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The True Cost of Custody Transfer Mismeasurement

Measurement made easy

In the oil and gas industry, operations are only as good as what they can measure. When it’s time to move product from one place to another, accurate custody transfer measurement is paramount. Without a precise account of what’s been delivered, operations cannot accurately charge for their services and this can have major financial implications.

This article will discuss the challenges of accurate custody transfer measurement and the potential financial loss from mismeasurements, the options out there for accurate real-time assessments, and how some operations find themselves in court over minor custody transfer errors.

How are flow measurement systems utilized in the custody transfer of oil and gas?

Flow measurement systems usually consist of flow meters, pressure and temperature transmitters, and optionally other field devices which are installed in a pipeline close to the delivery point and connected to a flow computer.

The flow computer measures all field signals and accurately calculates how much oil or gas is delivered, utilizing internationally recognized standards, stores all relevant data, and delivers several reports. The custody transfer flow measurement system is considered to be the cash register.

Why is accurate measurement so important during custody transfer?

Accurate measurement is extremely important because in many custody transfer measurements, large quantities of oil or gas are transferred, so that even a small error has a big financial impact. Even the smallest measurement calculation or other error can yield a high figure with such large quantities.

For example, when an oil tanker gets loaded with 700,000 barrels of crude oil, and the custody transfer system measures with a combined uncertainty of a realistic 0.3 percent, this then may introduce an error in absolute value of $105,000 (at $50 per barrel). It is, therefore, important to utilize the most accurate measurements available, as the cost of this equipment involved is earned back in a very short period of time.

What are examples of the types of things that typically go wrong with measurement during custody transfer? How do flow measurement systems account for them?

We have seen many different measurement issues ranging from human errors, incorrectly calibrated equipment, low-cost and inaccurate measurement instruments, flow computers with incorrect algorithms, and drifting analog inputs. “Penny wise, pound foolish” is perhaps an applicable statement here. Usually such errors need to be back-calculated once they are detected, but this is a cumbersome and time-consuming manual process. Companies even go to court sometimes when they cannot agree on how much the financial impact of their measurement error and final compensation between buyer and seller should be.

Why do many operations assume they are getting accurate measurements during custody transfer?

Because they maybe assume that when they have purchased an expensive meter, that the rest is less important, which is not the case. Every aspect of the cash register matters because big quantities are involved, of where even the smallest error introduces a big financial impact.

Are there less obvious issues that can cause inaccurate measurement? If so, what usually causes these, and how do they slip through the cracks?

Yes, there are many different issues which can cause inaccurate measurements. We have seen hundreds of different mismeasurement causes. Sometimes there is a lack of maintenance done on the measurement system, introducing issues, or it can be caused by human error — for example, a pressure transmitter which has been accidentally left to a keypad value after a calibration. The whole custody transfer measurement becomes next to worthless because of this mistake. Operating staff on a platform or at a refinery are sometimes more focused on managing the chemical process, for instance, than watching the custody transfer systems.

A tenth of a percent of pressure variation may not be a lot for the chemical process itself in a gas plant, but it has a huge impact on the volume correction and, therefore, on the custody transfer measurement with a significant financial impact.

What are some of the consequences that follow these mismeasurements?

A lot of effort has to be done to manually correct the error. This is a tedious and cumbersome process.In the example above, if there was only one pressure transmitter which has been kept to a keypad value, rather than a real-time measured value, how can you convince your customer what the right value has been during the entire mismeasurement period? Who pays for this, and where is the proof?

What are some methods for automatically detecting these mismeasurements in real time?

Make the measurement system smarter. You can do several things. For example, at a custody transfer metering system, you can install flow computers and a supervisory computer system not only with state-of-the-art diagnostics, but also with smart mismeasurement management software.

This innovative software will help avoid mismeasurements because nowadays these computers can continuously and intelligently validate, in real time, field signals and raise an error condition and take appropriate measures when that measurement fails.

Depending on the actual root cause, in many cases it can not only detect an error and warn the operator, but much more importantly, it can semi-automatically or even fully automatically correct for the mismeasurement incident and regenerate the flow calculation results, in near real time, without adding any further uncertainty.

This is a huge cost benefit for all parties involved because now the mismeasurement is accurately resolved in seconds, rather than in weeks, saving a lot of blood, sweat, and tears in comparison to resolving this manually.

How can API’s Manual of Petroleum Measurement Standards (MPMS) help alleviate mismanagement problems?

It could develop a better standard for resolving mismeasurement issues and in more detail. Because there are so many different mismeasurement issues, this will not be a simple process, as all involved parties must agree and be aligned with the methodology, but it is certainly worth trying.

For more information about custody transfer management,

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