Sludge is created by the condensation of rust and bacteria in the tank. Condensation forms on the top and sides of the tank in warm weather. It creates rust which flakes and falls to the bottom of the tank.
The refining process today has improved the quality of the oil, but cannot remove bacteria that is present. This combination of condensation, rust and bacteria form sludge. This build up keeps growing. Most tanks in the area are between 10-25 years old and have a large buildup of sludge.