Crude Oil Custody Transfer Sales Verification in the Upstream Sector

Marked  domestic  production  increases  have  resulted  from  hydraulic  fracturing  in  combination  with  horizontal  drilling   in  major  shale  plays  across   the  country.    With   those  gains  has  come  a  renewed  emphasis  on  the  importance  of  proper  measurement  and  verification  processes.      The   custody   transfer   (i.e.,   the   sale)   of   crude   oil   from   producers   to   purchasers   is   often  accomplished  through  a  LACT  (Lease  Automatic  Custody  Transfer)  unit.    As  the  custody  transfer  point,  LACT  deliveries  should  not  only  be  measured  and  reported  as  accurately  as  possible,  but  they   should   be   verified.     Historically,   LACT   operations   have   been   highly   dependent   upon   the  tanker   truck  driver   for   correct,   conscientiously   submitted  data.    However,   recent   advances   in  hardware,   software,   telecommunications,   and   information   technologies   allow   leading-­‐edge  instrumentation  to  not  only  control  and  monitor  LACT  unit  operations,  but  to  instantly  prepare  and  distribute  electronic  delivery   tickets   for  each   completed   transfer,   and   then   to  webize   the  data   for  easy  access,  analysis,  and  archiving.    When  combined  with  relevant   information   from  other   sources,   such   as   ancillary   monitoring   equipment,   laboratory   analyses,   and   field   test  reports,  comprehensive  system  intelligence  may  be  compiled.      This   timely   electronic   gathering   of   information,   in   conjunction   with   advanced   hydrocarbon  measurement  software  systems,  permits  rigorous  verification  of  the  custody  transfer...including  preparation  of  balances  across  the  production  and  delivery  transfer  points.    With  such  tools  and  data,   experienced   analysts   can   readily   identify   and   generally   reconcile   unacceptable   gains   or  losses,  whether  due  to  bad  data,  leaks,  measurement  errors,  improper  accounting,  or  even  fraud  or  outright  theft.      Verification  of  crude  oil  custody  transfer  is  a  vital  process  whose  time  has  come.    Regardless  of  the   price   per   barrel,   be   sure   that   you're   accurately   accounting   for   every   sale,   with   an  infrastructure   and   data   repositories   that   can   provide   for   a   full   supporting   audit   trail.     For  assistance   in   preparing   and   implementing   the   relevant   policies   and   procedures,   be   sure   to  contact  a  highly  specialized  crude  oil  measurement  specialist  to  assess  the  most  advanced,  cost-­‐effective  solutions  available  for  verifying  crude  oil  sales.        "To  attain  knowledge,  add  things  every  day.  To  attain  wisdom,  subtract  things  every  day."  

~  Laozi,  Chinese  philosopher