STORAGE OF OIL ABOVE GROUND OR UNDERGROUND: REGULATIONS, COSTS, AND RISKS

Abstract

ABSTRACT Some owners of underground storage tank systems (USTs) appear to be replacing their systems with aboveground storage tank systems (ASTs) without full knowledge of the U.S. Government environmental regulations that apply to facilities with ASTs, and their associated costs. This paper discusses the major federal regulatory requirements for USTs and ASTs, and presents the compliance costs for new tank systems that range in capacity from 1,000 to 10,000 gallons. The costs of two model UST systems and two model AST systems are considered for new oil storage capacity, expansion of existing capacity, and replacement of an existing UST or AST. For new capacity, ASTs are less expensive than USTs, although ASTs do have significant regulatory compliance costs that range from an estimated $8,000 to $14,000 in present value terms, depending on the size and type of system. For expanded or replacement capacity, ASTs are in all but one case less expensive than USTs; the exception is the expansion of capacity at an existing UST facility. In this case, the cost of a protected steel tank UST system is comparable to the cost of an AST system. Considering the present value of all costs over a 30 year useful life, the cost for an AST with a concrete dike is less than the cost of an AST with an earthen dike, for the tank sizes considered. This is because concrete dikes are cost competitive for small tanks, and the costs to clean up a release are higher for earthen dikes, due to the cost of disposal and replacement of oil contaminated soil. The cost analyses presented here are not comprehensive, and are intended primarily for illustrative purposes. Only the major costs of tank purchase, installation, and regulatory compliance were considered. The costs for ASTs do not include the opportunity costs for the use of the land on which the AST is located. This omission indicates lower relative costs for ASTs than actually are the case. The analysis does consider the major costs for a range of tank types and sizes that are widely used and provides a framework for facility owners to compare the costs of USTs and ASTs for a given facility. Costs should be only one element in the decision as to whether to install an AST or UST at a facility. Other facility-specific considerations include local zoning and fire protection codes, the availability of land, and whether there is a high water table at the site.