What Are Aboveground Storage Tanks?
Aboveground storage tanks (ASTs) are stationary containers, typically made of steel or reinforced concrete, designed to hold liquids or gases at or near atmospheric pressure, positioned on or above the ground. These structures are a critical component of Industrial Infrastructure globally, serving a wide array of sectors from energy and manufacturing to agriculture and public utilities. They are primarily used for storing bulk quantities of substances such as petroleum products (crude oil, gasoline, diesel), chemicals, water, and various industrial fluids. From a financial perspective, ASTs represent significant Property, plant, and equipment for the companies that own and operate them, requiring substantial Capital expenditures for their construction, maintenance, and eventual decommissioning. Their effective Asset management is crucial for operational efficiency and managing associated financial and environmental risks.
History and Origin
The concept of storing liquids in large, accessible containers dates back centuries, but modern aboveground storage tanks began to proliferate with the rise of the petroleum industry in the mid-19th century. Early tanks were often simple riveted iron or steel structures, prone to leakage and structural integrity issues. As demand for oil and its refined products grew, so did the need for safer, larger, and more reliable storage solutions. A significant milestone in the evolution of ASTs was the development and widespread adoption of standardized design and construction codes. For instance, the American Petroleum Institute (API) first introduced its API 650 standard, "Welded Tanks for Oil Storage," in 1961. This standard provides comprehensive guidelines for the design, fabrication, erection, and inspection of large, welded, low-pressure storage tanks, ensuring greater safety and durability across the industry.6, 7, 8 The ongoing evolution of these standards reflects lessons learned from incidents and advancements in materials science and engineering.
Key Takeaways
- Aboveground storage tanks are essential for storing bulk liquids and gases across various industries.
- They represent substantial fixed assets and require ongoing investment for maintenance and compliance.
- Strict regulatory frameworks and industry standards govern their design, construction, operation, and environmental protection.
- Effective management of ASTs involves rigorous Risk management practices, including regular inspections, preventative maintenance, and appropriate Insurance coverage.
- Failure to comply with regulations or adequately maintain aboveground storage tanks can lead to severe financial penalties and significant Environmental liabilities.
Interpreting Aboveground Storage Tanks
Aboveground storage tanks are not typically "interpreted" in a numerical sense like a financial ratio. Instead, their interpretation revolves around their operational status, integrity, and regulatory compliance. For investors, understanding the condition and management of a company's AST assets provides insight into its operational reliability and potential liabilities. Key factors include the age of the tanks, their inspection history, the materials stored, and adherence to maintenance schedules. Companies with robust tank integrity management programs demonstrate strong Regulatory compliance and a commitment to minimizing environmental and safety risks. Conversely, a history of spills, citations, or deferred maintenance can signal significant financial and operational challenges. Performing thorough Due diligence on such assets is critical in merger and acquisition scenarios or when evaluating Infrastructure investments.
Hypothetical Example
Consider a hypothetical energy company, "GreenFuel Corp.," that owns and operates a network of aboveground storage tanks for refined petroleum products. One of their facilities has 10 ASTs, each with a capacity of 50,000 barrels. GreenFuel Corp. regularly inspects these tanks in accordance with industry standards and maintains a detailed record of each tank's structural integrity, lining condition, and cathodic protection system performance.
In a given year, GreenFuel Corp. allocates a portion of its budget to inspect Tank A and Tank B for internal corrosion and external coating degradation. If the inspections reveal significant corrosion in Tank A, requiring a major repair or relining, the company would incur substantial Capital expenditures. This expenditure would be recorded in the company's Financial accounting records and would impact its Cash flow. The decision to repair or replace would depend on a detailed cost-benefit analysis, considering the tank's remaining useful life and regulatory mandates.
Practical Applications
Aboveground storage tanks are prevalent across numerous industries and financial contexts:
- Energy Sector: They are indispensable for storing crude oil, refined petroleum products (like gasoline and diesel), and natural gas liquids at refineries, terminals, and pipelines, serving as critical links in the Commodities supply chain.
- Chemical Industry: Chemical manufacturers rely on ASTs to store raw materials, intermediate products, and finished chemicals, often requiring specialized tank designs to handle corrosive or hazardous substances.
- Utilities and Water Management: Public and private utilities use ASTs for storing potable water, wastewater, and chemicals used in water treatment processes.
- Real Estate Investment Trusts (REITs): Some Real estate investment trusts specialize in industrial properties, including those with substantial tank farms, generating revenue from leasing these storage assets.
- Environmental Regulation: Government agencies, such as the U.S. Environmental Protection Agency (EPA) and the Occupational Safety and Health Administration (OSHA), impose stringent regulations on ASTs to prevent spills and protect human health and the environment. The EPA's Spill Prevention, Control, and Countermeasure (SPCC) rule, for example, mandates that facilities with a certain aggregate oil storage capacity develop and implement plans to prevent oil discharges into navigable waters.4, 5 Additionally, OSHA sets standards for the safe operation and maintenance of tanks containing flammable and combustible liquids, emphasizing worker safety and spill prevention measures.2, 3
Limitations and Criticisms
Despite their necessity, aboveground storage tanks come with inherent limitations and potential criticisms. Their primary drawback is the risk of catastrophic failure, which can lead to large-scale spills, fires, or explosions, resulting in significant Environmental liabilities, property damage, and loss of life. Such incidents often stem from factors like corrosion, inadequate inspection, welding failures, or external impact. For example, a sulfuric acid tank explosion at a Motiva Enterprises refinery in 2001, which resulted in fatalities and environmental release, highlighted the dangers of tank corrosion and inadequate safety protocols during "hot work" (operations involving open flames or heat).1
The visibility of ASTs means any failure has immediate and widespread environmental consequences, impacting water bodies and soil, which can be costly and time-consuming to remediate. Critics argue that regulatory oversight, while extensive, may still not be sufficient to prevent all incidents, especially concerning older infrastructure or facilities with limited resources for maintenance and inspection. The ongoing costs associated with maintenance, integrity management, and Regulatory compliance can also be substantial, affecting a company's profitability and potentially leading to underinvestment in essential safety measures if not properly managed. Furthermore, the Depreciation of these assets over time necessitates significant reinvestment to ensure continued safe operation.
Aboveground Storage Tanks vs. Underground Storage Tanks
While both are used for liquid storage, Underground storage tanks (USTs) differ significantly from aboveground storage tanks (ASTs) in their placement, regulatory burdens, and associated risks.
| Feature | Aboveground Storage Tanks (ASTs) | Underground Storage Tanks (USTs) |
|---|---|---|
| Placement | On or above the ground, fully visible. | Entirely or partially buried beneath the ground. |
| Leak Detection | Easier visual inspection for leaks; secondary containment (dikes, berms) is visible. | More challenging to detect leaks; relies on complex monitoring systems. |
| Environmental Risk | Spills are typically more visible and contained locally, but can quickly spread. | Leaks can go undetected for longer, potentially leading to widespread groundwater and soil contamination. |
| Installation Cost | Generally lower upfront installation costs. | Higher installation costs due to excavation and specialized leak prevention. |
| Regulatory Focus | SPCC plans (EPA), OSHA safety, API standards. | EPA UST regulations, state-specific leak detection and remediation rules. |
| Security/Exposure | More exposed to external damage (e.g., vehicle impact, sabotage, weather). | Less exposed to external physical damage; less susceptible to temperature fluctuations. |
| Maintenance | Easier to access for routine maintenance and inspection. | More difficult and costly to access for maintenance and repairs. |
The primary confusion between the two often arises from their shared purpose of liquid storage. However, their distinct environmental exposure and monitoring challenges lead to different design considerations, regulatory requirements, and risk profiles for owners and operators.
FAQs
What types of liquids are commonly stored in aboveground storage tanks?
Aboveground storage tanks are commonly used to store a wide range of liquids, including crude oil, gasoline, diesel fuel, jet fuel, chemicals, solvents, wastewater, and potable water. The specific design and material of the tank depend on the characteristics of the liquid it contains.
Are aboveground storage tanks regulated?
Yes, aboveground storage tanks are heavily regulated by various government agencies and industry standards. In the United States, the Environmental Protection Agency (EPA) sets rules like the Spill Prevention, Control, and Countermeasure (SPCC) regulation to prevent oil spills. The Occupational Safety and Health Administration (OSHA) enforces workplace safety standards, and organizations like the American Petroleum Institute (API) develop industry design and inspection standards. These regulations aim to ensure safe operation, prevent environmental contamination, and protect workers.
How often do aboveground storage tanks need to be inspected?
The inspection frequency for aboveground storage tanks varies based on regulations, industry standards (such as API 653 for in-service tank inspections), and the type of liquid stored. Regular visual inspections are often required monthly or quarterly, while more thorough internal and external inspections, which may involve taking the tank out of service, are typically mandated every few years. These inspections are crucial for identifying issues like corrosion or structural weaknesses and are a key part of effective Asset management.
What happens if an aboveground storage tank leaks?
If an aboveground storage tank leaks, it can lead to immediate environmental contamination of soil and water, posing significant Environmental liabilities for the owner. It can also result in financial penalties from regulatory bodies, costly cleanup operations, and potential legal action. Prompt detection and response are critical, often involving the deployment of emergency response plans and reporting to relevant authorities. Comprehensive Insurance coverage is essential to mitigate these risks.