ethanol fuels tank concerns

New oxygenates could cause clogged filters, phase separation without proper preparation.

Ethanol may be good for the environment and it may reduce U.S dependence on foreign oil, but it’s murder on underground storage tanks.

With ethanol-blended fuel on its way to gas stations and convenience stores across the country, petroleum marketers are beginning to realize that tanks must be in suitable condition prior to the changeover or they could face a variety of costly problems. Yet many are unaware of the potential dangers.

Regulatory and industry standards require that storage tanks receiving new ethanol-blended fuels be free of all water, debris and accumulated sodium salts. These standards exist for good reason, experts say. The presence of these constituents in ethanol-based fuel poses serious consequences for retailers and their customers—they are simply not compatible with ethanol.

“Retailers would be making a mistake to simply rely upon their automatic tank gauge or dipstick to tell them that they don’t have water in their tank and then proceed with the addition of ethanolblended fuel,” said Allen Porter, president of Tanknology, anAustin, Texas-based firm specializing in the testing and monitoring of underground storage tanks (UST). “Those tools are simply not reliable when it comes to ensuring that there is no water in the tank, a condition that is required for the introduction of ethanol. In our experience, more than half the time, uneven tanks result in water collecting in an area of the tank that is not detected by the tank gauge.”

Understanding Supply
The two most commonly available ethanol blends are:

  • E-85: 85% ethanol, 15% gasoline
  • E-10: 10% ethanol, 90% gasoline

Of the two, E-85 is less common and can be used only invehicles specifically designed for it. These vehicles are commonlyreferred to as Flexible Fuel Vehicles or FFVs. E-10, meanwhile,performs similarly to unblended gasoline, as well as gasolineformerly blended with MTBE. E-10 is approved for use in all vehiclessold in the U.S. In fact, due to its clean-burning characteristics—which improves performance in many key categories—many automakers actually recommend it. As such, most ethanolblended fuel conversions occurring across the country are to E-10.

While the federal mandate for ethanolblended fuel is being phased in across the country, markets, such as Houston, Dallas and the Mid-Atlantic, are already receiving ethanol blends. The issue with the introduction of ethanol blends into existing storage tanks is the chemical nature of ethanol itself. When water mixes with ethanol-blended gasoline, the fuel will emulsify, creating a series of fuel system problems ranging from clogged filters to damaging car engines.

“Every underground storage tank has a certain degree of water, sludge and sediment in it. This is typically not a problem because the sludge settles below the pump inlet,” said John Eichberger, vice president of government relations for NACS. “However, ethanol will clean the sediment off the tank sides and mix the sludge in with the gasoline.”

In this scenario, the potential danger includes phase-separation, caused when ethanol absorbs too much water. Since water and ethanol are homogenous, too much water throws off the balance. It eventually will saturate the gasoline causing the water and ethanol to separate. The water will descend to the bottom of the tank, while the ethanol rises.

“When this happens, pumps are essentially dispensing gasoline without an oxygenate-[ethanol], and this will clog filters and damage vehicles,” Porter said. “Our experience to-date indicates that more than 50% of the tanks we inspect require some level of preparation services before ethanol-blended fuel can be introduced.”

Tank servicing runs anywhere from$500 to $1,000 per tank depending onthe amount of water, debris and wastethat is generated per tank, Porter said.Debris is removed in drums and has to bedisposed of as hazardous material. Ittakes about two hours per tank to clean.

On the preventative side, Tanknology estimates it serviced more than 2,200 locations in the past eight weeks.

While this sounds expensive for a store with four or five tanks, phase-separation is much more costly. It causes downtime for the fuel business because the tank has to be taken out of service and cleaned and the contaminated product has to be removed and reformulated, not to mention the cost of fixing damaged cars and bad publicity.

“For high-volume fuel marketers, the cost incurred is considered the price of doing business,” Porter said. “The big question is what is going to happen to mom-and-pop operators that have already made costly investments in tank remediations and now have to invest thousands more to convert to ethanol.”

Caught Short
The capricious nature of E-10 is also directly related to supply shortages andhigh fuel prices in several markets during ethanol conversions, Eichberger said.

First of all, ethanol-oxygenated gasoline is typically not transported in pipelines, which frequently contain water. Instead, the ethanol is generally added to tanker trucks at the terminal, immediately before delivery.

“Supply outages were not only experienced at retail, but at wholesale storage tanks as well,” Eichberger said. “Tanks at both levels had to be drained for cleaning and drying.”

With demand exceeding availability, prices will remain high. The increase in spot-market ethanol prices over the past year has far outpaced the increase in prices for reformulated gasoline suitable for ethanol blending. Testifying before the House Energy and Commerce Committee in June, NACS Vice Chair of Government Relations Sonja Hubbard, CEO of E-Z Mart Stores Inc. in Texarkana, Texas, said the price differential between the reformulated gasoline market of Dallas/Fort Worth and the surrounding conventional gasoline markets has been as high as 40 cents per gallon.

This has resulted in consumers fueling with lower-priced gasoline at her stations located outside the Dallas/Fort Worth market with such increased frequency that gallons sold at some locations are up 35% compared to year prior. She further explained that part of the reason prices are so high in Dallas is because of the market’s reliance on ethanol, which is trading at extremely elevated prices and must be shipped via truck from the Midwest.

“Ethanol currently is trading at over $3.75 per gallon on the spot market— double its price last year,” she said. “There can be no clearer indication that there is not enough ethanol to meet current demand.”

Despite the shortages, President Bush’s energy bill call for an increased commitment to ethanol.

“Ethanol is clearly going to be mandatedin many markets over the next few years,” Porter said. “If you think this is another passing trend, you will get caught off guard.”


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