American Oil and Gas Reporter - February 2017 - 73

SpecialReport: Enhanced Oil Recovery

Method Adds Custody Transfer Options
By Michael Machuca
HOUSTON-Manual tank gauging at
onshore oil and gas facilities is viewed
as a cost-effective solution for managing
tank inventories and custody transfer
measurements. The American Petroleum
Institute's Manual of Petroleum Measurement Standards (MPMS) Chapter 18.1
standard provides guidance for how such
measurements are to be made, but there
is increasing concern about accounting
accuracy, production losses and safety.
Operators also are looking to reduce
costs and increase cash flows by better
managing tank transfers, logistics, and
inventories.
Manual tank gauging presents a number
of health and safety concerns associated
with frequent field trips, working under
harsh seasonal weather conditions, and
cumulative exposure to volatile organic
compounds.
For example, opening tank thief hatches
can lead to the rapid release of high concentrations of hydrocarbon gases and vapors. This may result in very low oxygen
levels and toxic hydrogen sulfide levels,
as well as flammable conditions around
and over the tank thief hatch, all of which
pose serious safety risks to workers while
gauging tanks, collecting samples or transferring fluids.
As outlined in a bulletin on gauging
and sampling from the National Institute
for Occupational Safety & Health and
the Occupational Safety & Health Administration, eliminating hand-gauging
and utilizing automated technology can
reduce risks to workers. In addition, better
insights into tank inventory levels can
reduce the chance of spills and optimize
transfer logistics, thereby reducing road
traffic hazards.
Historically, the only small lease tank
custody transfer method other than API
MPMS Ch. 18.1 for manual gauging was
installing a lease automatic custody transfer
(LACT) unit per API MPMS Ch. 6.1.
However, LACT units can be uneconomical on sites with low production volumes.

measurement methods. The goal is to
allow existing technology and standards
to be used for custody transfer while
eliminating manual tank gauging and the
opening of thief hatches.
API Ch. 18.2 defines three zones
where the quantity and quality of oil
being loaded from a lease tank to a truck
trailer can be measured. The zones are
defined as the tank zone, transition zone,
and trailer zone.
The tank zone is defined as the tank
interior and any equipment attached to
it. It ends at the outlet valve. The transition
zone is defined as the area between the
tank and the truck/trailer during custody
transfer. It ends at the inlet valve of the
trailer. Finally, the trailer zone is the
trailer interior after a product has left the
transition zone. The trailer zone begins
at the inlet valve of the trailer.
API Ch. 18.2 requires six categories
of data be measured for custody transfer,
which can be done using equipment located in one or multiple zones. The categories are:
* Merchantability;
* Indicated/observed volume;
* Product temperature;
* API gravity and observed temperature;
* Suspended sediment and water; and
* Calculated volume (gross and net
standard volumes, as referenced in API
MPMS Ch. 12).
API Ch. 18.2 recommends creating a
list of existing and/or available equipment
for each zone and documenting the equipment uncertainty used to determine the
quantity and quality of crude oil. Section
13.2 outlines a process for calculating
the overall uncertainty of the custody
transfer operation.
These data can be used to develop a
method that minimizes overall measurement uncertainty while meeting contractual
obligations. Because of the different types
and possible permutations of potential
devices on the market, this article focuses
on the indicated volume measurement
using the two most common methods:
automatic tank gauging and LACT units.

New API Standard

Automatic Tank Gauging

To address this issue, API has released
MPMS Ch. 18.2, a new standard that
provides guidance for crude oil custody
transfer from lease tanks using alternative

One of the solutions in the tank zone
is automatic tank gauging. While API
has a standard (MPMS Ch. 3.1B) for automatic tank gauging for custody transfer

measurements, this standard was designed
for large storage tanks, and its requirements
are uneconomical for small lease tanks.
API Ch. 18.2 addresses the unique requirements of small lease tanks in many
onshore operations by referencing the
Ch. 3.1B standard practices, but with reduced accuracy requirements associated
with API MPMS Ch. 18.1. This allows
using instruments more suitable and economical for the application, such as guided-wave radar.
Guided-wave radar traditionally has
provided validation of well production
rates, off-lease transfers of produced
water, and tank gauging operations for
oil custody transfer. Many operators have
standardized around using guided-wave
radar and have an installed base of instruments.
Operators now can realize additional
benefits by adopting the technology for
custody transfer. They also will need to
develop procedures for obtaining product
quality measurements in the transition
zone to achieve the safety benefits of
keeping their personnel off tanks.
API Ch. 18.2 Section 10.2 outlines
various options and standards for determining oil quality. There are additional
benefits to minimizing manual tank gauging, such as improved accuracy and reduced potential for production losses.
Manual tank gauging requires high
operator competency, is subject to human
error, and frequently must be performed
under difficult weather conditions. When
oil is hauled off the lease site, the operator
often must ensure that the volume delivered
is not less than what was measured to be
contractually compliant. This can lead to
rounding open- and end-level measurements, which can introduce lost-and-unaccounted-for production errors.
An example shown in Table 1 uses a
typical shale well producing 900 barrels
of oil a day. A 1 percent error in tank
gauging represents an annual fiscal exTABLE 1
Manual Gauging Error Example
Production rate
Gauging error
Volume error
Daily exposure
Annual exposure

900 bbl/d
1%/haul
9 bbl/d
$450
$164,250
FEBRUARY 2017 73

American Oil and Gas Reporter - February 2017

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