Oil and Gas Measurement Reviews

Why should you conduct an oil/gas measurement review?

  1. Reporting delineation understanding
  2. Reduce maintenance
  3. Resolve metering differences & proration factors
  4. Repeatedly resolve metering and measurement of oil and gas concerns

My name is Wayne Dunnington. I am with Intricate and the topic today is measurement reviews.

So let’s get started!

Click here to watch presentation instead!

Introduction

I’d like to kick off with some wise word from Albert Einstein. Why not, right!? 

Albert is going to define insanity for us and it shouldn’t be anything new for you, we’ve all heard the saying before. 

What is the definition of insanity and how am I going to help solve some of your Measurement Insanities. 

I can’t claim to solve it all with this post but I will do my best to help solve some of your oil and gas measurement concerns. 

The definition of insanity as a coined by Albert is doing the same thing over and over and over again and expecting different results.

definition of insanity

This comes into play in the oil and gas measurement world quite often. There’s a number of production accountants I’ve had experience with that month over month have seen the same problems become very chronic without much resolve. So we’re looking to help solve that today. 

What kind of problems can we look to solve with conducting a measurement review? 

Some of the more common problems are:

  • Metering Differences
  • Proration Factors
  • Imbalances

These are some of the most chronic problems, and the larger problems we see. And these three problems are actually one of the biggest reasons that we have to get called in to do measurement reviews.

Metering Schematic of gathering system

How many of you experienced these types of problems?

Have you experienced metering difference problems? Have you experienced proration factor problems or imbalances? Or maybe you’ve been involved in helping resolve some of these problems. They are again, the most common problems that we typically will see and one of the most common reasons that somebody would want to conduct an oil and gas measurement review. 

metering differences, proration factors, imbalances

Traditional Practice for addressing oil and gas measurement concerns

If we have a meeting difference or we have a concern that we’re aware of at a given facility, what are some of the traditional practices we use to resolve the concern?

Quite often, production accounting will get a hold of all the numbers at the end of the month and they will identify that we have a 18% metering difference or proration factor that’s 15% or whatever the case is.

We’ve identified that there is definitely some sort of concern there.

That production accountant will typically call field operations and say “HEY we have this big metering difference and I’m not sure how to resolve it”. 

So operations does what they do and they send somebody to calibrate and prove meters because that seems like the most logical thing to do at the time. And they will calibrate every meter in the field and prove every meter in the field and at the end of the day, quite often, they find nothing.

The month end comes, Production Accounting again runs the numbers for the end of the month and what was an 18% metering difference the previous month is still an 18% metering difference this month. We still have the same metering difference though it’s a new month.

So what do we do now? Well we phone operations again and say I still have an 18% metering difference and behold the operations will bring out the crews again will recalibrate everything again and reprove everything again in hopes that we find a solution to our metering difference. 

But we have not found it once again.

What’s the definition of insanity again?

It’s time for a new approach.

So how can we resolve this metering difference? How can we resolve this proration factor?

My suggestion would be to introduce a little bit of Dr. Seuss, “Sometimes the questions are complicated and the answers are so simple”

Sometimes the questions are complicated and the answers are simple

So what is a better solution? What’s a more modern solution? What will get a different resolution other than calibrating and reproving and calibrating and reproving over and over again?

Let’s conduct a Measurement Review.

That’s why we’re here. We want to learn about oil and gas measurement reviews and understand how a measurement review would be acted or be executed. 

What is an oil and gas measurement review?

A measurement review is a high-level assessment of the existing measurement practices and Reporting structure. 

So if we want to break away from the insanity, we’re going to want to conduct a measurement review and look to resolve the concern that’s in front of us.

What is our objective with a review? 

The objective is to basically to resolve the concerns in front of us

Fuel flare vent is one of the aspects that we could conduct a measurement review on. Maybe we’re not reporting volumes correctly, maybe we’re not estimating volumes correctly or so and so forth. Many of our clients will ask us to specifically hone in on FFV for this reason.

Essentially the measurement review itself we’re just looking to identify the overall oil and gas measurement uncertainty of the facility, and that can be as broad or narrow as you want it to be.

In addition to solving our metering differences, proration factor concerns or imbalances that we may have at a facility, some of you may be asking the other opportunities that I could get out of conducting a measurement review. 

The possibilities really are endless but let’s go through some of them more of the high-level ones we can address and mitigate non-compliance events from happening. It is amazing how often we conduct a measurement review and we find other related or non-related non-compliances that are associated with the existing concern or with the concern that typically brings us to the table in the first place. We can learn to address them and identify them and how we want to come up with an action plan to resolve those. 

We may identify other measurement gaps that are present and these can be more of a corporate thing so we’re not sidestepping existing processes or policies. It doesn’t necessarily have to be regulatory based.

We may find opportunities for exemptions, maybe an existing requirement doesn’t make sense for your existing facility or for your existing business. 

An exemption to side-step and existing regulation, if we can put a sound business case together, is a great way to reduce the cost of your business or conducting business at that facility. 

We may want to look at conducting a voluntary self disclosure. A lot of times, opening up the communication with the regulator is a great way to come up with a resolution. They may have other opportunities or options that they’ve dealt with with other producers or midstreamers related to your issue. And from our experience the regulators in Western Canada have been very helpful and willing to help those with the concerns around existing regulatory requirements.

Conducting a measurement review may provide you with the ability to implement, revise and streamline your existing business processes. 

One example I like to use: a couple years ago I did a measurement review for a producer and they were very diligent in conducting well testing that was required at that facility. And it wasn’t until such time that we conducted a measurement review of that facility, that the Production Accounting Group was actually shocked that they did any well testing. They had thought over the course of a number of years that they quite simply were not doing the testing. 

Operations were doing a great job, they’re very diligent in doing the testing. However that information wasn’t carried forward for production accounting to actually use the testing results. Therefore, we immediately had the ability in front of us to streamline a process so that those factors that were obtained during the time of testing would be able to be used by production accounting 

Lastly, streamlining and improving a company’s management program – In the example I just gave previously, we were able to take that learning, we were able to develop a process and work with the measurement group to develop a process so those concerns wouldn’t continue to happen at that facility. Not only at the one facility, but at their other facilities as well. We use that opportunity for a knowledge sharing opportunity to share the learnings from from the review itself and the better their program was as a whole.

So to summarize, here are some of the other benefits of conducting a measurement review:

  • Address / Mitigate Noncompliances
  • Identify Measurement Gaps
  • Opportunities for Exemptions
  • Voluntary Self Disclosure
  • Implement / Revise / Streamline Business Processes
  • Streamline / Improve a Company’s Measurement Program

Ultimately, we’re a business. 

Savings. 

Money. 

All too often when we conduct a measurement review, we find opportunities for savings. 

We’re over calibrating some metering points, we’re calibrating reference points, we’re over-sampling where may or may not be needed and we may not be charging fees for compression or fees for fuel gas. 

It is amazing how often we’ll conduct a measurement review and we find that we’ve been “selling” fuel gas to another operator but we’re actually not charging them for that fuel gas because somebody in the finance group didn’t understand that we were “selling” that fuel gas. 

There are many opportunities over and above just addressing your immediate concern by conducting a measurement review. 

What are the things that we need to be cognizant of when we do conduct an oil and gas measurement review?

There are many business and financial risks that you could be exposed to, in the example that I just gave, if we are selling fuel gas to somebody obviously there’s a financial risk if we’re not charging for it. If we’re compressing third-party gas, there’s definitely a financial risk if we’re not charging them for the compression of their gas. 

There might be many different ways we can start swinging gas which is where Marketing comes in and goes hand in hand with finance’s risks. 

Essentially, if you have the ability to flow split that gas or sell gas one way vs. another, there are many advantages to doing that and we need to be aware of that during the time we are conducting a review. Otherwise things can go sideways. There’s definitely regulatory requirements that we need to be cognizant of when we’re conducting a review. 

Most of the time, when a midstream organization or producer asks us to conduct a measurement review, we’re typically brought in because of the regulatory requirements. That organization may not understand the regulatory requirement or they may be looking for an objective, outside opinion on the regulatory objectives or another way to address a concern based on history.

So nine times out of ten we’re brought in because of regulatory requirements. Yes, you have to have a background and understand those regulatory requirements. But I would argue that you should be looking at your business as a whole. We need to be cognizant of the regulatory requirements, but at the same time understand the business when conducting that measurement review.

We want to make sure that we align ourselves with the business because we’re ultimately out here for the money not being accounted for in the contractual agreements. We need to be aware of what contractual agreements are in place. If for example, I have a receipt point or number of receipt points coming in, there might be agreements in place that supersede the regulatory requirements. What I mean by that, is there might be a contractual agreement to sample every month or every week, given the type of receipt point, as opposed to the regulatory requirement which says to sample every 6 months or every year depending on the application.

So when we conduct a measurement review it’s very mindful to be aware of those contractual agreements that are in place. 

There are many different reasons that we could conduct a review and I said earlier. We may conduct a review on an entire facility as a whole, maybe giving a 10,000 ft view, or we may be trying to isolate one specific concern that the operator has in play.

There are many different reasons that we may be asked to look at a facility when we’re conducting a measurement review. We could be trying to pinpoint one of those specific points or we could be looking at an entire facility or gathering system as a whole (looking at the larger picture). 

Some of the most common areas that we would conduct a review on are:

  • Production Data
  • LTDH Systems
  • FDC Systems
  • EFM Systems
  • Allocations
  • Sampling & Analysis
  • Measurement Points / Installations / Operation
  • Calibrations & Proving
  • Oil / Gas Well Testing
  • Trucking Receipts & Dispositions
  • Delivery Point Measurement
  • Royalties / Allocations
  • Calculation Factors
  • Accounting Formulas
  • Master Data Setup

If we come to the determination of yes, I would like to conduct a review of a facility, who should be involved? 

At Intricate, we feel that these roles are pretty much required to be at a measurement review.

Stakeholders recommended for a measurement review:

  • Engineering
  • Operations Foreman
  • Production Accounting
  • Measurement Coordinator

Stakeholders that may be required based on specific needs:

  • MOC Coordinator
  • Project Engineeer
  • Controls & Automation
  • Maintenance E&I Lead
  • Marketing

We like to see engineering, or preferably production engineering at the table. I would like to see operations and production accounting at the table, and if your organization has a management coordinator (FMC also referred to as). These are the stakeholders we like to see at the table for any measurement review. They have the broadest brush in the measurement decisions that are made at a given facility. 

Now depending on the specific nature of a review, we may ask other people to be involved in the review. Again, going back to previous points there are many different reasons we would conduct a review. Let’s say for example we’re deciding on how we want to flow split gas, is flow splitting gas between plants something we want to entertain? Then we may need to bring marketing into play.

Similarly, for a maintenance E&I lead, if I had a metering difference or proration concern, how we maintain those meters could be a key determining factor and we may ask that they be at the table.

Controls & Automation can speak to any electronic flow measurement (EFM) that we have on the site. How are they programmed? What calculation blocks are they using? And so on. 

They could all be brought into play depending on the issue being faced.

So what steps would we take in conducting a review? 

S-E-T-U-P

SETUP stands for Stop, Equations, Table Top Review, Unknowns & Planning

It’s also used in first-aid, but the same acronym can be used in oil and gas measurement reviews as well with some slight changes to the definitions.

Similar to how you would assess an emergency first aid situation, you can follow similar steps for a measurement review. 

Let’s start at the beginning.

Stop

When we have a measurement concern, maybe it’s a metering difference or something to that effect. We want to take a minute and stop to assess the situation. Do you have metering schematics for that facility? Has there been any recent changes in the delineation? Meaning, have we tied in a third-party receipt into the facility? Have we decided to swing gas left to right? What are the cases? Are there any recent delineation changes that have happened?

And history as well! It is amazing how long a metering difference can go on before anybody really starts to take action.

I’ve seen instances where we’ve had an 18% metering difference that’s occurred month over month over month for several years (hard to believe, but it does happen quite frequently). 

So if that’s you, you’re not alone.

But we do need to know the history. How long has this metering difference happened for? Is it one month? Is it a year? Is it 8 years? 

It’s incredibly beneficial to understand that history.

By having the drawing in front of you and understanding the history, you’ve already set yourself up for a good review of the concern that you have in front of you. Quite often you can resolve it just with that information.

Equations

Quite often we find oil and gas measurement concerns in the equations. If we take a minute and we verify the line size (I’m using an orifice plate as an example here), atmospheric pressure, etc.

Are we correcting to standard pressure and temperature? Have we taken into consideration the orifice plate size? Has there been any changes? 

If we verify the equations and the calculations used in that data, quite often we will resolve our concern. We find that this is definitely the case if there is a long history of a measurement concern or bad metering difference month over month.

Table Top Review

If by now we haven’t found the concern, we will quite often bring all the stakeholders together at and will conduct a tabletop review. 

So what things would we discuss in a tabletop review? ‘

1) Delineation Changes

We would discuss those delineation changes: where do lines come in? Where do the lines go out? Has there been any changes and is the drawing itself accurate? 

I’ll walk left to right across the entire drawing and we’ll discuss well by well, compressor by compressor, satellite by satellite, facility by facility. We will discuss in complete exhaustion, is the drawing accurate? Do lines tie-in where the drawing represents? 

2) Fuel Gas

We identify things like fuel gas, where’s the fuel gas tap located in conjunction with the given metering point? Is it Upstream of a receipt point or is it Downstream? That will have a large bearing on the metering difference if we’re not accounting for fuel gas directly. 

3) ESD’s and blowdowns

Are we accounting for ESDs and blowdowns? What is the procedure to log a blowdown of the pipeline itself? It is amazing how often there isn’t one.

Operations may blowdown a compressor but if it goes unlogged, that will immediately create a metering difference.

4) Measurement points 

Where are the measurement points in conjunction with the whole gathering system? Are they accurately depicted on the metering schematic?

Once we identify all of these concerns or potential concerns then we can step back and identify if we are reporting the facility correctly, if we are using the right reporting delineation for that facility given where all the metering points are and all the infrastructure is. 

So we will have this table top review with everybody at the table and it’s basically an open dialogue conversation to see if we can identify the cause of the concern.

Still can’t find it?

Now we have to go look for the unknowns.

Unknowns

There are many unknowns. Where is a fuel gas tap located? Does this receipt point use fuel gas? Where does this receipt point tie-in? Are we pigging at this receipt Point? 

These are all kinds of examples of unknowns: anything that we can’t answer at the tabletop review. So we’ll have to put on our boots and all of our safety gear and we’re going to look at the unknowns out in the field.

I started intricate in 2009 and since that time myself and all of my co-workers and in that entire duration we’ve only ever seen two PD meters that have been set up correctly. And it was our senior measurement specialist that identified it and took pictures of those two PD meters. 

So if you recognize them, we want to give props to these two PD meters that have been installed correctly!

Correctly installed pd meter configuration

There are a number of unknowns with a PD meter and I just want to use this one as an example for how many unknowns could be given or identified at a given metering point.

So I have two PD meters here, the unknowns that can be associated with these meters start with the dial. The dial reading itself can be in many different units. Is that dial reading in cubic meters or is that dial reading in cubic feet? 

You can find meters that are in both, but if it is reading cubic feet at the meter but I’m going to my field data capture system or spreadsheet, that dial reading needs to be in the correct units that the end-user is reading them in.

So if I’m reading a meter in the field in cubic feet and I’m entering it into a spreadsheet for production accounting to report on, but the production accountant assumes that it’s in cubic meters, obviously we have an immediate discrepancy.

That dial reading is also given that the process conditions are at standard pressure and temperature, which quite often they aren’t. 

Unless you’re operating your fuel gas system at 101.325 kPa and 15 degrees celsius, the dial reading is going to be off. So there are additional unknowns that we need to address. 

I’ve circled here the pressure elements that are required to be installed in conjunction with that PD meter.

oil and gas pressure elements for measurement corrections

You’ll notice that there’s a pressure element that’s upstream and a pressure element that’s downstream. They’re both within correct requirements that are set up in all three provinces: British Columbia, Alberta and Saskatchewan in their respective “Directive 17” that there be pressure elements upstream and downstream. 

That pressure element requirement to be upstream and downstream the meter is to monitor any pressure drop that’s across that meter. If there is a pressure drop, the meter is starting to fail. So do we have a means to monitor that Pressure drop? That is one unknown that we would address there.

Another one is we’re going to use the upstream pressure transmitter to correct to standard pressure. Where are we as an organization applying that standard pressure or that calculation to standard pressure conditions.

Are we correcting that dial reading to standard pressure?

Some metering technologies have the ability to do that conversion for you, even PD meters. Does our specific meter have that functionality? That’s an unknown that we would have to answer so that’s the reason that we would have the pressure elements there. 

Another unknown with this specific metering technology is the temperature. the picture on the right, the temperature element is actually out of the frame of the picture, but there is a temperature element that’s just downstream of that PD meter. 

oil and gas temperature element for measurement correction

The picture on the left I circled the temperature element, that temperature element is required to be downstream of the PD meter and again within the requirements of D17. So that allows us to do a temperature correction on that gas volume. 

So I need to do a correction for the pressure and I need to do a correction for the temperature. If I don’t have those instruments installed, the pressure transmitter and the temperature transmitter, I don’t have the ability to accurately correct the volume to standard pressure and temperature.

Do you as an organization have those temperature transmitters installed? Are you utilizing them in your calculations to correct the standard pressure and temperature? 

And lastly, there is yet one more unknown here: Are you proving this PD meters? 

You’ll notice that both of these meters there is a tag that you see attached to the side of the meter.

oil and gas measurement devices and meter factors

That’s the meter factor from the time of proving. If this was in a fuel gas application we would be required to prove this PD meter once every seven years. And then I would have to take that tag, say it was 0.995, I would have to take my total volume and multiply by that meter factor to get a corrected volume.

So that one simple dial reading, if I’m taking that one simple dial reading that we started with and I’m not adjusting for pressure and I’m not adjusting for temperature and I’m not adjusting for that meter factor that’s obtained during the time of prove, you can already start to see the compounding effect and how inaccurate that dial reading can actually be.

All too often we rip that PD meter out-of-the-box at the time of construction. We install it and none of the pressure or temperature elements are there and we don’t have a meter factor to attach.

So ultimately we’re going to have a very inaccurate volume that we’re using for reporting. That inaccurate volume compounded over an entire gathering system with inaccuracies all along the way is going to create large metering differences.

So to summarize this, U is for unknowns and as you can see this is just one metering point and there can be a number of unknowns that we would have to identify when we’re conducting that measurement review.

Planning

Once we resolve a concern we need to plan. We need to develop a strategy. What is our strategy to address that problem and can we move forward? Not even with that specific facility but for the entire organization as a whole.

If I’m not pressure and temperature correcting at one facility, odds are very good that I’m not correcting for it  at other facilities.

Do I have a strategy to address the problem at that facility and then moving forward how am I going to ensure the pressure elements, the temperature elements and the meters themselves are going to be proved.

So what is that strategy? 

You might be sitting in your office right now thinking to yourself, this sounds an awful lot like EPAP… and yes it does! 

What we want to do is take a play out of the EPAP book and look at developing controls. 

What controls can be embedded within our organization to ensure that the concerns that we’ve identified are addressed? 

oil and gas measurement controls

If I find the resolve for a metering difference or bad proration factor, how can I fix it at that facility? How can other facilities within our organization learn from that and gain from that knowledge? Also, what controls can we put in place to ensure that moving forward we don’t have those concerns keep happening again and again?

As I mentioned earlier – a measurement review can be very specific or it can be very broad.

Oil and Gas Measurement Schematic of a Gathering System

I have an example that you see on above, it is a fictitious gathering system and we can look at that entire gathering system as a whole to ensure the oil and gas measurement practices are accurate.

  • Following the right trucked production 
  • Using the right reporting delineation
  • Using right accounting formulas for that entire network 

Or, we can zero in on one of those facilities and find maybe we have a metering difference or proration factor at just one of those facilities and we really want to get to the root cause of that. This allows us to start zeroing in on one of those facilities and do a more exhaustive review at one of those facilities.

It really depends on that interaction and the reason that we’re brought to the table as to how we’re going to conduct a review of that facility, gathering system for a small micro level issue.

So let’s reflect on the two different approaches that we saw.

If I have a meeting difference or if I have a proration issue, there is a certain cost to going out and calibrating and calibrating and calibrating month-over-month over month. There is definitely a high cost associated with doing that. 

It takes operator time to organize it .

It’s somebody’s time to manage the calibrations and/or proving.

And then, obviously there is the immediate cost of paying a vendor to go out and calibrate, prove, calibrate, prove. So there is a huge cost of and time associated with that 

But for a long time this has been the resolve to identifying or fixing measurement concerns

So I want to take that methodology and I’m going to put that up square in the face of the cost of conducting an oil and gas measurement review.

When you conduct a measurement review, there is not only the benefit of fixing your immediate concern, but you also get the benefit of identifying any other concerns: regulatory concerns, business concerns, and so on so forth. 

And we can address those with a measurement review to see immediate monetary benefits as well as the long-term benefits.

Conclusion

I started this with Dr. Seuss so now that we’re wrapping up I think it would only be fitting to end on Dr. Seuss as well!

Nothing is going to change unless someone does something soon

Nothing is going to change, unless someone does something soon.

If every month you have a bad proration factor and you just let it go, or every month, we continue to calibrate and re-prove, calibrate and re-prove. Nothing’s going to change. 

The best solution to resolve your measurement concerns in my opinion is to step back, conduct a measurement review, and find the underlying cause of your measurement concern.

At the end of the day it’s not going to cost you more than the capital cost that you’ve been spending in doing calibration, prove, calibration, prove again and again. Address the initial problems properly and move forward!

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