Metering and custody transfer (1)

L. Hayden, Inspectorate Measurement Services, Houston, Texas

With North American petroleum exploration and production already at a 25-year high, the US Energy Information Administration (EIA) now predicts that US crude output will exceed 9.6 MMbpd by 2016, making LNG production a tremendously promising economic opportunity (Fig. 1).

Fig. 1. Domestic oil and gas production levels are reaching historic highs.

However, with this financial growth, natural gas producers are under increased pressure from both landowners and shareholders to ensure the accuracy of their production measurements and to produce expected monetary gains.

Measuring gas production volumes accurately and to standard has become more critical, particularly as new LNG facilities come online and as lessors or landowners vigorously enforce their contracts. However, despite dramatic improvements in the performance and capabilities of gas measurement metering systems, many producers still view measurement as a production cost—a burden to increased profitability—rather than as an efficient, margin-enhancing business practice.

Leaving money on the table. Consider a gas well yielding 5 MMcfd, or 150 MMcfm. Using an arbitrary value of $4.75/Mcf, the well will generate $23,750/d, or $712,500/m. However, if the measured quantity is off by just 0.5% (typical meter uncertainty is 0.2%–0.5%), then the potential loss is $3,562/m, or $42,750/y.

Multiply that loss by multiple wells, and the economic drawbacks of failing to produce forecasted volume expectations become even clearer. Statistically, 5%, or 24,000, of the approximately 480,000 natural gas production sites in the US are operating outside precision tolerance levels, meaning that production companies are potentially leaving about $85 MM on the table every month, equaling more than $1 B/y.

Furthermore, the discovery of noncompliant metering equipment results in substantial fines from state and federal regulatory agencies that closely monitor the petrochemical industry, costing producers even more than hydrocarbons that are unaccounted for.

In a world where the national debt runs into the trillions of dollars, a loss of approximately $119/d may seem like a trivial amount. However, landowners are pressuring natural gas producers for every dime they are entitled to receive, by vigorously enforcing their lease contracts.

Substantial investments to improve the efficiency of drillsite identification and drilling technology have dramatically reduced the time and cost of turning a new location into a fully functioning production site. These improvements have put pressure on production companies to also upgrade their gas quantification and calibration protocols and tools, in accordance with American Petroleum Institute (API) standards.

The API has been establishing and maintaining standards for the worldwide petroleum industry since 1924 to ensure quality, keep costs down, reduce waste and minimize confusion through consistency and control. Since petroleum and other hydrocarbon products, such as natural gas, cross many national and international borders, API standards ensure that industry protocols comply as closely as possible.

LNG trade is based on a complex scheme of measurement methods and calculations for determining the volume of produced LNG and its composition. The challenge for new suppliers of LNG will be to meet the exact measurement requirements of their trading partners and deliver product with the correct calorific value, making accurate quantification systems an absolute necessity (Fig. 2).

Fig. 2. Calibration creates confidence in measuring production volumes.

Regular calibration is an essential part of accurate gas processing quantification. The calibration process starts by gathering data from a gas well’s flow computer, which continuously records temperature, pressure and density data from flowmeters in the field collection system. The calibrator then audits changes that occur within any of these parameters. The flow computer also notes flowmeter events and alarms and keeps a running tally of gas volume on an hourly, daily, batch or monthly basis for well supervision, accounting and auditing.

Calibration is then facilitated by comparing gas flowmeter measurements of the producing well to that of the API industry standard. Flowmeter measurements are then mathematically adjusted to ensure that the most optimal flowrates are achieved during normal operations.

Numerous factors, including oil and mineral deposits, wear, damage and time, can negatively affect flowmeter performance. Regular calibration helps keep gas processing equipment operating efficiently and provides both the seller and the buyer with confidence in the end-product custody transfer.

Calibration techniques most recommended or widely used to enhance flowmeter performance include the drop test or volumetric method, the gravimetric method, the use of ultrasonic clamp-on meters and the use of insertion probes.

Both the volumetric method, which measures volume, and the gravimetric method, which measures weight, calibrate flowmeter performance by comparing the amount of liquid collected in a vessel, for which the volume or weight is known, to that measured by the flowmeter.

Ultrasonic clamp-on meters are installed on the outside wall of a pipe to take transit-time measurements as fluid moves between ultrasonic beams within the line. The time difference, combined with the pipe’s internal diameter, allows for the calculation of the volumetric flowrate. This method can be accurate to within 2% to 5%. However, other factors, such as errors in the pipe’s internal diameter or flow velocity profile and acoustic interference, generally produce results that are accurate to within 5% to 10%. Insertion probes measure the fluid velocity within 2% to 5% accuracy.

Another method for ensuring the accuracy of processing quantification is through the use of a lease automated custody transfer (LACT) unit. A LACT unit is an automated device that measures the volume and quality of a hydrocarbon product, such as natural gas, as custody is transferred from one entity to another. Common types of LACT units are Coriolis meters, turbine meters and positive displacement meters.

Each type of LACT unit has its own characteristics when being calibrated, but the basic principles are the same. Temperature, pressure, flowrate and density must be as stable as possible during the calibration process. Liquid is then flowed through both the meter being checked and the LACT unit. For a truly reliable calibration, the same liquid measured by the meter should also be measured by the LACT unit. Any differences between the two are factored in when calculating the total net volume.

In addition to regular calibration, technology advancements have made it possible to remotely monitor production so that adjustments can be made as soon as there is a problem, rather than at the next predetermined inspection visit. Cloud and Internet-based technologies of metering equipment, along with proprietary supervisory control and data acquisition (SCADA) systems, if in place, allow an ever-increasing flow of data to be retrieved on a real-time basis (Fig. 3).

Fig. 3. Accurate calibration and performance optimization of equipment, such as provers and meters, assist in driving margins.

Adding value in the field. Regardless of the method used, the success of the calibration depends in large part on the expertise of the individual or corporate entity performing the service. A well-managed calibration program has numerous benefits for both the production company and the landowner.

An effective approach that many producers are taking to achieve optimal results is leveraging third-party calibration specialists, such as Bureau Veritas, which are well-versed in the intricacies of making detailed measurements, and which are educated on the various makes and models of each instrument.

When onsite, a reputable third-party provider will make observations and recommendations regarding equipment maintenance, helping operators avoid unforeseen costly repairs. Many third-party providers also possess the expertise and necessary equipment to complete repairs of the flow-monitoring equipment on location to ensure that all operating standards and requirements are immediately met.

In the field, an inaccurate gas flowmeter costs money, and the longer the inaccuracies exist, the more money it costs producers and landowners. Verified production volume based on precise and readily available performance information supported by third-party specialists contributes to accurate allocations and contract negotiations, and it provides critical data for future gas production efficiency improvements and growth. GP

Laurence Hayden has been in the testing, inspection and certification industry for 16 years. He oversees the measurement services division of Inspectorate, a Bureau Veritas company. Inspectorate provides calibration, allocation and validation services to the oil and gas production industry.