Energy Accounting: Royalties, Allocation, Custody Transfer, and Sub-metering
Allocation, Royalties, and Custody Transfer
The Oil & Gas Industry uses allocation as a part of the hydrocarbon accounting process to calculate royalties. The flow of petroleum from contributing sources - like natural gas - must be measured or "allocated" in order to determine ownership of sources that become commingled from the source to storage or the point of sale. Investors in Oil & Gas exploration or production often share costs over multiple owners to decrease individual risk. However, once production begins, determining ownership percentages from the product can become tricky if there are inaccuracies in the estimation of flow. Beyond ownership of produced hydrocarbons, the objectives of allocation are:
- To account for product transported from source to customer
- To help production planners determine offtake schedules
- To assist engineering staff regarding reservoir, well & production facility behavior
- To record data for report, audit & review purposes
Without accurate data on flow, the integrity of these objectives is compromised.
Daily accounting of natural gas usage is a priority for a variety of industrial facilities with multiple processes and/or buildings that need to track usage across these processes or buildings. Fuel gas flow meters are used as sub-meters in these cases to analyze demand, improve operating efficiency, reduce waste, and adjust for peak usage.
In the past, flow meter types such as orifice plates, venturis, vortex and turbine meters were used to measure natural gas consumption. However, these volumetric devices offer limited rangeability and require pressure and temperature transmitters to compensate for density changes.
Today, the thermal mass flow meter has become the preferred device for many energy accounting applications. The thermal flow meter measures gas mass flow directly, with no need for additional hardware and without pressure or temperature compensation. It also provides better rangeability and a lower pressure drop than volumetric flow meters.
For example, one manufacturer replaced an older fuel measurement system that consisted of turbine meters with ancillary pressure and temperature transducers with a new system made up of only thermal flow meters. Not only did they reduce the time and expense associated with servicing the turbine meters, they also found that the thermal flow meters’ wide turndown provided a more accurate measurement at low and varied flows, ensuring accurate cost allocation and improved combustion control capability; and no additional equipment was needed to monitor pressure and temperature.
In addition to industrial facilities, thermal flow meters help provide accurate usage reports for environmental compliance, and compare measured usage to billing reports from gas providers in commercial applications.
University campuses and industrial parks use totalizing flow meters to allocate fuel costs to various buildings and/or tenants. Natural gas check meters are often used to document usage, negotiate rates and resolve billing disputes. Fox Thermal flow meters may be used to monitor and bill for fuel consumption on skid-mounted generators and compressors. Sub-metering by department or process helps manufacturers assess inefficiencies, assign costs and implement conservation measures.
In addition to the primary benefits of direct measurement of mass flow rate, low-flow sensitivity, and fast response, the thermal flow meter’s no-moving parts design also helps reduce maintenance costs.
Typical applications include:
- University campuses and industrial parks use totalizing flow meters to allocate fuel costs to various buildings and/or tenants.
- Natural gas check meters are often used to document usage, negotiate rates and resolve billing disputes.
- Fox Thermal flow meters may be used to monitor and bill for fuel consumption on skid-mounted generators and compressors.
- Sub-metering by department or process helps manufacturers assess inefficiencies, assign costs and implement conservation measures.
Check out the Fox Thermal Products available to help with the energy accounting process.
Read more about Oil & Gas applications.
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