Silo Conversion

Discussion in 'Energy Futures' started by zf trader, Jul 18, 2007.

  1. Well you may think this is crazy but has anyone out there ever considered converting a silo into storage for heating oil?

    The silo I want to convert is 60 feet tall and 20 feet in diameter. It was previously used for storing haylage, corn silage and barlage.

    For some of you this should romove any doubt as to who ZF trader is.

    If the futures market told me there was enough profit in storage, I might consider a conversion.

    Thanks
     
  2. I've heard of conversion to marijuana and crystal meth production. Those would certainly be the most lucrative.

    Would a silo be strong enough to hold a liquid? Are you living in a state with oil in the ground?
     
  3. I don't believe this. You can get fined for not recycling the 4 litres from your auto and you want to store 40,000 ga HO in a mfing silo. You think the EPA might have a little something to say about this?
     
  4. From corn silage?? That beats Jethro's water to gasoline converter hands down!
     
  5. The silo is in southwestern Ontario, good old Huron County.

    It is made of concrete and could need re- inforcing. I know that in order to store grain in concrete silos you need to strap cables around the outside to handle the weight.

    I would think heating oil would be easier to handle than grains with less concerns about spoilage too.
     
  6. You might want to consider a bladder to contain the oil. I believe a test was conducted:

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  7. I've never actually inspected a silo before; however, one could fill a waterproof popcorn bag with unpopped corn without it bursting and with it standing mostly straight. You would have probs if you were to fill it with water.
     
  8. That is actually a pretty good idea but I don't think that the small storage space alone of the silo would make it worth your time by the time you factor in costs to transport, finance, etc. This sounds like a good convience yield problem for someone to work. How many silos do you need to make it worth your time?
     
  9. I PM'd you ZF.
     
  10. As others have mentioned, you have numerous regulartory and environmental issues with storage...Not sure about Ontario but probably federal, provincal and possibly local as well and permitting costs $, it's not just paperwork. And you'll need insurance.

    Having said that, converting/building storage isn't a short term play, you'll need the summer/winter spread to have a decent carry for several years and to play it right for the initial investment to pay...

    Last but not least, you'll need a buyer for the physical bbls when it's time to exit the trade...Changing regulations which are lowering sulfur requirements will also come into play i.e. if your ultimate buyer needs low/ultra low sulfur and you have high sulfur (which is what the ho contract is) you have basis risk as well, not to mention USD/CAD risk. Liquidity/transparency in cash distillates in Canada aren't great either as a handful of players control the market.

    Good luck
     
    #10     Jul 19, 2007