Global oil and gas industry risks million due to mis-measurement

The oil and gas industry is facing major financial exposure due to the choice of fiscal measurement point in the supply chain. NEL, the custodian of the UK’s National Flow Measurement Standards, is warning operators and taxation authorities that the level of exposure runs into millions of dollars each year.

In the UK alone, the point of sale for one-third of oil production is outside the country, valued at approximately $13 billion each year. This is measured on systems not subject to the Department of Energy & Climate Change’s (DECC) scrutiny, with regulations and accuracy requirements potentially varying widely between countries.

NEL believes that this is a global problem as organisations, such as Measurement Canada, and the Federal Energy Regulatory Commission (FERC) in the USA, face similar issues to DECC.

Douglas Griffin, Head of Petroleum Measurement & Allocation at DECC, said: “We are increasing scrutiny in this area as we are unable to audit facilities outside the UK and must therefore rely on third parties out of our control to apply rigorous measurement principles and good operating practices.”

Dr Phil Mark, Director at NEL, said: “We have been involved in flow system testing for over half a century and have identified an increasing level of uncertainty in accurate fiscal measurement as cross-country trade grows. Any mis-measurement due to location and the measurement techniques applied impacts not only the sales revenue generated by the operator, but also the tax revenue of governments.”

Flow measurement occurs at a number of points during the journey from oil extraction to the discharge port, such as a refinery. Each point will have its own uncertainty, which causes cumulative error in the final fiscal measurement.

To address these issues, NEL, supported by the UK National Measurement System, is organising a one day workshop on 25 March in Aberdeen. The Workshop will examine each step in the measurement chain in the transfer of oil from the offshore installation to port of discharge.

Edited from source by Elizabeth Corner

Read the article online at: https://www.worldpipelines.com/business-news/12022015/global-oil-and-gas-industry-risks-millions-mis-measurement/