Heating Oil Storage: Regulation vs. Non-Regulation

In May of 2009, I attended an oil heat symposium in Canada where one of the topics was titled ‘MIC in Domestic Oil Storage Tanks.” MIC is short for microbial influenced corrosion, and it appears to be affecting domestic oil storage tanks more frequently than in the past. It is speculated that the new ultra low sulfur diesel (ULSD) fuel, which is a cleaner burning fuel, is more prone to causing internal tank corrosion failures. On one hand, we improve the air quality, however, on the other hand we may be increasing the potential of ground contamination should a tank corrodes through and leak into the environment. The hypothesis is the removal of sulfur in the fuel is somehow allowing MIC to become more prevalent in heating oil tanks. It is theorized the higher sulfur content fuel from the past created a less attractive environment for MIC to grow. It is important to note water has to be present in the tank bottom for MIC to live and grow.

Others will argue that the higher MIC failures recently experienced are a result of the tank replacement process where MIC and other contaminants from the old tank are pumped into the new steel tank. Tiny blemishes in the new tank’s internal mill scale coating allow the corrosive material from the old tank to instantly attack this unprotected surface. The result is a premature pinhole failure on the bottom of a new steel tank without warning. (It is important to note that neither theory has been proven, but the increase tank failure trends in Ontario, Canada recently provides evidence this phenomena is worth further study.)

The MIC problem associated with ULSD is only the latest issue to plague the oil storage system, which continues to be a major concern for insurance companies and is the Achilles’ heel for the oil heat industry. For many, the answer lies with government regulations, however when we review the Canadian provinces with regulations, the anticipated reduction in incidents associated with the legislation appears elusive. This has caused some provinces to delay enforcement of existing legislation and those considering new legislation have put the proposals on the back burner. When I asked one provincial official why they hadn’t considered implementing legislation to enforce tank replacement and to insure the installers were licensed, the response was:

1.      We do not have the technical expertise in the heating oil business to legislate changes to the storage system. The oil industry is in a much better position to regulate itself.

2.      Legislation would require policing and administrative costs taxing stretched resources.

3.      Financial decisions requiring homeowners to spend money on a heating oil system has become a political issue in some regulated provinces.

4.      Other provinces with regulation are not seeing anticipated reduction in incidents.

Government Regulation Experience

Prince Edward Island, Canada (PEI) introduced legislation in June 2001 that requires all storage systems to be inspected, upgraded and registered. The regulations only allow licensed installers to install storage systems and there is a maximum lifetime put on storage tanks. They have tweaked the regulation over the years adding things like a guard over the outside valve and have extended the deadline for the inspection a few times when it was evident too many systems had not been inspected. However, as of 2008 all systems on PEI have been inspected and tagged. If they don’t have a tag on the fill pipe, they are not allowed to receive oil.

In Newfoundland, Canada, the 2002 legislation has become as elusive as a codfish. Initial legislation requiring tank inspection to be completed by trained inspectors, each requiring $2 million error and omission insurance, died a very quick death. It became apparent that no inspector could afford the annual insurance premium estimated to be in the tens of thousands of dollars, thus this requirement was quickly dropped in 2003 and now inspectors do not require insurance. The next portion of the April 2002 legislation to be relaxed was the March 2007 deadline for the initial inspection and upgrade. As soon as the deadline for inspections approaches, it becomes apparent not enough systems have been inspected, resulting in a further extension. This has happened many times, and now it appears this part of legislation will not be enforced.

Technical Standards & Safety Authority (TSSA) in Ontario has requirements similar to PEI, and it too has had to modify its deadline for inspections a number of times and has even flip-flopped on a few requirements.

Is Government Regulation the Answer?

            For years the Insurance Bureau of Canada (IBC) has called for government regulation in provinces where regulations do not exist. Obviously, this would move the burden of policing the industry from the insurance companies over to the government. However, what would be more important and convincing would be if the implementation of regulations was having the beneficial effect of reducing leaks and spills versus non-regulated provinces. Unfortunately, provinces without regulations do not keep detailed spill and leak statistics, thus it is hard to compare.

PEI Leak and Spill Results

Since the introduction of regulations only a modest reduction in incidents has been achieved and in the past two years the incident rate has been climbing. Does that mean these regulations are a failure? I would argue that they are not; however, improvements need to be done, and unfortunately, this indicates that governments don’t have all the answers. In PEI, all homes have now been inspected, upgraded and tagged. However, incidents continue to happen at a rate of 0.317 percent annually (one in every 316 homes). Keep in mind PEI has stricter reporting rules than all other provinces, thus, the spill numbers will be higher than what insurance companies or other governments will show. All spill incidents need reporting in PEI, not just those requiring a major cleanup.

PEI’s Important Contribution

The efforts by the PEI government to reduce leaks and spills by regulations may have fallen short of expectations, however, what PEI has brought to us is statistical data. No other province in Canada has taken the initiative to painstakingly gather data on failures like PEI. This is the most important contribution to solving this problem that any province has made to date.

Spill and Leak Data Holds the Key

In my previous role as a petroleum technical specialist and a maintenance engineer of an oil refinery, I have learned over the years to gather as much data as possible before proposing solutions. If you do not understand the problem, the solutions will typically not solve the issues and in some cases will make it worse. If we look at the domestic oil storage system, essentially we are dealing with different types of failures associated with a mechanical system. With PEI’s data, we can clearly see what is working and what is not. The data allows us to focus on solutions in the areas where real problems exist. Here are some very important tips:

1. Outside Storage Tanks

First, the most obvious place to start is the outside storage tank. Clearly, a single wall steel outside storage tank based on the data represents the worst possible choice for oil storage. One could argue that ULC (Canada’s equivalent to UL) should never have removed the words ‘Inside Tank for Oil Burner Fuel” off the ULC label back in 1991. At a corrosion failure rate of one in 490 installations annually, the outside steel tank represents the highest rate of failure for any oil storage related equipment. The new B139 code (Canada’s equivalent to NFPA 31) slated for 2010 addresses this issue and states outside tanks will be required to be double bottom with interstitial monitoring or non-metallic.

Ironically, the inside located storage tank (steel or other type) is the best performing piece of equipment of the oil storage system, having a failure rate of one failure in every 2,400 installations. I have yet to find sufficient data to determine acceptable life for an outside steel tank. It will depend on a number of factors. Certainly, an end tap 14 gauge tank, located outside, is a concern. Some insurance companies require replacement after 10 years. My data would suggest less time than this for this particular style tank. Keep in mind all outside tanks will have water form in the bottom from time to time unless it continuously drains. It is unavoidable due the condensation process. Those suggesting this can be removed are not being realistic because it is a known fact that condensation can be a daily event when the conditions are right. Inside tanks don’t typically suffer from condensation issues because the temperature is constant.

2. Outside Supply Line

The next most obvious choice for upgrade is the outside supply line. End or bottom outlet supply lines located outside are the second most likely place you will get a catastrophic failure leading to an environmental incident. The homeowner should be strongly advised against putting a tank outside at all times. However, if it has to go outside, I suggest installing a top outlet single line system with an anti-siphon valve and a dearator (air eliminating device). This way if the line gets cut or the valve breaks, the tank will not leak. A two-line burner supply system is not advisable because it will generate additional condensation in the outside tank. Two-line systems are banned in many countries in Europe. Bottom outlets would probably work out fine in areas where temperatures rarely get below freezing, but that is not likely in Canada. Top outlets also provide protection from vandalism.

3. Inside Storage Systems

When dealing with a storage system inside the home, the solutions to reduce incidents are not obvious. This is where the data is extremely important. As stated above, the inside storage tank is actually the best performing piece of equipment. Incident rates from overfill and piping leaks are one in 757 and 754, respectfully. Keep in mind, piping leaks include filters, connections and the line itself. When we look closer at major incidents in Table 2 (those that are not quickly detected), which in PEI are classified as spills and leaks over 5 litres, the incident rate drops to one failure in every 4,260 installations for inside tanks.

Based on this data, it doesn’t make sense to have a policy to replace an inside tank after 10 or 15 years. Just the process of replacing a tank can be disastrous. For example, incidents in Nova Scotia from installations accounted for over 5 percent of the incidents from 2002-2005. Should the homeowner decide they want the replacement tank outdoors, they have just created more risk of a major spill for themselves or their insurance company by a factor of three times versus the old inside storage system. It is far better to keep the tank indoors for 25 years provided the tank, filter and burner connections are equipped with a leak containment tray and alarm system. This system can be added at anytime and protects the home from corrosion, connection and overfill leaks.

Leak Detection for Inside Storage Systems

Leak detection is simple to install. Essentially the tank, filter and burner areas are protected with specially designed oil resistant containment trays, embossed to insure any leaked heating oil is quickly channeled to an audible alarm. Like a smoke detector, the alarm will sound when oil is present. The alarms are either battery or wired into a security system. The oil line connecting the tank to the burner is typically sleeved (double walled) ending over either containment tray. Most oil systems have this double wall protection already (orange plastic coated line). The cost of installing a leak detection system is only 1/10 of the cost of a tank replacement, thus, it provides a higher risk reduction return on investment. With leak detection the frequency of failure will be reduced considerably, estimated to be one incident in 8,000 annually, which is 24 times better then the current system performance. Keep in mind leak detection systems are not available for outside tanks. The environmental conditions prevent its use outdoors.

Fire departments have endorsed the use of leak detection systems because it reduces the risk leaked heating oil will migrate under the heat source and flash causing a house fire.

Regulation, B139 Installation Code or Insurance Financial Incentives

It is evident from the data presented government regulations associated with home oil storage are having mixed results. Governments run the risk of homeowner apathy if they fail to get the regulation right. From my experience, homeowners are reluctant to spend money on an oil storage system after it has been inspected and tagged for another 15 years, despite the fact the initial regulation lacked sufficient data. Changes to regulations are not easy to implement and the political delays and fallout are always a consideration.

From my perspective, I would suggest the Canadian CSA B139 Code should be more responsive to the environmental issues associated with the oil heat system. This is the technical manual for installations of oil burning equipment. These incidents tend to be corrosion or mechanical technical related failures. Like the NFPA 31 code (the U.S. National Fire Prevention Association Oil Burning Equipment Installation Code), these codes were initially designed to protect the homeowners from fires. Homeowners can benefit from knowing what is intumescent paint. Environmental issues seemed to have evolved and now have become as important, but there seems to be a gap in the mandate of these codes to address environmental issues.  Unfortunately, changes to codes take a long time (typically every five years), thus can the insurance industry stand by patiently and wait?

It has been proven that insurance driven financial incentives have been the motivating factor behind many home-related improvements. Where the underwriting risk is left, with the insurance company, would it not make sense to suggest changes homeowners can make to reduce risk with a discount approach? This would be much more dynamic and responsive to current issues and equipment improvements than the route via codes and/or regulations. Fortunately, we now have valuable data that can guide these risk reduction discount programs. Based on my analysis, the oil storage system can move to safer ground. The data suggests all current incidents can be reduced by 95 percent if suggestions above are considered.  

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button