When Measurement is Money

Derek Scott explains how to ensure the robustness of systems that determine the income and tax bill of plant operators, and illustrates some of the pitfalls of getting it wrong

FROM refined fuels like petrol and diesel to raw materials like ethylene and benzene, metering systems are a mainstay in the oil, gas and chemical industries.

These have a specific importance in fiscal metering and custody transfer situations, where a meter reading determines how much a producer gets paid for a product, or how much tax is due on a product.

Large sums of money are exchanged each day and to avoid disputes between buyer and seller, every transaction has to be implemented fairly and equitably. To ensure this, the product must be measured accurately and without bias, and that accuracy has to be unimpeachable.

All the components from the primary measurement device through to the final billing play an instrumental part in ensuring that the metering system functions to specification and complies with the standards.

The implication of not having a robustly operated and maintained metering system can be summed up in the words of Lord Kelvin: “If you cannot measure it, you cannot improve it. When you can measure what you are speaking about, and express it in numbers, you know something about it; but when you cannot measure it, when you cannot express it in numbers, your knowledge is of a meagre and unsatisfactory kind.”

Our company recently became involved in a dispute between two companies, A and B, who worked across a fence from each other. One measured and supplied feedstock, the other measured the feedstock they received. When the supplier’s invoice arrived, there was a significant difference between the buyer’s and seller’s figures.

What was the problem?

Measurement errors in custody transfer can be very expensive, and therefore custody transfer and fiscal metering are heavily regulated by national metrology standards and involve government taxation and contractual agreements between parties.

A variety of regulations, industry standards and protocols are in place to help maintain the highest levels of accuracy during custody transfer. Protecting the financial interests of both buyers and sellers is one of the key goals.

After an investigation into the dispute mentioned previously, it was discovered that while the seller had a fully maintained and well-documented metering system, the same could not be said for the buyer.

Technically defensible measurement

When you purchase fuel, you take it for granted that the volume delivered is correct. How would you know?

Firstly, a fiscal/custody transfer metering system must be designed to meet the specified requirements laid out in the relevant international standards.

Secondly, the meter – the primary element – must have been flow calibrated at an accredited facility and routinely flow calibrated thereafter to ensure there is no drift or shift in the measurement.

Flow calibration at an accredited facility ensures that the measurement is traceable to an international standard. If the calibration is not traceable then it doesn’t count and is therefore not technically defensible. The picture illustrates the issue between company A and B. The meter operated by company A had been recently flow calibrated at an accredited facility and had a fully traceable document path.