Hyundai Wins Building Bid for Singapore Oil Cavern Storage Facility

Pictures Source: The Straits Times, Singapore.

Via Your Industry News:

Friday, Apr 17, 2009

Singapore moved forward with plans to build a 9.5 million-barrel rock cavern oil storage facility by awarding on Thursday an S$890 million ($594 million) building tender to South Korea's Hyundai Engineering (000720.KS: Quote).

The first phase of 1.48 million cubic metres (9.5 million barrels) comprises five caverns on offshore Jurong Island that could hold crude, naphtha, condensate and gas oil, most likely for commercial, rather than strategic purposes. The first two caverns are expected to be operational by early 2011.

A planned second phase could add another 1.3 million cu m of storage but a decision has not yet been made.

For cost and operational reasons, underground caverns are often used to hold long-term strategic stocks rather than more actively traded barrels.

The U.S. government stores its strategic crude reserves in four underground sites, while South Korea leases out its tanks to refiners to be used for strategic purposes.

Industry sources say underground caverns, which normally cost more than an above-ground facility of similar capacity, are typically used for barrels that remain in-tank for longer periods and are not traded in and out of tanks rapidly.

"The cavern facility will be used for commercial purposes, but there will be physical limitations for storage of trading barrels, particularly those that need to move quickly or be blended, as transferring of products will be involved," said a source in the storage business.

State-owned industrial landlord JTC Corp had said it would unveil the winning bid for the operator of the Jurong Rock Cavern project in the April-June quarter, delaying it from end of February.

A spokeswoman said the results would be unveiled before end-June.

JUMP IN STORAGE CAPACITY

This is not the first time the decision has been postponed -- the tenders were first called in late 2007, and the results have been plagued by months of delays since.

JTC said that more time was needed to study the design and construction process for the large-scale, complex project, as safety was a key priority.

Industry sources said bidders for the operation tender include Dutch oil and chemicals storage firm Royal Vopak NV (VOPA.AS: Quote), New York-based engineering and infrastructure consultants Parsons Brinckerhoff and storage operator Horizon Terminals Ltd, wholly owned by Emirates National Oil Company (ENOC).

Vopak already operates landed oil storage tanks next to the planned facility.

For phase one of the cavern project, there will be about 7.0 km (4.3 miles) of galleries and tunnels.

Once both phases are completed, the project could raise oil storage capacity in land-scarce Singapore to nearly 11 million cubic metres or almost 70 million barrels.

Since end-2005, Singapore has almost doubled independent oil storage capacities, but all of it has been leased out, leaving the market short of tanks despite slowing consumption.

For example, fuel oil storage capacity in Asia , following the opening of three new terminals with a Total of 4-5 million cu m since end-2006, has increased substantially but has not been balanced by a similar rise in demand for the residual fuel due to the economic downturn.

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Related News: Energy Business Review

JTC Awards Contract To Hyundai Engineering & Construction For Oil Storage Project In Singapore

Published:17-April-2009

By Staff Reporter

JTC Corporation (JTC), a provider of industrial real estate solutions and services, has handed the construction tender for the city-state's rock cavern oil storage project to Hyundai Engineering & Construction Co., Ltd. Jurong Rock Cavern (JRC) is an initiative driven by JTC to increase underground oil storage capacity on Jurong Island. JRC will comprise an oil storage complex to be built at subterranean depths beneath the seabed of Banyan basin.

Upon completion, the underground caverns will have a potential storage capacity of close to three million cubic meters catering specifically to liquid hydrocarbons like crude oil, condensates and diesel oil.

Development works for Phase 1 of JRC, with a storage capacity of about 1.5 million cubic meters, had commenced at the end of 2006. JTC is currently appointing an operator to manage, operate and maintain the JRC facility.

The first contract of the Phase 1 JRC project involving the construction of two access shafts and start-up galleries is near completion. JTC is progressing onto the next critical milestone of the JRC project -- the construction of tunnels, caverns and associated facilities.

Work will now commence with the detailed design of the caverns/facilities and actual construction is expected to start by end of the year. When completed, the JRC will have an overall storage capacity of 1.47mil cubic meters. The whole project will be completed in stages, with the first two caverns targeted for completion in 2013.