Market & Supply 60
Given developments in Ukraine and the role that Russia plays in the global oil market, supply availability is a big talking point once again. Below UX Energy Services consultant Dr Craig Lowrey looks at some of the issues that this situation could generate for the UK market.
Closer to home, the devastating weather conditions that hit parts of the UK over the last winter have also brought security of supply into renewed focus.
The UK’s ability to control the fate of its heating oil price has diminished; something also seen in the wholesale natural gas market over the last decade. A decline in domestic refining capacity coupled with the decline in crude production from the UK Continental Shelf has meant increased import reliance, making the UK price for heating oil increasingly reflective of international events. As North Sea output declines further, forecasts from the UK government show that this trend is likely to continue well into the next decade for all petroleum products.
Reflecting the economics of the refining industry across Europe, the nation’s refining capacity has fallen over the past few years as the industry struggles with falling demand in the wake of recession and the resultant over-capacity. This has been compounded by growing competition from facilities in the US, Russia and Asia, although these regions themselves have had a few mixed years. Many sources in the industry are predicting that further European refinery closures can be expected by the latter part of the decade.
The refining sector saw the closure of the Petroplus-owned Coryton site in 2012 and in late 2013, an industrial dispute threatened to result in the closure of the INEOS site at Grangemouth. The start of 2014 has been equally challenging; in February, Essar Energy announced that its Stanlow refinery would see production capacity reduced by a third from October, citing ongoing losses on site.
For some years Murphy Oil has been seeking a buyer for its Murco facilities in the UK which include the Milford Haven refinery. With the latest efforts regarding a takeover having recently broken down, the future operation of the site is now in further question; particularly given the general ill health of the European refining sector.
Increasing imports with ‘mutual interdependency and common interest’
With the UK’s reliance on imports showing no signs of abating, there is the question of the source of those imports and, in particular, the role Russia plays with respect to energy matters in the UK and Continental Europe.
Building on a long standing partnership, Russia and the EU signed an agreement in March 2013 aimed at cooperation in the energy sector through to 2050. In recent years, Europe has sought to diversify away from Russian energy imports, a move that largely commenced in 2006 following the Russia-Ukraine gas supply dispute when Russian gas flows to the EU through Ukraine’s pipelines were compromised. A second dispute in early 2009 accelerated the move away.
The EU describes the relationship with Russia as one based upon ‘mutual interdependency and common interest’ with Russia being the largest oil, gas and coal exporter to Europe. In the oil industry, EU-Russia cooperation has been growing over recent years with European companies active in Russian exploration and production, while Russian companies have made increasing inroads into refining, marketing and retail.
According to the latest figures from the UK government, at 40% of total imports Russia may have been the nation’s largest single source of coal and solid fuel imports in 2012 but it was third in terms of crude oil imports with the provision of 11% of the total, behind Norway at 50% and Nigeria on 12%. The Department of Energy and Climate Change did however note that Russia ‘has generally become a more important source of imports’ of crude oil in recent years.
The effect of sanctions
While the possibility of economic sanctions and a decline or loss of Russian energy flows into Europe is – at the time of writing – a number of steps away, even the possibility of such an event gives rise to continued volatility in financial and energy markets in the short term. So far, Russia’s comments regarding a possible reduction in energy flows have focused more upon gas than oil and oil products, a fact reflective of Ukraine’s outstanding multi-billion debt to state-owned Russian company Gazprom.
The ability of both the UK and the rest of the EU, notably Germany – the largest single importer of Russian oil and gas – to diversify away from this traditional and long standing source is limited – particularly given that the influence of sanctions will have a global effect.
Sanctions against Iran in the summer of 2012 contributed towards a 10%-15% increase in the price of crude oil that was reflected in the markets for petroleum products. As well as impacting energy prices, this in turn fed through to the cost of living through the prevailing inflation rate.
Russia’s status as the largest non-OPEC oil producer – as well as the world’s largest largest oil producers in general – means that sanctions would have a noticeable effect, although the extent of this – not to mention the likelihood and form of sanctions – remain speculation at this stage.
Oil remains the most dominant source of primary energy supply in Ireland, accounting for around 60% of overall energy consumption; double that of economies such as Germany, France and the UK.
Major investment has been made at import and storage terminals; Greenergy holds its own physical oil at eight terminals, including North Tees
Greenergy is continuing to expand its role in the UK’s fuel supply chain as it pushes ahead with a major programme of infrastructure investment and develops its in-house logistics operation in Greenergy Flexigrid.
The company is already the largest of the independent wholesalers, supplying more than a quarter of the road fuel in the UK. It holds its own physical oil at eight terminals across the country, including at Thames, Teesside, Clydebank, Cardiff and Plymouth, and supplies customers from a further 16 locations – making it the country’s only national fuel supplier.
To consolidate its position in the UK market, Greenergy has made a number of major terminal investments over the last few years, including the purchase of former Petroplus refineries at Thames Oilport and at Teesside. These complement its previous investments in petrol blending facilities, new storage and distribution facilities at import terminals around the country. They also mean that Greenergy owns or part-owns the only two deep water jetty terminals in the UK.
Greenergy has also expanded its role in the delivery of fuel to company sites. The company has always been a major supplier of fuel on a delivered-in basis, but historically provided deliveries through third-party haulage companies. In order to improve control and service levels, it began insourcing these operations in 2012. Today the company employs around 250 drivers, based in 15 depots nationally and supported by operational centres at Thames and Tamworth. Tankers are either Greenergy livery, Flexigrid livery (providing a neutral service brand suitable for delivery to retail sites) as well as customers’ brands.
Andrew Owens, Greenergy chief executive explained: “Our aim is to create a low cost base without compromising on reliability and service, so we can offer the most competitive pricing for customers. To achieve that, we are continuing to make major investments in import and storage terminals in order to develop our service capability and meet the needs of our customers.
“By developing modern import terminals with deep water jetties, we can buy in large quantities from the lowest cost suppliers globally and move that low cost product to our other supply locations around the country.
“Our cost advantage also comes from a lean organisation that is highly automated. Investment in IT systems has created back-office efficiencies, minimised back office costs and provided for an error-free service for customers.”
Improving the terminal’s capability has seen customer service and efficiency optimised says engineering manager, Phillip McEvoy
Since moving to its new terminal at Stanlow in Cheshire, ESL Fuels has gone from strength to strength.
ESL has invested in modern, sophisticated facilities and systems to bring the terminal up to date. The terminal is on the former BP Castrol site which closed in March 2010 with the loss of 60 jobs
Deputy editor Liz Boardman visited engineering manager, Phillip McEvoy to find out more about the company’s plans for growth.Innovation and diversification
“Innovation powers our long-term growth and is at the heart of what we do,” said Phillip. “Established in 1999, ESL Fuels pioneered the manufacture of alternative industrial fuels long before anyone was truly aware of the impact caused by greenhouse gases and CO2 emissions. We’ve gone on to diversify, specialising in the design, manufacture and supply of a wide range of innovative fuel products.
“The move to Stanlow has opened the doors for further diversification. We’re in a key location with extensive storage and have numerous opportunities to move the business forward.”
In addition to a long-standing partnership with Certas Energy, ESL has recently further strengthened its well established collaboration with Essar Oil (UK), by linking the two facilities together. “The infrastructure for growth is in place,” said Phillip.
“We have an excellent relationship with Essar – they have a good track record of supporting local companies and are helping us to grow the business.” This is being done by moving away from the traditional customer supplier model and moving towards a solutions driven collaboration between ESL and Essar. “We see Essar as a supportive and innovative business partner.”
Colin Dixon, Essar’s head of marketing commented: “Our partnership with ESL is a great example of Essar’s commitment to delivering world class service to our customers in the reseller channel. We’re proud to have supported ESL’s growth since the early days of their business.”
ESL operates a pipeline network that runs through the Stanlow refinery to the terminal’s quayside with the Manchester Ship Canal, opening up further opportunities for the company by having the ability to import and export products by ship.A bespoke service
ESL can offer a huge range of customer offerings, from standard storage solutions to bespoke discrete toll manufacturing and blending services.
“We have 112 tanks offering at total of 50,000 cubic meters of storage, of varying capacity and function. Any tank can be heated, agitated and blended with components from any other tank on site.
“We’re committed to working with customers and providing bespoke solutions. We pride ourselves in offering a good service at a reasonable cost.”
ESL has recently been awarded a major contract on behalf of a leading biodiesel supplier. This will see ESL blend up to an additional 100 million litres per year. This contract was awarded by working closely with the operator to provide a tailored solution to their requirements.
The company, which was founded by Stephen Whittaker and now employs 30 people, is also going through a program of major capital investment. This is focused on improving the terminal’s capability so customer service and efficiency will be optimised. Investment is also being targeted in terminal infrastructure and asset integrity. “Robust asset management is at the heart of everything we do, this allows us to sustainably provide an excellent service to all customers.”
ESL has also recently invested in four new In-Control loading skids to enable a quick turnaround for fuel collection for both customers and its own tanker fleet. Now supplying up to 180 million litres of alternative fuels per year, the company uses in house transport combined with dedicated haulage contractors to deliver a first class service.
Following the recent acquisition of Countrywide’s fuels division, deputy editor Liz Boardman travelled down to Ford Fuel Oils’ Farrington head office to find out more about the family firm
Family values
From early roots in milk and coal after the Second World War to scrap metal in the early 1970s, Alan and Jack Ford founded the fuel business in 1972.Following in their footsteps, sons Adrian, Michael and Richard remain in the business whilst the family’s fourth generation – John, Teelah, David and Grayson – has also entered the business in recent years.
John Ford, now a director, joined the business at 15, working part time to gain valuable experience. Having worked in every area of the business, including two years as a full time driver, John can turn his hand to pretty much anything. “You can’t ask someone to do something that you wouldn’t do yourself,” he said.
“We have got to where we are now through family,” adds John. “Certainly we have increased in size since the Countrywide acquisition and now employ 120 people including 45 drivers, but we are still very hands on. Customers can still talk directly to a member of the Ford family. We often go to visit farmers and regularly speak to domestic customers over the phone. Equally we know all of our employees well and regularly talk to our drivers. That’s what sets us apart and ultimately accounts for our success. We like to think that we do things differently here – and better!”
A good fit
Although the company has tentatively dabbled in the acquisitions market in the past – mostly buying one man bands for access to their customer bases – the decision to acquire Countrywide’s fuels division in October 2013 was not one that the directors took lightly, as John explained: “We agonised over the decision but ultimately it looked right. It was a good opportunity and one which fits well with our business – not least geographically.
“We have strong family ethics and in many ways still view ourselves as a small, independent distributor. We’ve not lost touch with our roots and don’t want to be seen as a big corporate machine now we have a sizable acquisition under our belt. We don’t want to introduce high margins or have phones ringing off the hook – it would be a bad reflection on both the business and the acquisition itself.”
Now rebranded as Countrywide Oils – part of the family driven solution/part of the Ford Fuels Oils Group (the company’s two strap lines) the new section of the business will eventually come under the Ford banner with a dedicated website in the pipeline.
As far as further acquisitions go, Ford Fuel Oils is not currently in the market, as John pointed out. “We’ve already taken on a big acquisition and that’s enough for the foreseeable future. We don’t want to chase growth and put at risk what has taken years to build. We need a solid period of consolidation and we also need to take the time to build Countrywide Oils back up to where it used to be.” Nor is the company up for sale: “There have been a number of big distributor acquisitions recently but we are most definitely not for sale,” added John.
Supply solutions
With existing Ford depots in Farrington Gurney, Westerleigh, Stalbridge, Membury, Theale, Bow and North Petherton and newly added Countrywide Oils depots in Defford, Finmere, Presteigne and Weston Super Mare, the company has a good presence across the south of England with a significant stronghold in the south west.
Supplying in excess of 150 million litres of fuel each year, mostly to agricultural and domestic customers, the company also has a sizeable commercial customer base and services a number of local quarries. “The domestic and agricultural sectors remain by far our biggest markets. We are an old fashioned distributor – it’s what the business was built on,” John told Fuel Oil News. “However we are fortunate that we aren’t reliant on one sector. We haven’t really had a winter so far but have been able to pick up work in other markets.”
The company also supplies four million litres of Total, Petronas and its own brand lubricants – Lubricants Direct – per year. “Lubricants bring opportunities for fuel and vice versa,” said John. “We have our own bottling plant and can label containers with our customers’ logos, which is quite unusual for a distributor. It also gives us a good level of flexibility.”
Fuel cards is another albeit small arm to the business. “We supply approximately 15 million litres of fuel this way each year, explained John.” It’s a relatively small part of our business but one that’s convenient for our customers. If customers want to use fuels cards then we can supply them, although we are very wary credit-wise”
With a fleet of 43 tankers and another three on order from RTN Lakeland, Ford Fuel Oils moved up six places from 16th to 10th on this year’s Fuel Oil News’ Top 20 UK distributors list which was published in the February issue. “We have a long-standing relationship with RTN Lakeland and buy at least three rigid tankers each year. We are a company that likes to build lasting relationships and stick with them. We consistently use Emco Wheaton’s loading solutions and have long been a customer of Fuelsoft.”
INVER CONTINUES TO GROW ITS UK BUSINESS BY EXPANDING THE SALES OFFERING FROM ITS CARDIFF TERMINAL; THE SIZE AND LOCATION OF WHICH HAS FACILITATED THE COMPANY’S GROWTH AND DIVERSIFICATION
Development projects in 2008, 2010 and 2012 have transformed the terminal from a heavy fuel oil terminal to a modern sophisticated facility supplying a full range of fuel products. The 74,000 m3 terminal now has multi-modal capability for receipt of fuel by ship, road and rail. The terminal’s automation system, 24/7 operations, and its 6 fast-pumping loading racks offer customers unparallel flexibility and efficiency.
A wider range of products
Capitalising on recently vacated storage capacity within the terminal, Inver has expanded its product offering.
The company is now selling a wide range of gas oils, kerosene, diesel, heavy fuel oil and marine fuels. Inver’s ability to purchase and store large economical cargoes, allows it to offer customers competitive pricing for these products. Sales have exceeded expectations in the first quarter; this is supported by the security of supply afforded through the import and storage of 20,000 tonnes of kerosene and low sulphur gasoil.
The company has observed the increasing product segmentation of the gas oil market: 10 ppm gasoil for non-road mobile machinery; 1000 ppm gasoil for industrial and commercial heating; and various grades of marine gasoil. Inver’s ability to import and store these various grades has allowed it to offer customers the right grade at the right price for the specific requirement.
Tony Wilson, commercial director of Inver UK since 2006, says that the expansion of Inver’s sales and product offering has been well received and welcomed by customers.
“The exit by other fuel importers in the area has reduced the security of supply and competitiveness in the market. Inver is committed to using its own terminal to maintain the supply of cost competitive product,” says Tony.
“Customers always want supply and pricing alternatives. Inver’s pricing options include contract and spot live pricing and both are proving popular. Our ability to supply ex-rack or to deliver using our fleet of dedicated road tankers is also an important optionality and service.”
Pete George – taking every opportunity to get out and meet customers
AN HONEST CONVERSATIONHeadquartered in Houston, Phillips 66 has 13,500 employees and, as of 31st December, 2013, had $50 billion worth of assets
‘On the back of a strong supply of quality products both in the wholesale markets and in the retail market as JET’, Phillips 66 continues to grow its market share here. Fuel Oil News editor, Jane Hughes asked managing director, Pete George about the business, refining and fuels and its relationship with fuel oil distributors.
Refining activity at Fawley dates back to the early 1920s when a small facility of around 12,000 barrels per day (bpd) with 600,000 metric tonnes (mt) annual distillation capacity was commissioned. The facility supplied just under 7% of the country’s then oil product requirements
A new refinery was commissioned by Esso in 1951 with a capacity of 110,000 bpd (5.5m mt/year). Subsequent additions took the total up to 330,000bpd (6m mt/year). In 2012 Esso undertook a reconfiguration of the plant, closing one of its three crude distillation units, resulting in a reduced total distillation capacity of 275,000 bpd.
Supplying 15% of the country’s requirements
As Britain’s largest refinery, Fawley now accounts for 18% of the country’s total refining capacity and supplies about 15% of oil product requirements.
The refinery’s fluid catalytic cracking unit has a capacity of 75,000 bpd, with substantial catalytic reforming capacity of around 95,000 bpd. Prior to the recent reduction in crude distillation capacity, its Nelson Complexity was reported to be 9.1. A figure of approximately 11.5 has been reported to be more representative of the current configuration, making this a high complexity refinery.
Fawley’s mile-long marine jetty – the largest independently-owned jetty facility in Europe – comprises 9 berths and handles around 2,200 ship movements and 22m mt of crude oil, oil products and chemicals per year. The facility can accommodate coasters or part laden tankers of up to 350,000 (deadweight) DWT. The refinery complex is supported by 330 storage tanks.
A chemicals plant is integrated with the refinery from which it receives feed stocks. The plant manufactures a range of products for the plastics, synthetic rubber and solvents industries, along with base oils, speciality chemicals and additives, with about 90% of its output exported.
A CHP plant was constructed in 2000 to service the refinery complex, with generating capability of 130 megawatts of electricity and 150 of heat.
Product movements
Fawley is first and foremost an inland refinery. Its supporting logistics infrastructure is configured to supply the lion’s share of its output to inland distribution terminals through its own 450-mile pipeline network.
This network takes up to 85% of Fawley’s total output, supplying over 30 million litres per day into the UK’s inland market. Around 10% of product is transported by coaster with 5% despatched by road from the Hythe road loading facility.
Testing out Euro VI – Reynolds Logistics has one Euro VI vehicle running to assess how it fits into the operation and its likely running costs
Paul Day, Turners( Soham)
“Euro VI is marginally less energy efficient, adds weight and costs more to purchase and maintain, however it has vastly reduced emissions which will reduce air pollution.
Overall it has added cost to the industry – something that it and the economy can ill afford, however that may be the price industry has to pay to get cleaner, greener trucks and better acceptance.”Andrew Reynolds, Reynolds Logistics “
At Reynolds Logistics we are running one Euro VI vehicle to assess how it will fit into the operation and the likely running costs. Initially the results were a bit mixed but following some intensive driver training the performance of the vehicle is improving.
At this time we would be reluctant to say that it will be a positive step towards energy efficiency, but we are hopeful it will not end up being a backwards step in relation to the latest generation Euro V vehicles.”Mark Nolan, Nolan Oils
“I see the introduction of Euro VI as a positive step towards our emissions program for the environment, but I think the government should be helping the transport industry to cover the extra costs involved.
All engines will use AdBlue so there is an additional cost if you are replacing an older vehicle. There are issues with the ADR Safe Loading Pass and the Regeneration Exhaust System when on the loading bay at terminals, which I understand are being addressed but the main cost is the purchase of the new engine which is approximately £7-£8k more expensive!
If the government want to meet these emission levels they should help fund the initiatives with financial support for the operator.”Jonny Morrow, Morrow Tanker Services
“The onset of Euro VI has been a huge talking point amongst prospective customers.
We’ve had an end of year rush of Euro V orders and have even stocked some pre-registered chassis’ having received feedback that Euro VI may be troublesome and expensive in early models.
We see a couple of problems with Euro VI – the first being the increased size of the exhaust/catalytic converter which leaves the clearing of the nearside virtually impossible. This in turn makes the fitting of bottom loading and metering equipment etc into the available space more troublesome, especially in shorter wheelbase rigid mini and midi tankers.
The second issue is the high temperatures that the exhaust will reach in the EGR (exhaust gas recirculation) cycle. This may become a problem when carrying petroleum products and may even be an issue with oil terminal safety and SLPs. “
Keen to grow in the fuel distribution sector, managing director Steve Spelman says MHT has products for everyone right down to the smallest depot
Keen to find out more about MHT Technology, the terminal automation and tank gauging solutions specialist, deputy editor Liz Boardman travelled to the company’s base in Melsonby near Richmond to meet managing director Steve Spelman and product manager Judith Brown
2014 is a big year for the company as it celebrates 20 years in business. From just five members of staff in 1994, the company has grown almost five fold and now employs 24 people, including Steve who joined the company in June 2013. “MHT has built up a strong team with many loyal and committed staff,” said Steve. “There’s a huge amount of knowledge and experience here and we’re in a strong position to continue the growth of the company.”
In September 2013 the company became a wholly owned subsidiary of Endress+Hauser. “It’s a win-win situation for us,” explained Steve. “Although we have the backing of a large, well known company and access to international markets, we are still MHT. We have retained the brand – the company name and logo remains unchanged and we maintain our independence within the market place when it comes to recommending gauges and instrumentation.”Scalable software
Having carved a niche as a supplier of tank and inventory management solutions which can interface to field devices from all leading manufacturers, MHT offers a range of software and hardware solutions designed to lower operating costs and improve safety.
One of the company’s first products, Visual Tank for Windows (VTW) was launched in 1994 and still remains one of its most popular. “As well as providing real time stock monitoring, the software also increases safety by reducing the need for manual dips,” explains Judith. “It enables fuel distributors to optimise deliveries and can also provide leak and theft detection. By working with all the main gauge manufacturers, we’re able to provide a complete service.”
Launched in 2011, smartTAS terminal automation software is a scalable solution which can communicate directly with a single loading skid at a typical depot or multiple gantries at larger oil terminals. “Not only does smartTAS increase security through controlled loading but it also helps to reduce costs by increasing efficiency and quickly identifying any losses incurred,“ said Judith. “By working closely with a number of loading skid manufacturers and suppliers we can offer a complete solution.
“Additionally there’s a link between the two software products, so physical stocks displayed in VTW can be compared against the transactional data in smartTAS. This means any losses can be identified and the cause investigated.”
“Whilst a typical depot would have smartTAS, VTW and an ATEX approved Field Display, which provides level, temperature and volume data for multiple tanks, our systems are completely scalable and depots may opt to have just one element rather than the full package,” added Steve.Size doesn’t matter
Although MHT’s main market is the terminals and storage sector and the company can boast an impressive client portfolio, Steve was keen to stress that it offers products which are suitable for even the smallest depot. “We have products for every market – both big and small – all of which are tailored to meet specific site and customer requirements. The fuel distribution sector is an extremely important market for us and one which we are keen to grow.”
Carrs Billington is one of MHT’s biggest fuel distribution customers. The company is benefiting from increased efficiency and cost savings following the successful rollout of a programme of depot automation solutions across eight sites (five in England and three in Scotland.)“I can remotely monitor stock 24-7 across all of our sites, either from the office or at home. This is particularly useful at our unmanned sites, giving me both visibility and peace of mind.”Robert Young, operations manager for Carrs Billington’s five English sitesAdded support
In addition to its range of products, site surveys, installation and commissioning are all part of the company’s standard service offering and are tailored on a site by site basis, as Judith explained: “We offer a free site survey as part of our pre-sales process where we can demonstrate the system and get a real understanding of the customer’s requirements.
“Following installation, our support team provides a selection of maintenance and support packages. These range from remote support whereby we set up a remote login and can be on hand to support customers within office hours, to complete 24/7 support for some of our bigger customers. We have a helpdesk which is manned during office hours and out of hours there is always an engineer on call.”
The company also offers face to face training and e-learning, both of which are proving popular with customers.An exciting new development
Ensuring continuity of software systems is an essential requirement for most of MHT’s customers. With this in mind, the company has just launched a redundant solution for its smartTAS software, which enables a vehicle to load without interruption, even if the primary server has a hardware or software failure. In this instance a secondary server would automatically take over in a matter of seconds.
“This gives our customers ultimate piece of mind and eradicates costly downtime,” said Steve. “It also means that routine IT maintenance can be done in office hours – again passing a cost saving onto our customers. With customers throughout the UK and across the world already using our redundancy offering for VTW and LMS (our LNG management system), we’re pleased to complete our portfolio with the new redundancy offering for smartTAS.”
With more than 200 million Americans in the icy grip of a polar vortex, FON spoke to US fuel distributors Loud Fuel and Porco Energy to find out how they were coping.
Well seasoned
Working in and around the Cape Cod area of Massachusetts, Loud Fuel’s managing director, Kabraul Tasha said that the company was finding it tough: “Cold weather is tough on the fuel in the trucks – trying to keep them running is difficult and, with the ice and snow staying around for longer, driving conditions are slowing down output.
“We were prepared for the last cold spell – I was way ahead on degree days with my autos, so it’s a little more comfortable not worrying about autos on the brink of running out. The best thing I have on my side is seasoned people both in the office and out in the field.” www.loudfuel.com
Crunch time
Porco Energy, based at Marlboro, New York may not have had the snow that others have experienced, yet demand for product has increased by 10%. Porco Energy, which has 10,000 customers and covers a 40-mile radius from two different locations, delivers kerosene, fuel oil and propane.
“We’re normally busy at this time of year but when it gets really cold like this it’s crunch time,” said owner Joe Porco. “The extreme cold weather has put added pressure on us with increased deliveries and we do need to carry methyl alcohol in case we get frozen on a tank and fuel oil additive to stop gelling. Plus, due to several factors there’ve also been supply disruptions.
“In the north east our main propane supply is from the Teppco pipeline. Two pipelines start at Mont Belvieu, Texas to Todd Hunter, Ohio, with one continuing to Selkirk, NY from where we get most of our supply. This year Teppco has decided to reverse the flow of one line from Todd Hunter to Texas to export propane and shale gas. This puts an immediate strain on the amount of propane coming north.
“We supplement this with a contract for propane by rail, however, extreme cold out west and in Canada has at times affected pumps, compressors and valves, delaying delivery. Of course, all this supply and demand has increased costs.”www.porcoenergy.com
The latest Fuel Oil News Distributor Debate took place last month on a day now referred to as Wild Wednesday. As the wind and rain began to whip up a storm, more than 80 people gathered at the Ramada Hotel in Solihull.
Our first speaker was Andrew Owens (1), co-founder of Greenergy in the early 1990s, a company which now supplies over a quarter of all the road fuels in Britain. To better support the country’s growing import demand, Greenergy has both acquired, and made significant investment in, GB terminals. With the prospect of two thirds of our diesel needing to be imported in the future, Andrew asked the pertinent question Can the UK survive without refineries?
With its Lindsey refinery, Total UK operates one of the UK’s 7 remaining refineries. Networking with a rather rain soaked David Hodge (6) of Lancashire-based Ribble Fuel Oils was Total UK commercial sales manager, Dominic Hewitt who found the day ‘very interesting.’
Phillips 66 still operates the Humber refinery, Pete George, managing director of the company’s UK & Ireland marketing, reported this Distributor Debate to have been ‘very informative’. With Pete George (3) are on his right, Janet Kettlewell of Kettlewell Fuels, one of the more recent distributors to join the Jet branded fold, and Karen McBride and Richard Billington from Certas Energy.
Instructing the audience on the impact of issues in the wider oil world was Mystic Mog the Portland cat. James Spencer’s (4) entertaining presentation was much appreciated by the audience and particularly ‘thought provoking’ for Rod Prowse of Marathon Associates.
Distributors and speakers had travelled far and wide to attend the event, among them Marcus Jones (5) from Anglesey-based TR Jones and Sandra Morris from Chester-based Wirral Fuels, pictured with Ken Taylor, OAMPS.
By 2015 it is possible that oil heating could be eradicated – OFTEC director general, Jeremy Hawksley (2) made a plea for distributors to get behind the Oilsave campaign, a joint initiative with the FPS. FPS president Mark Nolan (7) of Nolan Oils, seen among many familiar faces, was spurred on by Jeremy’s call to fight for oil heating and is actively promoting the campaign in the distributor community.
Julia Mansfield of Fuel Additive Science Technologies provided a highly informative insight into kerosene supply and quality. Taking a look at the impact of the imminent launch of the Renewable Heat Incentive, Paul Stephen, editor of Renewable Energy Installer, explained the challenges and the possibilities for oil heating. Endeavouring to give a business a more competitive edge, Fuelsoft’s David Kingsman and Kan’to’s, Dimitri Papaioannou discussed the benefits of customer relationship management software and enhanced real time tank telemetry respectively.
To help better prepare for future events, Fuel Oil News welcomes feedback from those who attended to jane@fueloilnews.co.uk.
Donall O’Connor, Value Oils
“As Northern Irish oil distributors, we are part of a saturated supply market where consistent pressure on margins exists for all but a few high demand months o the year.
Buying groups typically thrive where distributor numbers and supply options are low and where healthy margins are traditionally achieved – Northern Ireland is no longer such a place – even in periods of decent demand, the number of distributors far outstrips demand.
In Northern Ireland many small distributors work off margins which barely cover variable costs for most of the year. A quick check on the Northern Ireland/UK price checker websites will verify that Platts-plus with a pathetic margin of 3ppl is not uncommon on 500 litres. Nowhere else in the UK mainland would such margins be tolerated by any worthy distributor.
Buying groups, propped up with local government and council financial support, are not really a welcome addition to the current melting pot. The NIHE, which has a switch them to gas policy, has deemed fit to select the oil distributor trade for special attention. Where is the government support for gas, electricity, meat, milk and bread buying clubs?
Oil buying clubs will continue to pop up, come and go and remain in existence across Northern Ireland. But, when government and local council funding runs out, the effort will ease for the simple reason that there’s not a decent margin to work with in the first place. In the long term buying groups will lead to more damage in an already fragile and fragmented market. Whilst I do not agree with the NIHE view on more oil buying clubs, there will inevitably be more – batten down the hatches!”
For further comment see the Value Oils blog – www.valueoils.com/blog/home-heating/heating-oil-buying-groups-2/
Joe Bradley, Bradley Fuels
“I don’t understand how any supplier could make any money from oil buying groups. I did it once and it was a waste of time and money. I just about covered my costs but some guy from 30 miles away saw fit to undercut me – never again!!”
David Blevings, Northern Ireland Oil Federation (NIOF)
“Oil buying clubs have their place – assuming they’re set up correctly, members have realistic expectations of savings and delivery addresses are centred around a local village or cluster of homes that offers logistical savings to the distributor.
“We need to be careful that consumers are given the correct information: the leaflet prepared by the NIHE is both supportive and informative. Prior to this guidance document many oil clubs made savings comparisons based on the cost of heating oil supplied in 20 litre drums – which included the cost of the drum – something in the region of £1 per litre!
“Rather than join a club many consumers are now filling drums they’ve acquired over the last few years at kerosene pumps at their local petrol station. This is big business in Northern Ireland and is now seen by many oil users as a viable ‘budgeting’ method.
“NIOF is concerned at the growth of the drum business as there are clear health & safety issues when carrying drums of flammable liquid in cars and, the potential for environmental contamination from drips/spillages. Small oil drums should be for emergency use only.
“While we accept that clubs do have a role to play by offering savings to clients buying small drops, we’re convinced that the future for oil consumers is a viable payment plan or Pay as you Go system similar to that for gas and electricity.
“We’re not against oil clubs per se, but think consumers should be given the correct information on actual savings. As a responsible industry NIOF members already offer numerous products to assist consumers to budget for their annual fuel requirements.”
Working in ‘a highly competitive market’ DHL keeps deliveries on track for Morrisons with 56 new Scania Euro V tractor units
Morrisons has strengthened its relationship with DHL, extending its national fuel distribution agreement for a further six years.
In the new contract DHL retains responsibility for the scheduling and delivery of fuel from its fuel planning centre in Whitwood, West Yorkshire to Morrisons’ network of 335 forecourts and regional distribution centres across the UK.
Speaking to Fuel Oil News’ Liz Boardman, Stuart Carlyon, DHL’s vice president fuels and chemicals explained: “Morrisons’ decision to renew the contract demonstrates its confidence in our partnership and the closeness of our relationship. We see ourselves as one big team and work hard to ensure that customers get the supply chain they deserve.”
BP, Esso and Shell were supplying approximately 70% of the UK’s total requirements at the end of the 80s. Of the three only Esso now has a refinery presence in the UK – Fawley pictured here. Major reassessment of the market since 1980 has led to the three companies closing six of their UK refineries.
Since the late 80s, the UK oil market has seen a gradual shift away from domination by the oil majors and mini majors.
Phillips 66 has awarded a new contract to Wincanton for the delivery of over a billion litres of petroleum products per year.
Operating from Immingham, Kingsbury and Stockton, a team of 100 Wincanton operational staff will deliver more than a billion litres of fuel and LPG per year to retail forecourts and other commercial premises across the Midlands and north east England.
The announcement, which comes off the back of an excellent safety record, including an Energy Institute Award for Safety, is significant as it will take the two companies’ working relationship to the 15-year mark.
“The very nature of the industry in which Phillips 66 operates means safety has to be of paramount importance,” said Eric Born, Wincanton CEO. “We’ve worked hard at this aspect of the partnership, underlined by our Energy Institute Award for Safety.
READ THE PHILLIPS 66 INTERVIEW IN THE APRIL ISSUE OF FUEL OIL NEWS
www.wincanton.co.uk
www.phillips66.co.uk
UK Fuels has relaunched its Fleetone fuel card following the signing of a new deal with JET.
Under the new deal Fleetone has been adopted as the national fuel card offering for JET’s UK network of 300 plus dealers. Fleetone fuel card holders will also benefit from access to UK Fuels specialist fleet card services, including its Velocity online management tool and its e-route journey planner
Velocity is offered as standard to UK Fuels customers and provides fleet managers with complete control of fuel spend with the ability to monitor the fuel usage of individual drivers as well as the entire fleet. Online reporting removes the need for drivers to retain all fuel receipts whilst the e-Route journey planner software can deliver long-term cost savings by helping drivers find convenient refuelling stations and therefore avoid route deviation.
“Whether for a fleet of one or 100, the Fleetone fuel card is the ideal way to track fuel spend and take steps to reduce it,” explained Tony Garner, UK Fuels director. “With its extensive nationwide acceptance, the time and fuel often wasted by drivers searching for a suitable filling station is significantly reduced.
“This is critical when you consider the UK has the third highest diesel prices in Europe. At UK Fuels we aim to make fleet management as simple as possible, which is why we provide a flexible solution where our customers aren’t tied into a contract. It’s also why we conveniently collect payment by direct debit and send invoices by email.
“Our fuel cards can be tailored to a specific vehicle, fleet number and driver, with restrictions placed on what can be purchased on the card. This reduces company driver fraud as well as helping to prevent theft when a fuel card is stolen. “
The card is already accepted at over 2,700 multi-branded fuel stations nationwide, including Texaco, JET, Morrisons and Tesco.
www.ukfuels.co.uk
From May 2014, Norbert Dentressangle will provide ‘continuous, intensive and dynamic fuel operations’ for Harvest Energy
In a new three-year contract, Harvest Energy has appointed Norbert Dentressangle to distribute road fuels to commercial and retail outlets across the UK.
Central to the appointment is Norbert Dentressangle’s proven capability in managing continuous, intensive and dynamic fuel delivery operations on a UK wide basis, which can include handling volume swings in excess of +20% week-on-week.
“During the exhaustive review of the provision of our road fuels distribution, Norbert Dentressangle consistently challenged the norm,” said Simon Davis, Harvest Energy’s head of sales and logistics. “The company came up with innovative solutions to improve our supply chain service and deliver cost efficiencies.”
The new service agreement which commences on 5th May, will involve a core resource of dedicated vehicles. The operation will be managed by a team based at Norbert Dentressangle’s Thurrock site, and will be supported by the company’s Flexi Fuel Fleet regional management network and central functional specialists.
All vehicles will operate with an integrated state of the art tracking and driving style management system, which incorporates an automated reporting function to manage fuel efficiency and safe driving.
Ann Dawson, managing director, Norbert Dentressangle Tankers, added: “As a major logistics business already delivering a significant amount of UK motor fuel sales, we’re delighted to add Harvest Energy, which is experiencing rapid year-on-year market growth, to our expanding customer portfolio within this industry sector.”www.harvestenergy.co.ukwww.norbert-dentressangle.co.u