When the Victorian Environmental Protection Agency (EPA) introduced its guidelines on underground petroleum storage systems in February 2003 for implementation by March 2004, the aim was to protect people, property and the environment from pollution through, in the first instance, leak detection, and then by implication, fixing any leaks that are detected.
The EPA requirements triggered the development of new systems from suppliers that initially focussed on leak detection but turned out to be essential wet stock management tools.
If you are a fortunate owner or operator of a new (or newly tanked) site with the latest state-of-the-art underground petroleum storage system (UPSS) and sophisticated wet stock management processes, you will know how it feels to be confident that all the fuel you buy is in either your tank of those of your customers; that if you do spring a leak you will be first to know immediately and the loss will be contained; and that the data the system generates is sufficiently reliable to use in key decisions such as inventory levels, delivery schedules and fuel pricing.
These days UPSS installations usually exceed EPA guidelines and include double-walled tanks (either fiberglass or glass steel), double-walled polyethylene pipes, containment sumps under pumps and dispensers, submersible pumps, automatic tank gauges, electronic line leak detectors, sensors in the tank turrets and under the dispensing pumps. Systems include automated data collection, automatic shut down, integration with POS, indoor consoles, intuitive touch screens, and access to reports through the internet from anywhere in the world.
In Australia, the space between the walls of double-walled fiberglass tanks is filled with brine and the level of the brine is monitored. Glass steel tanks (steel inner wall and fiberglass outer wall) are monitored by creating a vacuum between the walls and sealing with a vacuum gauge. Similarly, the interstitial space of double-walled pipes is pressurized with nitrogen and the leak detection device monitors pressure. If the level changes, an alarm sound and device can be linked to a switch to shut the pipe off.
"The aim is perfect containment," says Reed Leighton, Managing Director, Leighton O'Brien Pty Ltd. "When we install new tanks, we test the system with precision tank testing technology that uses aerospace sensors. The sensors can detect changes in pressure of one Pascal (one-seven thousandth psi) - effectively zero leakage."
This is all well and good if you are blessed with a new installation, but many of you will be managing a site that is up to 30 years old with tanks and pipes made of single-walled steel, and manual (in some cases, minimal) wet stock management processes.
The main problem with steel tanks is the corrosive effect of ground conditions. When the protective seal on the outside of the tank is corroded by acids and alkalis in the soil, the steel surface is exposed to water and that means rust. Similarly, steel pipes are vulnerable to electrolysis, rust and corrosion, and leaks at the joins when ground moves.
With so much vulnerable steel underground, it is little wonder that environmental issues are at the forefront in fuel retailing.
"The main focus of wet stock management is the issue of contamination and the industry is looking to suppliers for more effective ways to avoid contamination," says Jim Craig, Operations Manager Asia-Pacific, PetroTechnik Australia.
Understandably, you might view environmental compliance as an added impost in an already tough business. With margins always under pressure from competition,who can afford the time and money needed to meet, never mind exceed, government requirements? But think of it another way. With such a squeeze on profits, can you afford not to manage effectively your most valuable assets - the fuel underground and the land it sits in.
With double-walled tanks you can monitor the enclosed interstitial space between the two walls, but with single-walled tanks, there is no space to monitor.
"You cannot detect actual leaks in a single-walled tank," says George Palmer, Managing Director, Fibretank Systems. "You have to use data from deliveries, sales and measurements of fuel levels in the tank."
That is not as easy as it sounds. Not only is fuel your most valuable item of stock,it is the most difficult to count - a hidden liquid whose volume depends on its temperature. These unique features mean raw stock control - based on opening stock, deliveries, sales and closing stock - cannot be relied on to identify losses accurately.
"Historically, the industry accepted variances between 0.5% and 1%; now the paradigm shift to 18 litres per day has many rethinking business practice and profit", says Russell Dupuy, Managing Director, Fairbanks Environmental.
"The 'losses' were often rebated through commercial agreements leaving no incentive to really understand what was going on underground, until a major incident. Retailers are now becoming increasingly interested in understanding what their losses are and where they are going."
"With effective leak detection, you avoid the biggest cost - that of cleaning up if there is a leak," adds Mathew Harris, National Marketing Manager, Gilbarco Veeder-Root. "There is always some probability of loss but systems that detect leaks early prevent large losses."
"You do not need a big leak to cause damage," adds Reed Leighton. "For example, 200 ml per hour over 20 years is equivalent to about 35,000 litres. Small leaks can become big leaks and new leaks can appear. The cost of cleaning can be up to $2 million."
The EPA leak detection guidelines require either a combination of Automatic Tank Gauging (ATG) and Line Leak Detection or SIRA (Statistical Inventory Reconciliation Analysis).
"Automated ATG-based systems ask whether physically you can detect that the system is secure, whereas SIRA-based systems ask whether analytically you believe the system is secure," says Mathew Harris.
New systems tend to use the first method because it is more accurate and is best installed with the tanks. For existing systems the choice is less clear.
A SIRA system, as its name suggests, uses sophisticated statistical methods to reconcile the raw data from deliveries, sales and tank levels. When these numbers do not add up, the analysis attempts to separate the source of the variance, eliminating all other factors before concluding there is probably a leak.
"SIRA gives you a better understanding of losses - delivery loss, procedural loss, administrative loss and real physical loss," says Russell Dupuy.
"In our experience, about 85% of SIRA 'fails' are due to administrative errors," says Reed Leighton.
"About 10% are due to faulty meters or visible leaks such as under the pumps. Only 5% require whole tank testing. This is expensive, so it pays to have a process that reliably eliminates other causes first. If you use only raw data, you cannot distinguish between false alarms and real problems."
"Gains require as much attention as losses because there could be water incursion in the tanks or under-dispensing at the pumps," adds Russell Dupuy.
A SIRA system is only as effective as the accuracy of the data, and the main source of inaccuracy is in tank dipping. The dipping process is labour-intensive, time-consuming and fraught with opportunities for error - poor visibility, large increments on the dip stick, uneven tanks, and transcribing data. It can also be dangerous. Although an ATG-based system of leak detection is more expensive to install, at its simplest (and cheapest) level an ATG can replace tank dipping as part of the SIRA process.
"SIRA used with stand-alone ATG (electronic dip sticks) provides more accurate data input, maximizing efficiency," says Jim Craig. "At the same time, by removing the need for manual tank dipping, service station staff are not exposed to dangerous forecourt traffic."
"An automated leak detection system will bring losses to immediate attention," says Grant McPherson, Technical Director, G-Tech.
Fairbanks Environmental's number crunching shows that, for some sites an ATG is a cost-effective way to gather accurate and reliable tank levels. (See box below)
Electronically-collected, accurate tank data creates the opportunity for more than just leak detections. It facilitates total wet stock management and integrated business decision-making. For a network, ATGs send data automatically to a central office and there the data can be used for wet stock management and in business intelligence tools across the network.
"EPA compliance requirements may have driven people to look at what is underground, but the benefit is better wet stock management overall," says Mathew Harris.
"You start with leak detection which identifies the different types of loss," adds Russell Dupuy. "Then retailers can leverage that information."
Once you are confident about your tank data, you can be confident analysing the data and using it for stock-holding decisions and delivery schedules - even financial analysis and pricing. By integrating tank volume data with the POS system, you can include tank data in your accounting and stock control processes. Like other technology applications in retailing, fuel management software is advancing to take advantage of the data. You can watch sales change hourly and estimate the impact of price changes on profits, so that you have a much better understanding of your fuel business.
There are four certified suppliers of leak detection services - Gilbarco Veeder-Root, Fairbanks Environmental, Leighton O'Brien and VACC - and they also supply wet stock management services. Basic leak detection compliance costs between $10 and $25 per tank per month and full wet stock management from $20 to $50 per tank per month.
"In earlier times, major oil companies purchased pumps and tanks, had them installed, and managed them themselves," says Reed Leighton.
"Now, with fewer staff on site, there is a shift by the major oil companies towards outsourcing the total management over the life of the asset. The focus is on maintaining a clean site through installation, operation and closure."
However, this does not suit everybody. Driven by the introduction of the Victorian EPA's guidelines, the Victorian Automobile Chamber of Commerce (VACC) sponsored the development of Fuel Manager, a DIY SIRA-based underground tank monitoring system with an operations management module.
"It is a low-cost, safe and EPA-certified system to meet compliance needs that can be used by single and multi-site operators, as well as distributors," says John de Vos, Manager Business Support, VACC.
"Both programs run on most PC platforms - Windows 98, NT, 2000 and XP. It allows for automated or manual data input and the operator can choose from a menu of reports, including management reports for profit planning. It is user-friendly and suits a wide range of organizations that have responsibility for underground fuel tanks. User training includes a detailed emphasis on tank dipping procedures.
"A key feature is the facility to generate reports on a daily basis so that adverse trends can be promptly identified. This overcomes having to wait until month-end data accumulation and relying upon external data processing for tank reports."
"Fuel Manager allows you to manage the processes yourself for a modest licence fee, fully supported by a help desk. If the SIRA module identifies and confirms an unexplained loss then the VACC can call in the experts," says John de Vos.
Calling in the experts is something you have to do no matter what leak detection system you use, and the system you choose will reflect your site's configuration, your assessment of the risk and how you want to manage your business. With a system to suit everybody available in the market, there is no excuse for not meeting your environmental obligations.
Next issue we will look at what those obligations are in more detail with a roundup of the state regulations and an exploration of issue of responsibility, i.e. who might be prosecuted.
As an electronic dip stick, the ATG is an electronic probe installed into each tank with a product and water float. The float information is electronically transmitted from the probe to a console typically located in the office. The probe sends information about product height, water height and in-tank temperature to the console. It does not send actual volume information. The console converts the information to a volume per tank and displays this. Therefore, the console needs to be programmed with site-specific information, establishing a basic calibration for each tank.
The ATG is considerably more accurate than the dip stick, which usually provides volume inscriptions in 200 or 500 litre increments (larger tanks can be 2,000 litres per increment) and the volume includes any water in the tank as a product volume.
The process of manually dipping a tank correctly can take 30 minutes each day. In addition, preferred practice calls for weekly water paste tests per tank, adds 30 minutes per week. Dipping is often done at night in the dark, adding to error and exposing operators to vehicle hazards and hydrocarbon vapours. This time is spent on the forecourt away from the console. Operators also need to be trained to dip correctly and this can be costly where labour turnover is high. In contrast, the ATG is located inside the building for ease of access, safety and readability where all users are looking at the same information to the nearest litre or millimeter.
Using only time, the cost of dipping tanks is estimated to be over $3,000 per tank per year, comprising:
30 minutes x 365 days @ A$15 per hour = $2,737.50 per annum
30 minutes x 52 weeks @ A$15 per hour = $390.00 per annum
This compares to the cost of installing and maintaining Automatic Tank Gauging, comprising:
Typical five-tank site equipment cost = $12,000
Typical installation cost = $1,650
Maintenance, per annum = A$600
This assumes a five-tank site that is ATG-ready (tank turrets and cabling conduits in place). Ignoring GST and the time value of money, the ATG pays for itself (in saved dipping costs) in five years.
(These details were supplied by Russell Dupuy, Managing Director, Fairbanks Environmental)