Liquid Terminal Industry Thrived During COVID-19 Crisis
With President Biden having recently signed the historic $1.9 trillion COVID-19 relief bill and the nation marking the one-year anniversary of COVID-19 being declared a global pandemic, Think Tank has taken a moment to reflect on what the virus has meant to the liquid terminal industry over the past year.
It’s hard to believe a year has passed since the COVID-19 pandemic first broke out in the United States. In March 2020, with the virus so new and with so much unknown, the entire country – in fact, the entire world – was unsure how to react. This uncertainty led to an early stock market crash, to states enforcing a range of preventative measures including the wearing of masks and stay-at-home orders, and, most importantly for tank terminals, to a drastic reduction in petroleum product demand as people remained home.
The tank terminal industry was left with a challenging predicament. While demand stalled, oil production continued unabated in the United States and was even ramped up globally as major producers Saudi Arabia and Russia fought for more control in the oil market. The result was plummeting oil prices and a demand for storage unlike anything the world had ever seen.
Without a doubt, COVID-19 put terminals in the spotlight. Market analysts, who prior to March 2020, gave only a passing nod to weekly storage inventory reports, began reporting on them in earnest. The spotlight on terminals became even brighter at the end of March when West Texas Intermediate crude oil went into negative territory as future market traders with contracts to take oil at the contract’s expiry, paid others to take the crude off their hands because there simply was no room in storage to hold it.
The collapse in demand caused the usually extraordinarily flexible tank terminal industry to learn how to work at full storage capacity. ILTA members took every opportunity to consolidate existing stocks at storage facilities. Other parts of the industry also responded. Some pipeline operators offered two-way shipping. And oil traders stored record volumes of oil on ships as onshore storage filled. Some terminals even investigated switching liquid food storage tanks to petroleum product storage.
The industry did not have much time to plan and implement strategies to manage the new realities it faced. Like most industries, the liquid terminals’ first challenge was protecting its workers and contractors. This was complicated because – as an essential industry – liquid terminals had to do so while ensuring that operations continued unabated and safely. Remember: the products stored in terminals helped first responders get to work, fueled ambulances and were used to make essential medical products like ventilators and IV tubes.
Terminal managers and others in leadership positions quickly put in place measures, including worker travel screening, temperature screening, stepped up facility cleaning and implemented operational changes, all to limit potential worker exposure to the virus.
Recognizing that peers could serve as the industry’s best ally during difficult times, ILTA convened regular terminal-member COVID calls and set up a website to post government guidance, best practices, lessons learned, and provide a forum for members to ask questions and share ideas.
As scientific understanding of the virus grew, the industry adapted to evolving guidance from federal and state health officials and regulators, and it sourced protective equipment and cleaning solutions, which, at times were scarce.
During a mask shortage, ILTA sourced masks and shipped them to members. Faced with cleaning solution shortages, members offered recipes and advice to make their own. This terminal COVID forum also gave ILTA staffers insight into the regulatory needs of the industry, and we followed up with strong advocacy work. The calls also allowed terminal operators to stay in close contact, either directly or through ILTA, with regulators and other federal, state and local government officials to exchange information, identify challenges and resolve issues to ensure continued safe operations, critical to COVID-19 response.
ILTA Acted as Industry Advocate During COVID-19
ILTA played a major advocacy role during the pandemic. The demand for storage caused by severe imbalances in petroleum and refined product markets was happening at time when, in a normal year, terminals would be transitioning storage inventories of winter-grade gasoline blends to lower-volatility summer-grade blends to meet the May 1 compliance date under U.S. Environmental Protect Agency rules.
ILTA, after hearing from its terminal operators that the deadline would be untenable without drastic impacts on consumers, worked with other trade associations to urge the Trump administration to relax the summer blending requirements. EPA acquiesced, acknowledging the potential for fuel shortages and escalating summer gasoline prices without the waiver.
ILTA, working with AFPM and API, worked diligently on a solution to the problem of upcoming out-of-service tank inspections. ILTA and the other groups asked EPA to allow in-service (keeping the product in the tank) inspections of tanks in lieu of emptying, cleaning and inspecting them. EPA rules for tanks with internal floating roofs that are regulated under 40 CFR Part 60 Subpart Kb require once-a-decade out-of-service inspections, which are all but impossible early in the pandemic because tanks were at near or full capacity.
This eventually led to one of ILTA’s biggest advocacy wins ever: EPA issuing a rule to allow Kb tanks to comply with provisions of Subpart WW – and not have to take tanks out of service – for inspections. The use of a more modern tank inspections methods to find and correct air pollution leaks at large liquid storage tanks was a win-win for both the environment and the industry. ILTA worked with EPA on this common-sense rule, which became final in January of this year.
As vaccines are rolled out, normalcy is beginning to seem a real possibility. It’s so important to step back and remember all we’ve been through together. ILTA is extremely proud of its members – and the entire terminal community – for the important contribution they made to keep vital supplies flowing even during extremely difficult times and pivoting repeatedly to adjust to a rapidly changing environment.