Building a new bulk propane plant? Upgrading your existing bulk plant storage capacity? Installing a standby or peak shaving propane-air/SNG plant? Should you be buying a new or used propane storage tank? Below are few things you should consider when making the decision to purchase a bulk propane storage tank.
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Safety factor better with older tanks:
As the price of steel has continued to increase over time, the Federal Government has allowed tanks to be built with thinner steel. Over time we have seen the safety factor reduced from the original safety factor, 5 to 1, down to 4 to 1, and then again to 3.5 to 1 for new tanks. So basically older tanks even the 200psig U68 and U69 code tanks are considerably thicker and produced to a higher safety factor than brand new tanks. This is one reason many people consider buying a used propane storage tank versus a new one
Board certified
Propane Storage Tanks that have a National Board Number either on their Data Plate or stamped in the steel are able to have paperwork obtained, referred to as the U1A Data report, which is basically a birth certificate of the tank detailing the material used, original openings, manufacturer , inspectors, dates, pressure test, certifications, and so on. These tanks are able to be placed back into service in most states and other countries due to their ability to have paperwork produced.
Environmental Consciousness
Today's "green movement" reminds us all to reduce, reuse and recycle. Purchasing a used propane storage tank versus a new one not only saves the customer money, it is also a large form of recycling and being "Green" as the steel is reused without exhausting the energy required to lift, transport, purge out all vapors, cut up, melt, and many times to ship the steel out of the country only to be sent back over to the US using more energy.
Turnaround time and freight costs
Ordering a new bulk propane storage tank requires planning and often times a waiting period of several weeks or months for the tank to be built and delivered. It has also recently been the case that the final price of the tanks is not known until they are built and a steel "Surcharge" is then placed on top of the tank price which is normally thousands of dollars. The location the new tank is shipped from may not be conveniently located to your plant site and freight costs can be very high. Often times you can find a used bulk storage tank near your plant site, buy it immediately and save thousands on freight costs, due to its proximity to your site.
More bang for your buck
For anyone who has priced a new tank the savings is well known, as well as the time often spent waiting for a new tank to be built for your project. New propane storage tanks are often 50% to 100% more costly than used propane tanks. These percentages can grow during times of large steel price increases.
How to determine the proper amount of storage you require?
A qualified Commercial Propane /SNG Contractor will be able to determine the space and distance requirement s needed for the size and quantity of propane tanks needed for any project. As well as the number of tanks that are allowed to be in a group and the distance required between the groups of propane tanks.
The installation of new or used propane bulk storage tanks verses domestic propane tanks will allow the consumer to purchase transport loads of gas which is on average about 9,000 gallons or more in some states where the transports are allowed by the Department of Transportation to be larger. In most cases this greatly reduces the cost of propane as the dealer does not have to handle the product twice by first having transport deliver it to their bulk storage tank and then utilize their bobtail delivery truck and driver to bring a smaller amount to a domestic tank. There is also a reduction in insurance costs to the dealer when the propane is sent directly to the end user and does not run through their propane storage tank which plays a part in the reduction in cost to the consumer.
To properly size propane tanks, as well as propane liquid and or vapor piping, a commercial propane or SNG contractor will need to know the maximum BTU load that a consumer will require. This would be the combined maximum load of all the equipment and appliances that a facility has - meaning the maximum consumption of BTUs per hour of each appliance. This will tell us what size propane tank is required as well as any vaporizer and or blender system that may be needed to provide adequate propane or SNG (Synthetic Natural Gas).
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It may be wise to consider the possibility of future growth and need for more propane at your operation rather than size a propane system to meet the current needs, or at least try and permit for future storage to be added and have this added to any submitted drawings. Having more capacity also gives the consumer more buying power and the ability to save money during times when propane may be priced lower. This additional storage may also give the consumer the ability to ride out tough demand times and high gas prices saving even more money and alleviating the stress of paying higher prices and time spent locating hard to acquire peak demand propane.
For more assistance with your propane storage requirements please fill free to contact the propane storage experts at TransTech Energy. TransTech Energy sells new and used propane storage tank systems and provide design, engineering and bulk plant construction services. With more than 50 years of experience in propane storage systems, TransTech Energy has one of the largest used propane storage tank inventories in the US. Visit our website today at www.transtechenergy.com or call our office at 888-206-. Not all inventory is shown on the website as TransTech Energy is constantly acquiring additional used propane tanks and equipment.
TransTech Energy also purchases underutilized or decommissioned tanks and plants, please contact us today for a tank or plant acquisition appraisal.
We naturally think that a used equipment purchase will result in cost savings when compared to buying new equipment, but that isn&#;t always the case especially when it comes to LPG bulk storage. More and more propane retailers are increasing bulk storage capacity and current demand for used storage tanks is high, especially for tanks that are in good shape. If you&#;re adding bulk storage and considering used equipment, then take some extra time to fully understand how this decision will impact your business.
Availability is limited due to today&#;s increased demand, but if you&#;re fortunate enough to locate one, you should be able to purchase a used LPG storage tank for less than a new tank. However, there can be additional costs required to insure that the used equipment is safe and reliable for years to come. For instance, valves and plumbing in used tanks often need to be replaced and that cost can be substantial. If you have the time and know-how, doing it yourself can save money, but if you have someone else handle it for you, the cost for a new valve kit and plumbing can run as much as $35,000-$45,000 installed.
Another factor to consider when purchasing a used storage tank is the effect on the value of your business. All too often business decisions are made based on short-term needs with little or no thought given to long-term effects. In the short-term, and assuming no substantial upgrades are required, a used tank purchase may save you some cash and you will be able to deduct depreciation expense. However, five to ten years from now the salvage value (the remaining value of an asset after it has been fully depreciated) will be substantially less for a used storage tank than it would be for a new one. Accordingly, the value of your business assets and the value of your business as a whole as reflected in the balance sheet will be less.
Whether you plan to sell the business or hand it off to a partner or family member, remember that the decisions you make now are determining future value. For example, assume you need a 30,000 gallon LPG tank for a new bulk storage facility and you&#;ve found a used one for $60,000. It&#;s salvage value is estimated at $15,000. You&#;ve also found a new 30,000 gallon tank for $90,000, but since it&#;s new, it has a higher salvage value which is estimated at $60,000 (assumes the same amount as today&#;s used tank price). In this case, assuming you don&#;t have to make any upgrades to the used tank, you&#;ll save $30,000 on the purchase price, but at the end of it&#;s useful life your balance sheet will reflect a $15,000 asset value whereas the new equipment will show a $60,000 value &#; a difference of $45,000 net worth in your business.
The obvious attraction for purchasing used is price, but used equipment carries a good deal more risk than new. Listed below are just some of the potential pitfalls to be aware of.
Source This may be the most critical issue of all, as so many problems hinge upon the honesty of the seller. Can you trust the source? Is the supplier reputable? An individual seller has no reputation to protect, so you operate on blind trust that the person is honest.
Warranty Check to see if you will have a warranty. Most manufacturers do not offer a transferable warranty. Thus, if a problem does arise, it is likely that you will have to pay for repairs.
Condition Unless you can personally inspect the storage unit before you buy (and you know what to look for), you rely completely on the seller to accurately describe the equipment. A photo is great, but even that may not be enough to spot many problems. And remember, condition goes beyond the external appearance.
Financial Risk More of an issue when dealing with an individual, this can be one of the most devastating potential consequences of the transaction. More often than not, Cash On Delivery (C.O.D.) is the method of payment between individuals. This requires a level of trust on both parties.
At the end of the day, the decision to buy used versus new bulk storage will be based on your unique financial situation. The important thing is to realize that there are factors other than just purchase price that you need to consider. Do your homework, look at all of the costs required to make the the storage vessel safe and production ready, take the time to review the long-term effects on the value of your business and give serious consideration to the risks involved before you decide.
Additional Resources: Equipmentstreet.com , Werc.org
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