RISING energy costs are literally sucking away the profits at some tank cleaning racks. It's a problem that seems likely to intensify through the rest of 2007, according to the latest natural gas price report from the Department of Energy.
At the New York Mercantile Exchange, prices for natural gas futures contracts for the next 12 months have increased across the board. Overall futures prices for the 12-month strip (April 2007-March 2008) are in the range of $8.31 per million Btu.
Natural gas prices matter because most wash racks use the fuel to heat water and provide steam for tank cleaning. In fact, natural gas accounts for most of the energy cost incurred by a wash rack. By some accounts, energy costs rank second only to labor costs at most wash racks in the United States.
Good energy management is a must in today's operating environment. DOE Energy Savings Assessments (ESAs) performed on 200 of the largest industrial facilities in the United States give a good indication on how much money can be saved with good energy management.
The ESAs found opportunities for energy savings that could reach $500 million per year and could reduce carbon dioxide emissions by 3.3 million metric tons per year, according to DOE. The ESAs analyzed pumps, fans, compressed air systems, and heating systems. Identified savings at each plant typically were between 5% and 15% of a plant's total energy use.
Energy cost reductions for the US tank cleaning industry probably wouldn't come anywhere close to $500 million, but there is still plenty of money to be saved through improved energy efficiency. Some of the steps being taken by wash racks to boost energy efficiency are highlighted in this issue of Bulk Transporter.
For instance, Bob Young added an oil-fired heater to generate hot water at Lafayette Sani-Wash in Lafayette, Indiana. He fuels the heater with soybean oil removed from tank trailers prior to cleaning. Young was prompted to purchase the oil-fired heater after the wash rack's monthly natural gas bill soared to $16,000 from $6,000.
QualaWash went after better energy efficiency as part of an $8-million upgrade program for its wash rack network. Key locations in the QualaWash system were targeted for the upgrades, which also addressed heel control and environmental protection enhancements.
Boiler guru Ralph Nappi of Niagara National Corp says the boiler is the heart of a tank cleaning operation and often is the biggest energy user at a wash rack. Unfortunately, many boilers don't get the attention they need.
Boilers must be considered in the overall context of energy savings at wash racks, starting with initial selection. The boiler must be sized to the wash rack. There is no one-size-fits-all boiler for the tank cleaning industry, according to Nappi.
Multi-fuel boilers are a good option in today's operating environment. The boiler should be a high-efficiency model, and Nappi strongly recommends four-pass boilers. The boiler room should be outfitted with a water treatment system, water pre-heating capability, and a water softener.
The next step in boiler efficiency is to make sure that the unit has the right amount of insulation. In addition it must be properly cleaned and inspected on a regular schedule.
Getting it right with the boiler and with energy efficiency can have a big impact on the success of a tank cleaning operation. Failure to adequately address these factors will send profitability right up the smokestack.