HYDROCARBON MANAGEMENT

HM 54 GUIDELINES FOR THE MANAGEMENT OF

MEASUREMENT FOR THE UK UPSTREAM OIL
AND GAS INDUSTRY
 HYDROCARBON MANAGEMENT

HM 54 GUIDELINES FOR THE MANAGEMENT OF

MEASUREMENT FOR THE UK UPSTREAM OIL
AND GAS INDUSTRY

January 2007

Published by
ENERGY INSTITUTE, LONDON
The Energy Institute is a professional membership body incorporated by Royal Charter 2003
Registered charity number 1097899
The Energy Institute gratefully acknowledges the financial contributions towards the scientific and
technical programme from the following companies:

BG Group Murco Petroleum Ltd

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Maersk Oil North Sea UK Limited

Copyright © 2007 by the Energy Institute, London:

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ISBN 978 0 85293 471 5

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 CONTENTS
Page

Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii

Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix

Introduction and scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi

1 Measurement philosophy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Management of measurement – An overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1.1 Why measure? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1.2 Key aspects of management of measurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Legal and statutory issues and UK fiscal regime . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2.1 UK statutory issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2.2 UK fiscal regime . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.2.3 Commercial issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.3 Measurement applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.3.1 Fiscal measurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.3.2 Custody transfer measurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.3.3 Allocation measurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.3.4 Reservoir management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.3.5 Environmental measurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.4 Measurement uncertainty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.4.1 What is measurement uncertainty? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.4.2 Using uncertainty as a decision making tool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.4.3 Uncertainty in financial terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.4.4 Uncertainty as a life cycle tool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.5 Commercial agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

2 The measurement system . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

2.1 Specification of requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.2 System design and manufacture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.2.1 Functional design specification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.2.2 Meter selection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.2.3 Meter calibrations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.2.4 Factory Acceptance Test (FAT) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.3 System installation and commissioning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

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Contents Cont... Page

3 Operations and management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

3.1 Operation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.1.1 Operating structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.1.2 Operating personnel competence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.1.3 Operating procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.1.4 System alarms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.2 Calibration and validation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.2.1 Requirement for calibration and validation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.2.2 Calibration procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.2.3 Calibration software packages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.3 Sampling and analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.3.1 Requirement for sampling and analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.3.2 Sample representivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.3.3 Liquid sampling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.3.4 Gas sampling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.4 Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.4.1 DTI production reporting mechanism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.4.2 Third party reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.4.3 Environmental reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.5 Documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.5.1 Required documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.5.2 DTI submissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.5.3 Log keeping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.6 Data management, validation and security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.6.1 Resolution of measurement data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.6.2 Validation of measurement data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.6.3 Security of data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.6.4 Storage and back-up of data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.7 Software control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.7.1 Need for software control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.7.2 Operating systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.7.3 Software packages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.8 Mis-measurements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.8.1 What constitutes a mis-measurement? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.8.2 How to identify a mis-measurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.8.3 Mis-measurement reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.9 Dispensations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.9.1 Purpose of dispensations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.9.2 Identifying dispensations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.9.3 Reporting process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.10 Compliance and auditing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.10.1 General requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.10.2 Measurement audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.10.3 Environmental audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.10.4 Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Annex A – Standards, guidelines and references . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Annex B – Glossary of terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

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 FOREWORD

The EI Hydrocarbon Management Committee is responsible for the production and maintenance of Guidelines
covering various aspects of static and dynamic measurement. In carrying out this activity, the EI works in
partnership with the API (American Petroleum Institute) to produce standards that can be used on an international
basis.
The Hydrocarbon Management Committee (HMC 7) deals with the upstream sector of the industry, and
produces guidelines on measurement for fiscal reporting, product allocation and streams associated with emissions
trading.
This document has been produced by HMC 7 in order to provide industry with Guidelines which can inform
key personnel and management of the requirements for hydrocarbon measurement in the UK, and to provide a
template for the development and deployment of management of measurement systems.
Issue of this document is timely as of late, ownership of gathering networks and producing fields is tending to
change from the large international oil corporations to smaller independent operating companies employing
contracted specialists. As many of the smaller companies are new to the management of production operations, they
may not have the necessary resources to develop robust systems to effectively manage measurement, allocation and
reporting.
The larger Corporations are also tending to move toward the engagement of contractors to undertake the daily
measurement and allocation tasks. The scope of work for the contractor may range from development of metering
and allocation philosophies through to the routine collection and processing of raw metering data which is used for
allocation and fiscal reporting purposes.
It is intended that this Guideline should apply to any size of offshore/onshore operations and will assist operators
plan, maintain and operate their respective measurement systems to comply with the legislative and commercially
agreed metering standards. It will also inform industry on how this entire range of activities is best managed and
what activities are mandatory and explain the importance of managing measurement in a cost effective manner in
order to realise maximum commercial value.

The DTI is represented on HMC 7 and has provided the following statement:

"Under the terms of the UK Petroleum Production Regulations, Licensees have a Statutory Requirement
to use 'Good Oilfield Practice' for the measurement of all petroleum won and saved.

In interpreting the term 'Good Oilfield Practice', the DTI has for many years been prepared to relax its
uncertainty requirements for new and existing fields. This step has been necessary in the interests of
stimulating the development of the remaining oil and gas reserves in the North Sea.

The relaxation of these uncertainty requirements is a reflection of the more challenging nature of the
fluids being measured. It does not follow that a system designed to meet an uncertainty target of 10%
will require any less management than one designed to meet 1%.

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 GUIDELINES FOR MANAGEMENT OF MEASUREMENT FOR THE UK UPSTREAM OIL AND GAS INDUSTRY

Irrespective of the level of the target uncertainty, a sound strategy of Management of Measurement is
essential if the target is to be met. In today’s North Sea, this aspect is more important than ever in view
of the pressure on staff resources, and the practice of outsourcing measurement supervisory activities.

DTI has been consulted in the production of these Guidelines, regards the principles contained within
them as essentially sound, and expects Operators and Licensees to follow them from the outset of a
field’s development through to cessation of production."

Although written primarily for the United Kingdom offshore industry, it is expected that the management principals
explained herein can be applied to good effect in most other countries throughout the world.
This document has been compiled for Guidance only and while every reasonable care has been taken to ensure
the accuracy and relevance of its contents, the Energy Institute, its sponsoring companies, the document writer and
the Working Group members listed in the Acknowledgements who have contributed to its preparation, cannot accept
any responsibility for any action taken, or not taken, an the basis of this information. The Energy Institute shall not
be liable to any person for any loss or damage which may arise from the use of any of the information contained in
any of its publications.
This Guideline may be reviewed from time to time and it would be of considerable assistance for any future
revision if users would send comments or suggestions for improvements to:

The Technical Department,

Energy Institute,
61 New Cavendish Street,
London
W1G 7AR
E: technical@energyinst.org.uk

viii
 ACKNOWLEDGEMENTS

The Institute wishes to record its appreciation of the work carried out by the following individuals:

David Stewart (principal author) and Gilbert Tonner of Kelton Flow Measurement Consultants for the preparation
of this Guideline.

Members of the HMC 7 Working Group who have assisted with steering the project and for providing valuable
expertise:

Keith Hart Energy Institute (Chairman)

Michael Almeida Hess Corporation
Ian Bates Total
Baron Bennington Talisman
Rod Bisset Britannia Operator Limited
Lol Coughlan Shell
Geoff Freter Chevron
David Geach ConocoPhillips
Douglas Griffin DTI
Sandy Hay BP
Denis Pinto Caledonian Flow Systems Limited (HMC 7 Honorary Secretary)

The Institute also wishes to recognise the contribution made by those who have provided comments on the Draft
document which was issued during an industry consultation period.

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GUIDELINES FOR MANAGEMENT OF MEASUREMENT FOR THE UK UPSTREAM OIL AND GAS INDUSTRY

x
 INTRODUCTION AND SCOPE

The measurement of hydrocarbons was relatively simple in the early days of the UK upstream oil and gas industry.
Large fields were developed with dedicated processing and measurement facilities, exporting to shore through
dedicated pipelines.
The measurement approaches were also relatively simple. Oil was measured using turbine meters, which were
in turn calibrated regularly against on-line prover systems to ensure measurement accuracy. Gas was measured using
orifice plates designed to an international standard; the plates were inspected and the secondary instrumentation was
calibrated at regular intervals.
The management of such measurement systems from the concept and design, through the operating, calibration
and validation, to the reporting was relatively straightforward.
This situation has changed dramatically in recent years as more and more secondary fields have been developed.
Many of these fields make use of existing platform infrastructure to process and/or transport the produced fluids.
As a consequence in many situations, more than one field is commingled prior to total product measurement and
export into a pipeline. This has driven the need for measurement further upstream, with requirements for allocation
measurement to determine the production from each source field.
The economics of many new fields are so marginal that the traditional measurement approaches and
requirements have been relaxed to reduce the cost to a level acceptable for the proposed fields. This has naturally
led to an increase in measurement uncertainty in some systems, with a consequent increase in financial exposure
for Operators and Government.
Combined with a two-tier fiscal regime, where some fields pay Petroleum Revenue Tax (PRT) and others don’t,
these changes have led to the issue of management of measurement becoming increasingly more important within
the UK oil and gas industry.

SCOPE

This document has been produced to provide high level guidance for the management of measurement for Operators
in the UK upstream oil and gas industry. It is not intended to be prescriptive.
The intention is to highlight all the key areas that should be considered at all stages involved with a
measurement system, in order to improve and assist management of measurement throughout the industry, and hence
ultimately improve the return on investment for all Operators in the UK oil and gas industry.
The approach to, and concept of, 'Management of Measurement' within this document is equally relevant
internationally. Operators outside of the UK will have different regulatory regimes that will apply in place of the
UK DTI.
Management of measurement covers all aspects of a measurement system from the specification of
measurement requirements, through system design and installation, to operation, calibration and reporting.
The Document is arranged in three main sections:

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 GUIDELINES FOR MANAGEMENT OF MEASUREMENT FOR THE UK UPSTREAM OIL AND GAS INDUSTRY

Section 1 Measurement Philosophy, addresses the need for measuring hydrocarbon production, looking at the
legal and statutory requirements and the financial and operational implications of different
measurement applications.

Section 2 The Measurement System, highlights the key stages in the design, manufacture and installation of the
measurement system. Management of the equipment and personnel is also discussed.

Section 3 Management of measurement, covers the on-going management and operation of the measurement
system once production has commenced.

Annex A Contains a list of relevant standards, guideline documents and any other references.
Annex B Contains a glossary of technical and industry terms used in the document.

xii