Article

Adapt and comply

The industry is abuzz with activity one year prior to safety code changes on storage tank valves.

Equipment manufacturers and their distributors continue to ramp up storage tank valve sales to owners who have just 12 months to comply with safety code changes that have been 10 years in the making.

But it’s all guesswork as to how many old containers still need change-outs to meet the National Fire Protection Association (NFPA) 58 code that becomes the law of the land July 1, 2011. Nor does anyone know if enforcement authorities will shut down propane deliveries to tanks violating the new standards.

Safer storage
The 2001 code changes followed several high-profile propane release incidents in the mid- and late-1990s.

At a bulk plant in Sanford, N.C., in 1996, a transfer hose failed as a transport was unloading to a bulk plant. A broken back-flow check valve in the line enabled some 35,000 gallons in the storage tanks to escape. Failure of the excess-flow valve in the transport allowed another 10,000 gallons to release. Perhaps because there was an electrical outage in the area at the time, the massive gas cloud never ignited.

Two years later on a turkey farm in Albert City, Iowa, a liquid line was sheared from an 18,000-gallon tank and ignited. The fire impinged on the tank and caused a BLEVE that killed two responding firefighters and injured seven others.

The code changes were designed to improve product containment by requiring thermal activation and remote emergency shutdown capability in storage vessels with a water capacity of more than 4,000 gallons.

For new installations, liquid connections that allow flow out of the tank now must use an internal valve capable of remote closure and an automatic shut-off with thermal actuation.

Existing plants have two options. Either the liquid inlet and outlet openings of the container must have an internal valve capable of remote closure and thermal-actuated automatic shut-off, or the tank must have an emergency shut-off valve with remote closure and thermal actuation near the tank inlet or outlet. The propane industry was given 10 years to retrofit an estimated 70,000 tanks in use by marketers, wholesalers or customers.

The national code does not address compliance, which is left to the state authority or local jurisdiction. Penalties for non-compliance could range from simple warnings to monetary fines or restrictions in operations.

Authorities in states using NFPA 58 editions older than 2001 will not be able to enforce the provision. There are 14 states in that category, according to NPGA (see page 38). Tank owners in those states may still choose to make the upgrades to improve safety or to meet insurance requirements.

Guessing the numbers
“The real problem is going to be end users - commercial, industrial and agricultural tanks, especially those that are customer-owned,” predicts Robert Barry, president of Bergquist Inc. “Many are probably not aware that there are new requirements. They will be very surprised when they can’t get product after July 1, 2011, as some transport companies will not deliver to locations that are not in compliance.”

A recent Purvin & Gertz study indicates there are 15.6 million gallons of marketer bulk plant storage nationwide. Customer storage accounts for another 4.4 billion gallons, although most is in smaller vessels that aren’t covered by the code change. But as the deadline nears, even the valve salesmen can’t pinpoint the size of the job that remains.

“The number of end-user tanks that exist is unknown. If you just drive the back roads of Ohio you will see hundreds of locations that are affected by the requirements. Expand this nationwide and it is mind boggling,” Barry notes.

He says the Toledo, Ohio-based equipment distributor’s sales of emergency shutoff valves have increased an average of 25 percent each of the last four years after having been flat for the previous five years. He estimates there remains some 40 percent of the target to retrofit.

RegO Products North America Sales Manager Ray Kazakewich agrees with that guess.

“We have estimated that nationwide maybe 50-60 percent of plants have been upgraded to meet the new 58 standards. But the majority are secondary storage sites such as large customer-owned facilities, not necessarily gas company owned principle bulk plants in the traditional sense,” Kazakewich explains.

Michael Hopsicker, president and chief executive officer at Ray Murray Inc., puts the number between 25-30 percent among propane marketers. The Lee, Mass.-based distributor says bulk plant valve sales at his company have doubled since 2006 with healthy double-digit annual growth.

“Last year there were some delays from the manufacturers. This year we’ve stocked extra heavy and we’re ramped up so there shouldn’t be any problem. We expect to get buried [leading up to July 2011], so we have significantly more inventory than usual,” he says.

Hopsicker says the equipment needed for most single tank change-outs costs $3,000 to $3,500.

The nation’s two largest valve manufacturers, RegO Products and Fisher LP Gas Equipment, both report sustained sales growth heading into the 2011 deadline – and beyond.

“Sales have increased noticeably, particularly for threaded internal valves, emergency shutoff valves and valve accessories since the advent of the 2011 initiative,” reports Fisher Marketing Manager Jeff Sexton.

“While we have noticed a steady increase in orders since the initiative started, based on our understanding of the market we still feel there is still a lot of work to be done in completing these plant upgrades. For that reason, we anticipate that order levels will remain elevated through 2012, and will not begin to settle back down to pre-2011 levels until 2013.”

Contractors cashing in
Propane bulk plants come in all types and sizes. Some marketers change out their lone 30,000-gallon vessels themselves. Those with multiple storage sites or the more complex tank farms are turning to outside vendors to do the work.

Superior Energy Services of Cleveland has been busy upgrading terminals, bulk plants, utility peak-shaving facilities and standby systems that pre-date new regulations.

“There’s definitely a buzz about it. We have a lot of people calling looking for quotes, or asking for us to come out and walk through their system and tell them what they need to do to get compliant,” says Derek Rimko, vice president of sales.

“This last year has been really heavy. I guess nobody thinks about [compliance] until it’s knocking on your door. We do a lot of prisons, large manufacturers and industrial customers who are worried that they won’t be able to get their tank filled [without compliance]. It seems that the retail guys are going to draw the line in the sand if they don’t get upgraded. That’s where the push is coming from for us.”

Oregon-based LPG Specialties has found traction with bulk plant change-outs throughout the western states. Owner and President Craig Schultz says his company’s sales nearly tripled in 2009 and are up another 15 percent so far this year.

“It’s been a good boon for us, obviously. We’ve gotten a good work load out of it, and this next year looks to be busier yet,” Schultz says.

About 60 percent of his business has been bulk plant upgrades; the rest are mostly orchards, dairies, commercial accounts and those with tanks for backup systems.

“The propane guys tend to call out of curiosity, so it’s an educational process for us. We convince them that they need to spend the money to get it done, and what the downside is if they decide not to. For the industry people, it’s usually just a matter of them getting to the point where they are ready to do it.”

Schultz says the Oregon fire marshall’s office told him they will inspect every propane bulk plant by next July. Those not up to code will have one year to comply or have their vessels red-tagged to prevent fuel deliveries.

“I don’t think we will see many marketers not coming into compliance,” he predicts. “Those running the risk are the customers with individually owned tanks. That’s a completely undocumented group of tanks and they are just oblivious. It’s a very hard thing to quantify as to whether we are getting our arms around it, really.”

Rimko says the heavy demand raises concerns about the availability of replacement equipment in the months ahead.

“Now the big thing is people are worried they won’t be able to get valves from suppliers as we get closer to the deadline,” he says. “Some suppliers have been saying they can’t keep them on the shelves. By next year, who knows?”

RegO and Fisher maintain those fears are unfounded.

“We have ramped up our manufacturing capacity significantly and work closely with our sales channel to ensure that our production plan is meeting the needs of the industry. It has been a challenging environment, but we have the capacity to fulfill the demand and are continually honing production plans,” Sexton says.

“We are in very good shape as far as equipment availability is concerned, and do not expect that to be a problem for us or any other manufacturers,” adds Kazakewich.