Oil Storage Industry to Promote Supply and Storage Infrastructure

14th April 2020: The oil storage market stood at 1.42 billion cubic meters in 2015 given the high demand for oil production from end-use industries. In order to stock huge supply of crude oil, the providers are inclined to improve their infrastructure and inventories. Oil is purchased and stored by the companies that are vertically integrated. These companies store the oil until its cost inflates, selling the stock for immediate delivery. The stored oil could be shifted for refinement process and can be stored for a short duration of time. 

Downstream operations include number of levels of control and automation for enormous storage tanks and for processing. To protect the stockpiled volumes, the government and international entities launch support initiatives such as Strategic Petroleum Reserve. Under such initiatives and other similar schemes, the companies that are involved in stockpiling are protected from untimely price spikes and stock out situations. Oil is an important source of power and energy and its availability and distribution can contribute to the achievement of sustainable targets. 

High Quality Product with Unique Characteristics to Fuel the Growth

Based on product, the segment includes open top tanks (OTT) and fixed & floating roofs. Tank is designed on the basis of type of input such as feedstock and unfinished or finished product. OTT enhances the risks of fire incidents and product contamination and has major application in liquid with negligible to zero evaporative losses.

Decreasing prices of crude is fueling the growth of the oil storage industry. The fall of prices motivate the vendors to reserve and increase storage facilities. It plays a pivotal role in affecting the prices of various products such as gasoline and lubricants, propelling the market growth. 

Fixed roof accounted for the largest share of the segment due to its benefits such as high quality characteristics that minimize risks of a fire. The designing of the oil storage tanks coupled with minimum and affordable cost associated with its installation has led to high demand of the product over the past few years. Floating roof tanks (FRT) are also anticipated to witness huge demand over the forthcoming years. This is due to product design as its major feature includes evaporative losses and minimizing corrosion. FRT segment is categorized as external and internal. Floating roof is anticipated to grow at a CAGR of over 5% over the forecast period. 

Floating roof storage is likely to grow exponentially due to increasing demand for the storage of large quantities. It is also due to its capacity to store medium and low flash point petroleum products in huge numbers. It’s characteristic of largely decreasing the volatile organic compound emissions and also effectively contributing in reducing the product losses makes the adoption of these tanks more preferable.

Rise in demand for storing liquefied gases including nonrenewable liquefied petroleum gas (LPG) extracted from natural gas along with liquefied natural gas (LNG) that is cooled down to for safety and ease of non-pressurized transport and storage is likely to boost the market. Stringent government norms due to concerns of environmental pollution is a major factor spurring the demand for LNG.

Fixed roof oil units used to store high flash point liquids including kerosene, fuel oil, and diesel that offer great strength while largely responsible for reducing environmental impact, will also boost the product penetration. 

Market Insights

Some of the notable trends of the market include decreasing prices of the crude oil, rise in adoption of alternative fuels for cleaner shipping, and growth of liquefied natural gas (LNG).  Increasing demand for rising oil production, falling prices of crude oil, high storage capacities, increasing need for improving infrastructure, and availability of import or distribution facilities globally are driving the growth of the market. In addition, fluctuating rate of natural gases, exploration of alternative resources, increasing concern towards energy security, are factors likely to have a positive impact on high-quality storage. 

Along with regulatory norms, technological advancement and concerns for reducing environmental impact, and increasing usage of nonrenewable energy sources is likely to drive demand over the next nine years. For instance, Columbian Steel Tank Company has declared to invest in unique aluminum geodesic dome designs that would reduce UV degradation and environmental impact. Key players such as CST and Marquard & Bahls are now keen on offering a high degree of product containment to develop innovative product designs with high durability. Major companies of the oil storage market include Belco, Marquard & Bahls AG, Zepnotek Storage Tanks, ZCL Composites, Columbian Steel Tank, LF Manufacturing, and Palmer.