Singapore digs deep to be petro hub

One hundred and thirty metres below the sea bed of Singapore lies a most unusual construction site.

Hundred of workers are carving out a series of enormous caverns in hard rock. The work is laborious, expensive and will take years to complete, but eventually they hope to create a space large enough to store the equivalent of nine million barrels of oil.

Why? Because Singapore, all 700 sq km of it, is running out of room. The company behind the project, state-run Jurong Town Corporation, wants to provide a secure storage site for companies that will pay them for using the space.

Chief executive Manohar Khiatani explains the rationale behind the project.

“Singapore is a small country, so we have to continuously think of ways on how we can optimise land use,” he says.

“In order to cater for the future growth of the petrochemical industry, we needed to create more space for storage and that’s why we decided to construct these caverns underground.

“Something like this does not make sense for everybody. It makes sense for us because land is a scarce and hence a very valuable resource in Singapore.”

Mr Khiatani points out that were a similar facility to be built on the surface “it would take up about 70 hectares of land”.

“By going underground, we can save around 60 hectares of land, which is about the size of 70 football fields, and that space can be used for other activities that cannot go underground.”

‘Very deep’

The project, dubbed the Jurong Rock Caverns, is costing them about $740m (£450m). It is currently in its first phase of construction and is due for completion in 2014.

Five caverns are being dug out under the seabed of Banyan Basin, off Jurong island, a series of mostly-reclaimed islands that house most of Singapore’s petrochemical industry.

Some 90 companies from the industry have facilities there, including multinational firms such as Shell and Exxon Mobil.

According to Mr Khiatani, the caverns will cater mainly for companies already producing on Jurong island and their long-term storage needs. However, he acknowledges that the project has its own “share of challenges”.

“Operating caverns is different from operating on land, so we will have to learn along the way as the caverns are implemented,” says Mr Khiatani.

“What we have to contend with is the fact that we’re going very deep, over 100m below ground level, the kind of rock that we have here is different, so we have had to manage that. We are trying to work on and improve the processes.”

New technologies

These “processes” involve drilling and blasting each rock cavern with explosives and then lining it in cement, using a high-pressure spray.

New technologies are also being used to prevent potential accidents, such as oil seeping through the rock. Part of this involves the use of a “water curtain” – water-filled tunnels and boreholes that will surround the cavern from the outside – in order to keep it sealed through hydrostatic pressure.

So arduous is the work that construction had to be stopped while the BBC crew filmed and interviewed Mr Khiatani in one of the half-completed caverns.

The cost and scale of the project shows the lengths that Singapore will go to in order to keep up its role as a regional hub for the petrochemical industry.

The nation, the smallest in South East Asia, has no natural resources, but has invested heavily over the decades in creating a refining hub that now processes much of the oil from the region.

Carving niche

According to Julian Ho from the Economic Development Board, the government entity responsible for attracting multinational firms to the city state, Singapore recognises its space and resource “constraints”, which is why it has had to provide the right conditions to become Asia’s largest export refining centre.

“If you look at companies like Exxon Mobil and Shell, where they have their largest refining downstream and chemical footprint in Asia Pacific in Singapore, I think it reflects a couple of things,” he says.

“They have 100% control of their assets, which are very valuable. They have an environment that is stable and certain in terms of how they will operate.

“And thirdly, this is a high-technology complex industry, and when you have that industry here, you really need manpower capabilities to allow them to operate these facilities efficiently.”

Singapore’s petrochemical industry is now estimated to be worth about $50bn to $65bn (£30bn-£40bn) annually and contributes significantly to the economy, which grew at a slower pace in the last quarter from the previous year.

It accounts for nearly a third of Singapore’s total trade in terms of both exports and imports, which is why a project like the Jurong Rock Caverns, despite its unusualness, comes as no surprise.

It shows how determined the small country is to carve out a big niche in the industry.

By Sharanjit Leyl BBC
Asia Business Report, Singapore
Singapore digs deep to be petro hub

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