x Abu Dhabi, UAEFriday 19 January 2018

Journey to cavernous future for oil

Singapore's Jurong Rock Caverns look like a scene from science fiction, but once completed they will transform 21st-century oil by helping to ease a shortage of space the industry faces.

Going underground: Singapore's Jurong Rock Caverns are the first hydrocarbon store of their kind in South East Asia.
Going underground: Singapore's Jurong Rock Caverns are the first hydrocarbon store of their kind in South East Asia.

The images of Singapore's Jurong Rock Cavernsresemble scenes from Jules Verne's novel Journey to the Centre of the Earth.

Although at first glance they appear to be part of an underground fantasy world, the caverns are part of a major underground 21st-century oil project.

With engineers now carrying out explosions to break away rock, the caverns are moving well beyond science fiction and becoming a science fact that will ease the shortage of space facing the oil industry in the city state.

The caverns are the first hydrocarbon store of their kind in South East Asia, although they are similar to projects in Norway, and are being developed by JTC, a government economic agency.

With limited space, yet high demand for storage, Singapore has been forced to look underground.

The project provides "surface land savings of 60 hectares for land-constrained Singapore", says a JTC official .

The caverns could, JTC has said, be followed by similar subterranean initiatives involving power plants or other industrial projects. Ultimately, the development, underneath Jurong island in south-west Singapore, could provide almost 3 million cubic metres of storage.

The first phase, consisting of one cavern of 150,000 cu metres and four of 330,000 cu metres each, is under construction and is scheduled for completion by 2014 at a cost of S$950 million (Dh2.83 billion).

Totalling 1.47 million cu metres, or 9.25 million barrels of oil, in size, this inaugural phase will be able to store almost as much liquid as 600 Olympic-sized swimming pools. The first two caverns, the 150,000 cu metres facility and one of 330,000 cu metres, should be finished by 2013.

There have previously been reports of delays, but JTC was confident enough with progress to take reporters on a tour.

A planned second phase would add a further half dozen caverns, totalling 1.32 million cu metres, although this part of the project depends on how well the first phase fares in the marketplace.

Two shafts, each 132 metres in length, will provide access to the first phase, while the larger caverns will be 20 metres wide, 27 metres high - as tall as a nine-storey building - and will stretch for 340 metres.

A substance called "shotcrete", which includes steel fibres, will give extra strength as a coating to the sedimentary rocks from which the caverns are being blasted. Phase one involves the construction of tunnels stretching a total of 8km.

According to Bloomberg News, ammonia nitrate is being used to blast away rock, with each of the several explosions a day extending the cavern by up to 5 metres. South Korea's Hyundai Engineering is the lead contractor.

The caverns are the latest of many oil-sector developments on Jurong. The island already has operations from nearly 100 companies, representing investments reported to total S$34bn. The caverns "will help to support the storage needs of the companies on Jurong island and enhance the integrated infrastructure and synergy of the petrochemical hub", the JTC official says.

Singapore's oil industry includes storage, petrochemicals and refining, and the country is one of the world's leading handful of hydrocarbon trading centres, with annual transaction volumes exceeding US$200bn (Dh734.5bn).

Most of the world's major oil companies have a presence on Jurong, among them ExxonMobil and Shell, and developments so far already give the island a storage capacity of oil and fuel exceeding 90 million barrels. The caverns will be able to store crude, condensates and naphtha, according to JTC.

Ong Eng Tong, a Singapore-based oil industry specialist with the trading company Mabanaft, says the crude will be kept there as "strategic storage". "Saudi Arabia has a lot of commitment here to Japan, Korea and Taiwan and this area, and maybe the Philippines," he says. "If something happens in the Strait of Hormuz and they cannot send their crude out, they probably will depend on crude storage here to supply their outlets."

Any crude stored at the caverns would "most likely" originate from the Middle East, he adds, and "most refineries here are built for Middle East [crude oil]".

Indeed, Middle East producers have been keen on filling up storage facilities in Asia as they look to maintain regional market share in the face of increased competition from Russian suppliers.

In 2009, Abu Dhabi National Oil Company signed a deal to store crude oil in an above-ground facility in Kagoshima prefecture in southern Japan.

Analysts have suggested oil-processing companies are likely to use the Singapore facility. The energy journal Platts reported that Jurong Aromatics, which is developing an aromatics plant on Jurong that is due for completion in 2014, will use the first two caverns to store condensate.

Third parties will provide services for the caverns such as maintenance and repair, and tankage facilities, JTC has stated.

In addition, terminal facilities linked to the caverns will be able to offload carriers that hold as much as 2 million barrels of oil, according to Bloomberg News.