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Melones Oil Terminal, Inc will operate and manage a tank farm facility with a 2.1 million-barrel capacity in a fuel free zone located on the islands of Taboga and Melones, Panama.

A press release from the Presidency of Panama reads:

"The Cabinet Council has authorized the Minister of the Presidency on behalf of the State to finalize a contract with the company Melones Oil Terminal Inc., for the operation and administration of a Fuel Free Zone capable of storing 2 million barrels of oil.

"Melones Oil Terminal Inc., will establish the area with an investment of $65 million to operate, maintain and manage a complex of tanks, pumping stations, docks, and ducts for crude oil, semi-processed, derivative products, natural gas, biofuels, petrochemicals and others on Taboga and Melones islands.

"During its construction phase, the fuel free zone will generate about 200 jobs and during its operation it is projected it will create 50 direct jobs, said David Muñoz, from the Energy Department."

Melones Island Oil Terminal [pictured]

The Melones Island oil terminal, located on the Pacific side of the Panama Canal, is currently under construction and expected to be in operation by the second quarter 2012, according to recent reports.

The facility is a joint project between Panama firm Marine Engineers and US company ATEC Steel.

Melones Island is located less than eight nautical miles from the Pacific entrance to the Panama Canal.

The terminal will have a total of 18 storage tanks: six 220,000-barrel tanks, six 100,000-barrel tanks, four 50,000-barrel tanks and two 10,000-barrel tanks. It will allow up to four barges to be loaded simultaneously out of four separate storage tanks with independent pipelines.

Transfer pumps for loading will have run rates of 3,500 barrels/hour for barges and 17,500 barrels/hour for ships. The berth positions will have a draft of 13 feet.

Additional features of the facility have been provided below.

Four, 3,500 bbl/hr bunkered product transfer pumps and two, 1,500 bbl/hr diesel fuel transfer pumps.

Two diesel driven fire water pumps provided with fresh water jockey pump.

Mass flow metering system for diesel to fuel oil blending suitable for simultaneous loadout to four barge docks.

Diesel driven and electric powered air compressor/ receivers.

Oil/water separator provided along with all auxiliary water removal pumps.

130 degree hot oil boiler systems for heavy fuel oil heating.

Self-contained sewage treatment system with lift systems.

Barge loading and ship unloading hydraulic operated docks.

Emergency shut down valves at dock, shore and tanks.

PLC programming and control systems.

Fresh water cistern system and pumping station.