model, security assessment (including sites off Jurong Island) and marine environmental impact, among others.

The VLFS will complement the JRC, he added, saying that the latter project is also 'progressing well'.

JTC is now finalising engineering design of JRC phase 1, and hopes to call the stage 2 tender for the construction of the tunnels, caverns and associated oil storage facilities 'within the next two months', he said.

As for selection of an operator to manage the JRC, Mr Su said that JTC is working on the shortlist and will launch the Request for Proposals for this by the first half of next year.

JRC phase 1, which is more than 100m underground, will have a storage capacity of 1.47 million cu m.

'Looking ahead, we foresee strong demand to necessitate an early development of JRC phase 2 - which will offer another 1.32 million cu m of storage,' Mr Su added.
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