Petroleum marketers tend to be conservative. While some live on the cutting edge — and others make changes only as a last resort — the broad middle is occupied by marketers who wait for new technologies and business strategies to prove themselves.
Take the example of vapor recovery. Fuel marketers in areas where Stage II is required have taken the necessary steps to comply. But the situation continues to change. The number of vehicles equipped with on-board refueling vapor recovery (ORVR) is growing, which increases the chance that as more vapors are captured by ORVR canisters, the Stage II system will instead suck air into underground fuel storage tanks.
Because the resulting pressurization can cause vapors to vent into the environment, state regulators are weighing new rules that would require Stage II equipment to be compatible with ORVR. At the same time, those venting vapors represent lost product, which, at retail prices fast approaching $4 per gallon, can amount to substantial lost revenues.
Manufacturers suggest Stage II technology compatible with ORVR has reached the point where even conservative marketers might ask: Should I consider installing compatible Stage II equipment before state regulators mandate its use? If so, can the investment be justified on product savings alone?
One marketer who is asking such questions is Tim Hurlocker, director of gasoline operations for Costco. Based in based in Issaquah, Wash., the hypermarketer offers fuel at 290 retail locations. “Sometimes I feel like all I do is keep up with regulations,” he commented. With sites in multiple West Coast states, “We let the California requirements be the leading edge in vapor recovery, and then see what technologies we can use elsewhere. What makes sense? Which markets can support what equipment?”
To date, Costco has retrofitted storage tanks at 23 of its Texas locations with equipment designed to stop the venting of volatile organic compounds (VOCs) and resulting product loss. Made by ARID Technologies of Wheaton, Ill., the company’s Permeator® technology can “help prevent loss rates that, typically, are about two gallons of liquid gasoline for every 1,000 gallons of fuel dispensed,” explained Ted Tiberi, president of ARID. “For busy stations, that loss could equate to 1,000 gallons of liquid fuel per month.”
Texas fuel marketers such as Costco were required last year to make their Stage II vapor recovery systems compatible with ORVR. Yet manufacturers believe that rising gasoline prices are making the choice to “go compatible” an economic decision as well as a compliance issue.
“We tell marketers to expect product savings in the range of 0.25 percent, though I’ve heard others use figures as high as 0.6 percent,” said Brandon Grote, product manager for dispensing systems at Cincinnati-based OPW Fueling Components. Even at the lower figure, the company’s Vaporsaver™ equipment “yields enough savings to justify the cost and pay for itself in a year.”
“Figures on product savings are comparing locations with no Stage II vapor recovery system to sites that have compatible Stage II equipment,” said Jay Walsh, marketing vice president at Franklin Fueling Systems, based in Madison, Wis. But that being said, the estimated savings from his company’s Healy brand Clean Air Separator are at 0.15 to 0.25 percent of liquefied product. “That’s up to 250 gallons for every 100,000 gallons of fuel you dispense.”
Kent Reid, vice president of strategic development at Veeder-Root in Simsbury, Conn., advises marketers to expect product losses of about 0.1 to 0.15 percent unless a solution is installed. The company’s Enhanced Vapor Recovery (EVR) and In-Station Diagnostics (ISD) system, certified by the California Air Resources Board (CARB), is designed to prevent gasoline vapors from escaping into the atmosphere.
“The average station pumps 1.3 million gallons of fuel per year,” Reid said, “which means the potential for venting 10 tons of hydrocarbons into the air each year and losing 3,000 gallons of product. So with gas prices increasing, the need for vapor recovery is increasing.”
Pinpointing the Problem
Spreading that message is a constant concern for Mike Heffernan, vice president of ARID Technologies. To date the manufacturer has installed Permeator® equipment at some 300 locations nationwide. “A lot of what we’ve been doing is educating potential customers,” he said. “Many customers are unaware of how much product they’re losing.”
When air is returned into the vapor space of an underground storage tank, the hydrocarbon concentration can fall below the naturally-occurring equilibrium level. To reestablish equilibrium, liquid gasoline begins to evaporate. “The expansion of liquid-phase gasoline to vapor-phase gasoline is very large,” Heffernan said. “A single gallon of liquid gasoline forms 520 gallons of vapor-phase gasoline at typical equilibrium concentration levels.”
As the liquid evaporates, the vapor volume and pressure build in the tank, eventually causing pressure relief valves to open. “Some of those can even be heard chattering, like a boiling tea kettle,” said Tiberi. Open valves then release concentrated hydrocarbon, causing lost product for the marketer as vapors vent directly into the atmosphere.
“There are about four or five things, from altitude to the fuel’s vapor pressure, that play a role in the amount of evaporation and product loss you can experience,” said Heffernan. “And in addition, storage tanks are subjected to a constant, high back pressure. So those small breaches in the fittings, connections or underground piping can experience continuous leakage of hydrocarbon vapors. What’s particularly bad about below-grade fugitive emissions is that they will eventually condense, mix with water and ultimately cause groundwater contamination.”
What is the solution to the problem of incompatibility between ORVR and Stage II? Tiberi does not advocate decommissioning Stage II systems since “the motorist whose car is not equipped with the ORVR system would be exposed to a high concentration of hydrocarbon vapors.” But neither does he propose that ORVR be abandoned in favor of sole reliance on Stage II vapor recovery. “Without ORVR,” he said, “many states would need to mandate use of Stage II. But to retrofit the hardware and piping into existing stations, which were not pre-plumbed for this gear, would be a very expensive and intrusive proposition.”
Instead Tiberi believes the answer is to resolve the incompatibility of the two systems and allow them to operate simultaneously through “some sort of vapor processing technology that can monitor and control the storage tank pressure, as well as yield recovered product as part of its operation. And that’s the idea behind our Permeator technology.” Through product recovery, “payback occurs in one to five years, with our customers generally seeing a payback in 18 months,” said Heffernan.
At Costco, Tim Hurlocker appreciates the return on investment afforded by the ARID solution. A return “which is increasing, depending on the price of fuel,” he said. Nevertheless, Costco has “been shy about looking at it that way. It’s hard to measure exactly since there are so many variables. Gasoline is like a river flowing down there in the tank. Stored fuel just expands and contracts so much with temperature changes.”
Instead Hurlocker takes a holistic view. “If we can stop emissions, then it’s a total win-win situation,” he said. “We do what’s right for the environment and the community and also save some dollars in product. That approach is in tune with Costco’s overall philosophy. We don’t try to advertise or promote, except to our members. Our philosophy is to let our business, the value we provide, and our service and best practices do the talking.”
In addition to the product savings available with vapor recovery equipment, manufacturers suggest another reason to install the technology is peace of mind. “If rather than waiting for regulations to come out in your area,” said OPW’s Grote, “you’re proactive and install equipment that makes your Stage II system compatible with ORVR, then you’ll already be compliant when the regulations do come.”
For petroleum retailers who operate across multiple markets and states, having compatible Stage II systems in place — now — provides a chance to standardize equipment across their networks and still be confident those systems will be compliant if and when mandates for ORVR compatibility are promulgated.
“Part of that peace of mind,” Grote said, “is being able to install the compatible systems when there are enough contractors to do the work. But if you wait until it’s mandated, you run the risk of not finding an available contractor — or having to deal with inexperienced contractors who entered the business just to take advantage of all the extra work.”
Some 13,000 California service stations must comply with the state’s enhanced vapor recovery (EVR) mandates by April 1, 2009. Yet the needed equipment must still be installed at an estimated 10,000 to 11,000 locations. “That’s going to be a big problem in California,” said Grote. “If you don’t already have a contractor scheduled now, you might not be compliant by next year’s deadline.”
Reid of Veeder-Root echoes the suggestion that marketers consider taking action on vapor recovery even before it may be required. “If you’re in an area that requires Stage II but doesn’t require ORVR compatibility,” he said, “there are still some compelling benefits to being compatible, given the product savings. In fact, even if you’re in an area where Stage II isn’t required at all, you still get product savings from installing a vapor recovery system.”
Jake Brown, the California marketing manager for Veeder-Root, likewise notes that proactive fuel retailers in the Golden State “are realizing some promotional benefits by going ‘green’ and using that to create promotional opportunities.” And if “confusion surrounding the complexity of the California EVR requirements is holding you back,” he added, “manufacturers are here to help.” Veeder-Root, for example, is setting up an educational Web site that invites marketers to register for periodic updates.
At Franklin Fueling Systems, Walsh believes that “the Texas approach — of requiring Stage II systems to be ORVR compatible — is the right approach.” For one thing, the threshold of 90 percent ORVR penetration in the nation’s automobile fleet is not expected to be reached until sometime between the 2013 and 2020. “So it’s not an option for most states to simply remove any Stage II requirements they may have,” he said.
But fortunately, making a Stage II vapor recovery system ORVR-compatible “can be as simple as hanging a nozzle,” Walsh said. “Then you’ll be ready if your area decides to require ORVR compatibility. Besides, compatible Stage II systems don’t cost more than incompatible systems — and can sometimes even cost less.”
However, Walsh worries petroleum marketers’ conservative natures might still get the best of them. “There are incompatible Stage II systems all over the place, venting vapor into the environment,” he said, “and yet nobody seems to want to talk about them. But if a marketer wanted to be proactive, to get out there and talk to the public about ORVR compatibility — and to take the steps to deal with it, ahead of any regulations — then I think there would be some real possibilities for setting yourself apart from the crowd.”
Associate writer Laura Glass also contributed to this report.