Hello, and welcome to the Hydrocarbon Engineering podcast, the podcast series for professionals in the downstream refining, petrochemical, and gas processing industries.

I'm your host, Calum O'Reilly, and in this episode, I'm joined by Peter Davidson, CEO of the Tank Storage Association, a UK based trade association representing the interests of companies engaged in the storage of bulk liquids and the provision of products and services to the sector.

We'll be discussing the evolving role of tank storage in a rapidly changing world and what all of this means for the sector's workforce.

I hope you enjoy this episode.

Welcome, Peter, and thanks so much for joining us.

How are you today?

Hi, Callum.

I'm doing very well.

Thank you on this cold Monday morning, but, thrilled to be talking to you this morning.

Great.

Thanks, Peter.

So I wanted to start our conversation today with a big topic, supply security, which has obviously been an important topic in recent years with various geopolitical events around the world, most notably the war in Ukraine.

So can you talk us through the role that tank storage has to play in security of supply and resilience?

Yeah.

Thanks, Callum.

I think it is probably first of all, it's important to mention that the bulk storage and energy infrastructure sector, which is effectively the businesses which we represent, it it really does play an incredibly important role in in providing products and services services that are critical to UK consumers.

And they aren't just the things that people think about such as the hydrocarbons or the fuels for transport and and heating, but it also includes things like chemicals, liquefied natural gas, animal feed, and even foodstuffs that we use in food production.

And I think that the terminals and the tank farms and the pipelines and all the associated logistics are an absolutely essential part of global infrastructure networks, which allow us to get all of those products from all over the world into The UK and vice versa.

And, really, it's that vital infrastructure that's pivotal to handling and storing the raw materials and the finished products before they're transferred to another facility or direct to the consumer.

And it's important as well to understand that terminals don't just necessarily store products for onward movement, but they also provide some additional services.

And they can be things like blending, heating, and transformations that have to occur before the product is transferred to another facility or again to the consumer.

And those transfer methods vary.

We we often call it intermodal, transfer methods.

And because those liquid products, they will be transferred by ships or inland barges on inland waterways, but also things like the railways, trucks, but also pipelines.

And terminals and tank farms, they they really do provide greater resilience, which comes to your your original question.

They provide greater resilience within the supply chain because they provide that much needed flexibility to meet demand, particularly in periods when domestic supplies of store product cannot be guaranteed.

A good example of that is if you think about long supply chains, it allows the terminals to buffer those volumes of products to allow demand to be met regardless of the pace of production, for example.

And certainly with recent geopolitical events such as the war in Ukraine, that really has intensified concerns over energy security, not just in Ukraine, but if we think about the, the recent pirate activity in the Red Sea area as well, that's put a strain on supply chain.

So our sector is absolutely essential to support energy security and resilience, even more so in these times of high geopolitical instability.

Another example here is is our members are strategically located across The UK, and we've got a couple of really important clusters, one in the Northeast and one in the Thames Estuary.

And with regards to our transport, energy system, so the hydrocarbons, if you like, its strategic flexibility really is heavily reliant on bulk liquid storage sector, our our member terminals.

And with fuels and hydrocarbon derivatives, they currently account for over 65% of tonnage throughput at terminal.

And just as a way of background, the The UK became a net importer of petroleum products back in 2013, and it was a net importer of products in 2023 by 11,500,000 tons.

And that's according to data from the Department of Energy Security and Net Zero.

And I think when we look at The UK's demand for diesel and aviation fuel, for example, this is heavily supported by imports through terminals.

And that's because of a misalignment between UK production at domestic refineries and what the domestic demand actually is.

And in The UK, almost half of transport fuel demand is accounted for by diesel vehicles even now.

And in 2023, again, according to those, statistics provided by Department for Energy Security net ero, well over half of UK diesel demand was met by imports.

And those imports were mainly sourced from The Netherlands, The US, and Belgium, which combined, it makes up around about 60% of diesel imports.

And believe it or not, over 80% of jet fuel demand was met by imports.

Again, mainly from the likes of territories such as Kuwait, India, and The United Arab Emirates.

It's also worth noting that The UK also imports 25 to 30% of the gasoline used, the petrol.

And in several regions across the country, such as the Southeast and the Northeast Of England, it's particularly reliant on imports because geographically, that's where we have the weakest domestic, refining capability.

And let's not forget either that I I said at the beginning of answering this question, Calum, that, we shouldn't just consider terminals as only handling transport fuels.

They handle all sorts of different things, like I said before, things like chemicals and foodstuffs and agricultural products.

So to just to give you an example there, the The UK is also a net importer of molasses, and our terminals in The UK perform a vital function in the feed food, and feed supply chains in meeting that demand.

And examples of that is molasses is one of the critical ingredients for feed production for agriculture.

Another big use of molasses is industrial fermentation, which is used to produce other things, for example, like yeast, which obviously we use in bread making and lots and lots and lots of other, application.

And let's not forget also that molasses is used in biogas production, where it helps to increase yield as well as the efficiency of the farm overall.

So when I talk about the importance of terminals in The UK, we're not just talking about hydrocarbons and transport fuels.

We're talking about lots of different substances where terminals are critically important to preserve those supply chain.

And just finally, let's let's also remember LNG imports as well.

And LNG have gained a huge amount of importance in ensuring a secure and diverse gas supply portfolio, particularly, following a decline in indigenous production in The UK.

Even before the war in the Ukraine, which began back in February 2022, I believe, the The UK had become increasing relying on LNG imports to support a domestic gas industry where production is in long term decline.

And, of course, Peter, LNG is seen as one of the transition fuels that we can use as we move towards more sustainable operations, and that's what I wanted to talk about next.

We're looking at more sustainable operations and net ero goals.

So I was wondering what role the tank storage sector has to play in facilitating the energy transition.

Yeah.

It's it's a really good question.

And I think, actually, you know what?

Not surprisingly, I'm gonna say this, but the, you know, the bulk storage in the energy infrastructure sector is very, very actively engaging in the decarbonization process, which lays at the center of The UK's net ero priorities.

You know, we we have government ambitions to achieve net ero by 2050.

Now it sounds like quite a small number, but at the moment, in our last survey that we did from maybe a year, eighteen months ago, well over half a million cubic meters of storage capacity at our members, storage terminals was currently used for low emissions fuels, and that includes things like first and second generation biofuels, methanol, ammonia, and, of course, sustainable aviation fuels.

It's quite a small number when you think that all of our member companies have a a total storage capacity of 11,500,000 cubic meters.

So very small, but we expect those volumes to increase quite significantly.

And I think to enable The UK to achieve its 2030 and 2050 climate targets, The UK is going to have to go through a process of replacing fossil fuels.

So those fossil fuels like the traditional diesel, gasoline, kerosene, marine fuels, gas oils, and LPG itself, and natural gas.

And it needs to replace those with low carbon and renewable energy carriers.

And, really, it's those fuels, and their low carbon and renewable substitutes are going to allow us to reach, the the end user, networks that we need to reach.

And that's made possible through extensive use of critical infrastructure for storage and distribution.

So in the future, this will continue to be done with renewable and low carbon liquid fuels and new services related to handling of hydrogen carriers.

Carbon dioxide, and hydrogen will need to be developed.

So I think what what I'm trying to say here is that, even though 60 odd percent of our capacity at the moment is used for traditional hydrocarbons, We are going to see that that those same assets and that same infrastructure being used to store some of these new energy carriers.

Like I said, the first and second generation biofuels and hydrogen hydrogen carriers and sustainable aviation fuel.

And whilst the products will change as we go through the energy transition, moving away from the traditional hydrocarbons to those new energy carriers that I've mentioned, the role in storage, it really does remain the same.

And it remains the same because it will continue to be a buffer and an enabler for complex logistics systems that keep UK industry competitive and successful.

And I think from a from an economic perspective, constant flows of fuels, chemicals, foodstuffs, animal feeds will ultimately keep UK industry alive.

And, certainly, you know, that our sector, the tank storage sector, and all of the the the associated infrastructure such as pipelines, etcetera, is part of an international and regional supply chains and domestic industrial ecosystems that function in a reliable and cost effective way.

And, really, manufacturing companies, that we have many of in The UK demand on depend on current energy carriers for their industrial processes, and they will continue to depend on future energy carriers.

And if we look at the chemical, health, steel, construction, food production, agricultural, and automotive sectors, they're only some of the constituents of The UK's industrial base that is, again, supported by terminals in the tank storage sector more widely.

So, therefore, the the role of the sector will continue to be critical as we evolve and look to address the challenges set out in net ero and the journey towards carbon neutrality.

So, Peter, you talked about the the industry evolving, and I was wondering if you could touch upon the role of new technologies, and how they're going to evolve for the tank storage industry.

So, yeah, Calum, it's it's as you can imagine, it's, it's an ever changing landscape when we look at new technologies.

And I think, you know, the the first thing that I always say when we start talking about, new technologies is actually safety is our number one priority within the tank storage industry.

And as operators, we are continually seeking to innovate in order to not only improve efficiency, but also to continue to maintain and improve safety for both people and the environment.

And I think, traditionally, bulk storage terminals have not been heavily manned, so we don't have lots of boots on the ground that look after these terminals.

And as such, we we've always relied on quite heavily on automation.

And it's it's therefore within the context of maintaining and improving safety that many new technologies are developing, particularly with regards to things like inspections because automating inspections allows us to remove people from potentially hazardous environment.

So things like robotic, inspections, is becoming far more, common, but so is robotic tank cleaning.

And it's likely that this is going to expand into other tasks looking at small repairs and analysis.

You know, gone are the days when we used to send, people in directly into storage tanks when they're empty to carry out, inspection and maintenance routines.

Clearly, that does still happen.

But wherever possible, we will always try and use robotics to do those tasks where we can because it it improves safety for individuals.

Something else that's worth worth mentioning as well is that, augmented reality is also likely to become more common place in the training of personnel, particularly in relation to safety critical tasks.

So that that training can be delivered in a safe environment, but provide a very, very high level of certainty that that training has been carried out successfully.

And some new terminology, which I learned myself only last year, everybody seems to be talking about digital twins and and virtual modeling.

And that really is an area of growth that will allow operators to, for example, monitor and optimize processes like inventory levels and material flows, equipment usage.

And it can do that by simulating different scenarios without disrupting actual operations.

In my time, we always used to call these things simulators, but digital twins sounds like a much more, effective terminology for this kind of technology.

Because, ultimately, what we want to do is we want to improve efficiency and reduce costs.

And if we can do that through data driven insights that digital twins give us, then it's a no brainer for the sector.

And I think virtual modeling can also be used to, utilize realistic interactive environments to plan, test, and implement technologies, new technologies, such as hydrogen, for example.

So when we look to the energy transition and we look to store some new materials like hydrogen, hydrogen carriers, and all the ancillary equipment that goes with that.

We can use digital twins and virtual modeling to help us to do that.

So, Peter, you mentioned then that safety is the number one priority in the tank storage industry.

So I was wondering if

you could guide us through the role of hazard identification and risk assessment in ensuring process safety in the sector.

Yeah.

Sure.

Look.

I mean, you know, hazard identification and identification and risk assessment is is relevant to all walks of life regardless of whether they're operating a terminal or refinery or chemical plant or or flying planes or or or driving ships.

So, you know, it it is a a very, very important construct and and really ensuring that operations are run safely, involves assessing the risks of the products that we store.

So whether that's hydrocarbons or chemicals or food stuff stuffs, we need to understand what the risks are associated with those products.

And also how they're being processed and the people and the environmental receptors that could be harmed if things go wrong.

And that's why identifying the hazards and carrying out a risk assessment is absolutely critical to everything that we do.

And I think when considering process safety incidents, including many of the most high profile safety occurrences, it's clear that actually process safety leadership failures are a significant causal factor irrespective of the industry or the sector.

And when we talk about process safety leadership, I'll I'll refer back to the, BP Texas City explosions back in 02/2005, I believe, in The US, but also, more the more homegrown would be the the Buncefield, explosions and fires in 02/2005.

And it's the twentieth anniversary of the Buncefield explosion and fires this year.

And and they clearly pointed to to failures in process safety leadership.

So really having a a an active and continuous focus on leadership is absolutely essential to ensuring that risks are not only properly managed, but also they're understood.

And good major hazard leadership helps organizations to ensure that the risks that they have are given the resource, the priority, and the attention that are required to reduce the likelihood of a major accident.

And I think it's also true to say that it's it's critical to the sustained management of risks.

And in that context, senior leaders need not only to understand what can go wrong and what could cause a major accident, needers need to make sure that they have the right information to provide assurance that those systems are working effectively.

So, Peter, we've touched upon quite a lot here, and we're talking about the evolving industry.

And I was wondering what all of this means for the workforce as we look to the future.

I think there is a real challenge within this sector.

And to be honest with you, within all sectors within UK process facilities that there is an urgent need for targeted skills development to help support the ambitions of what we want to do in the future, as well as the need to invest in the next generation of talent for the tank storage sector.

We we will require skills focused on managing these new energy carriers that I mentioned earlier, things like hydrogen and hydrogen carriers, and as well as to incorporate the new technologies that I spoke about, you know, the digital twins and the robotic inspections, etcetera.

But that's also alongside the operational expertise that we that we currently need in in general tank management, safety procedures, etcetera, etcetera.

So it is critical that the sector continues to invest in and champion the skills development as well as attracting the next generation of talent.

So it isn't just about training the people that we've already got.

It's also making our sector attractive to new talent coming in.

And it's something that, as an association, we are very, very passionate about.

So, for example, we've we've recently launched, today, actually, the the TSA careers week, which is aimed at showcasing the vast career and apprenticeship opportunities that are available for our sector.

And that includes, lots of different careers that are available, which cover different elements of the business, including operations, engineering, safety, marketing, IT support, supply, and trading, and and many, many more.

And our our campaign this week, the digital campaign, is is also represented by an important opportunity to celebrate and champion our industry's talent as well as encourage anyone to consider a career in the sector for themselves.

It's incredibly exciting.

And and part of our digital campaign this week includes many interviews with, apprentices, and qualified people that are working in lots of different, job roles.

And I think to to showcase the opportunities that our sector offers, we also have a dedicated website, which is jobs.tankstorage.org.uk, if any listener wants to visit.

And that contains a whole host of useful information on careers and apprenticeships and also videos and career stories to help anyone interested to discover what it's like to work in our industry and how to take the next steps.

And that website also includes a career finder to help anyone interested search and apply for vacancies, which which our member companies currently have.

So, look, I think in summary, this is an area that is absolutely of critical importance to our sector today and more so as we look to the future to remain competitive and to adapt to the landscape of the future.

So finally, Peter, I wanted to get your thoughts on the outlook for the tank storage sector.

So we've already touched upon the implications of the energy transition, but perhaps you could expand upon this for us and give us your vision for what the future holds for the sector.

Calum, it's it's an excellent question.

It's a little bit crystal ball gazing if you like, but I I I think, as I mentioned earlier, the, you know, our our sector, bulk storage and an energy infrastructure, it I mentioned earlier in our conversation that it is absolutely essential to support The UK's energy security and resilience, and even more so in these times of high geopolitical instability.

And it's also actively engaging in the decarbonization process, which I mentioned earlier that lays at the center of The UK's net ero priorities.

Now I I said earlier that half a million cubic meters of storage capacity is currently used for low emissions fuels like biofuels and HVO, methanol, ammonia, and sustainable aviation fuel, and that volume is going to grow quite dramatically.

Just to give an example, if we look at something like the decarbonization of transport, in the medium term, we're probably going to see that that's going to rely on the blending of conventional fuels with sustainable ones.

So everybody's used to filling up their car at the petrol station, with a pump on it that says e 10, which is 10 up to 10% of ethanol blended into the gasoline, or it might be b 10 at a diesel pump up to 10% of biofuel blended with the diesel.

So we we're gonna see that continue with probably larger blends of of products into into traditional, traditional hydrocarbon based fuels.

And I think fuel blending to reduce emissions in that way is going to play an even more important role in maritime and aviation sectors.

And I think increased reliance on those new energy products, such as the biofuels that I mentioned earlier and synthetic fuels, it really does put the bulk storage and energy infrastructure sector right at the middle of The UK's journey towards climate new neutrality because it's at those terminals where those products are going to be imported, stored, and blended.

And if we look specifically, for example, at the aviation sector, there was a SAF mandate was introduced.

SAF sustainable aviation fuels introduced on the 01/01/2025, and that requires two percent of The UK aviation fuel mix to be sustainable aviation fuel or SAF in the first year.

And that increases on a linear basis to, I think, 10% in 2030, '20 '2 percent in 2040.

And from 2040, the obligation will remain at twenty two percent until there's a greater certainty regarding SAF supply.

And the government has also decided not to limit the supply of heifer, which stands for hydro process esters and fatty acids for the first two years of the mandate.

But then to curb its supply to no more than 71% of the total SAF target in 2030 and thirty five percent in the 2040 SAF target.

There is also a separate obligation on power to liquid fuels from 2028 that reaches three and a half percent of total jet fuel demand by 2040.

So lots of facts and figures there, but that essentially means that The UK will need about 1,200,000 tons of SAF in 2030 based on today's demand for aviation fuel.

And today's demand for aviation fuel stands at around about 11.1 to 11,200,000 tons.

So we will also need to have 1,200,000 tons of SAF by 2030.

Now if you look at the announced SAF capacity in The UK, that's at around about naught point 6,000,000 tons.

So at least another 600,000 tons remains to be met by unannounced capacity, that's unannounced, production facilities in The UK, or by imports.

And possibly more if the announced facilities encounter delays or difficulties during development, so SAF production delays in The UK.

So the the unannounced capacity of half of of 600,000 tons by 02/1930 is going to require storage, blending, and distribution capabilities, which are all provided by terminals, all of our member companies.

So I spoke about 1,200,000 tons of SAF.

Some of that will be produced domestically in The UK, and some will be met by imports, but it all needs storing, and it all needs blending.

And those facilities are provided by the tank storage terminal sector.

And it's important to note that part of the existing storage infrastructure can be reused or converted or adapted to integrate some of the new liquid fuels, such as biofuels, e liquids, and synthetic fuels.

So we are set up to meet those challenges.

And blending some of those fuels with fossil fuels are not going to require very large investments at the terminals because it's what they already do, for example, with with traditional diesel and gasoline at the moment.

And if we look at some of the other fuels, new additional investments for storage and distribution is going to be required and is probably going to require dedicated storage, new blending tanks, and additional blending equipment to address potential differences in fuel characteristics and so on.

So it it really is a different story depending on what type of product that you're going to be looking after in the future.

And if we look at the indigenous production of alternative fuels, that may well become more decentralized and more geographically dispersed, moving, for example, closer to biological feedstock places of origin.

So in other words, where your feedstocks are being produced, that's where you manufacture, those future fuels.

And and really the spatial distribution of existing fuel supply chains will probably have to be adjusted and new local infrastructure added.

So in other words, where we used to have those supply lines coming from large refineries throughout the world, it's going to be different production facilities used that that will be producing some of those future energy carriers, like the advanced biofuels, are probably gonna be located in different areas globally.

So those supply chains are probably going to have to change.

And if we look at energy carriers, things like hydrogen and LNG, there will need to be an investment in new facilities, because of the temperature and pressure differences that are required.

You know, if you if you want to store hydrogen, for example, cryogenically, that needs to be kept very, very cold, very cold indeed, much colder than you have to with with LNG, for example.

So there's significant investment in new, facilities to be able to do that.

And we also need to bear in mind that the sector will lead to balanced demand for legacy liquids whilst remaining demand will be dispersed among several different energy carriers requiring separate supply infrastructure over the same geographical area.

So the sector will need to invest in infrastructure adaption and in building new infrastructure.

What I mean by that is that we are going through a transition, and that word transition is absolutely important to keep in our minds because the transition means that we the demand for traditional hydrocarbons is going to remain, albeit decreasing, whilst new energy carriers such as advanced biofuels, etcetera, will start to increase, but it's a balance between the two that we need to manage.

So I think it's fair to say that our sector is going to go through significant changes, and it will require significant investment and planning to ensure the import production, storage, and transport of those future energy carriers I've mentioned and industrial inputs that will be necessary to the journey in achieving the net ero ambitions of the UK government.

Just to conclude, what's needed is very much a framework that engenders investor confidence and for the government to recognize the significant contribution that the bulk storage and energy infrastructure sector and its innovation capabilities provide.

And I think that that's really key, Calum.

And that's kinda where I just want to finish off summarizing in that PowerSect provides an absolutely critical absolutely critical role, both in terms of our energy, demands today, but also all of those other products like chemicals and feedstocks and foodstuffs, etcetera.

And our criticality is not going to change.

And in fact, we're going to become even more critical as we manage and navigate through the energy transition.

So we need to make sure that our sector is recognized by the UK government and that we can ensure that there is sufficient investment where it needs to be at the right times to allow us to meet those challenges.

Great.

Peter, thank you so much for taking the time to join us today.

Lots to dissect there.

We we covered a lot, but really appreciate you you joining us and and offering your thoughts on developments in the tank storage sector at such an interesting time for the industry.

So thank you.

Thanks for the opportunity, Callum.

My thanks again to Peter Davidson for taking the time to offer his thoughts on a wide range of topics surrounding the evolution of the tank storage sector.

As Peter mentioned, the TSA recently launched its careers week campaign, which showcases career and apprenticeship opportunities in the bulk storage and energy infrastructure sector.

If you'd like to find out more, please visit www.jobs.tankstorage.org.uk.

The tank storage sector is something that we cover in great detail in our regular supplement to hydrocarbon engineering, tanks and terminals magazine.

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