The normal standard of practice is to design water systems (in your case apparently a dedicated firewater supply system) to handle ONE maximum fire demand scenario. However, the requirements for your system ultimately must come from the fire department with local jurisdiction. They will likely base their requirements on NFPA, ISO, AWWA, building codes, other standards, fire studies, etc., but local conditions can supersede these standards. I'm at home today, but as I recall, AWWA M32 (Computer Modeling of Water Distribution Systems) specifically mentions the single fire demand scenario as being standard practice. I've read this other places as well, but off the top of my head I can't remember where. As far as I know, this is not carved in stone is a code or standard, but is simply a reasonable and long-used standard of practice.
Years ago, a gas and diesel tank farm I consulted for was annexed by the local city. The local county had required next to nothing for fire protection (a single 750 gpm well pump and a loop of 4" pipe with wharf head hydrants), but the City had other ideas. I worked closely with the city's fire department to establish the design criteria for the new fire protection system. The fire engineer I worked with showed me some forensic studies for fires at other tank farms. As I recall, these studies indicated that, in the absence of a foam system, a fire flow on the order of 10,000 gpm to 15,000 gpm was required to suppress the worst of the fires. With a foam system, about half that was required. Unfortunately, the nearest city main was almost two miles away. There was a small semi-rural water company about 3/4 mile away to the edge, but that system was barely able to supply it's maximum fire of 1500 gpm. In the end, we agreed on two 2500-gpm diesel-driven well pumps feeding loops of 12-inch pipes, and a foam injection system. I had modeled the water company's system and determined that the well and piping upgrades that would have been required to enable that system to serve the tank farm were better and cheaper placed at the tank farm.
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