With the price of crude oil hovering around $100 per barrel, consistent accounting errors can cost oil and gas companies millions of dollars each year. That's exactly what has happened in an essential corner of the oil business – hydrocarbon transfers.
Hydrocarbon operations are spread far and wide, often in remote regions. At each wellhead, storage tank, offshore platform, pipeline inlet or terminal, buyers and sellers gain unattended access to oil supplies through a skid unit. It's called LACT – lease automatic custody transfer. The unit consists of a series of pumps, pipes and valves designed to measure oil quality and purity, as well as govern flow rate, operating pressure and other key parameters.
Accounting for these buyer/seller transfers is a far less sophisticated process. Most LACT units have little automation and even less network connectivity.
As a result, this is a common scenario: Truck drivers who load or unload oil at the LACT manually write out a ticket noting the amount of transferred oil, as well as quality metrics, such as the specific gravity. They then drop these tickets into a mailbox that stands next to the unit.
The LACT owner makes weekly or monthly rounds to retrieve the tickets, which office personnel then process for invoicing. Their work can be complicated by soggy, unreadable tickets, the result of rain at the LACT site or drivers simply failing to seal the tickets in the Mason jar left in the mailbox.
The time lag, the handwritten tickets and other variables create complications for oil companies and their balance sheets. These hydrocarbon-transfer payment cycles can range from 30 to 90 days, and contain errors ranging from 2 to 8 percent.
This persistent problem troubled Ted Hutto and Ronnie Riggs. They co-own two Texas-based companies that sell, lease and service LACTs: Panhandle Meter and Trigg Technologies. The co-owners are intimately aware of the impact that ticketing errors and invoicing delays can have on their customers.
Panhandle Meter and Trigg Technologies serve a wide scope of customers. They range from mom-and-pop trucking companies with fewer than 10 trucks, to global oil and gas producers with billions in revenue and hundreds of trucks.
“Customers across the board struggle with ticketing errors that result from poor handwriting or spelling,” said Hutto, noting that only a few LACT units are semi-automated with a touchscreen and on-site ticket printing or are linked via SCADA. “And sometimes, key information isn't filled in on the ticket.”
That's a major problem because the billing system for hydrocarbon transfers relies on oil and gas truck drivers accurately and completely filling out tickets. Unfortunately, the drivers have little incentive for such diligence because – as Hutto explained – they're usually paid by the truck load. They earn their commission simply by delivering the shipment, regardless of the specific amount or quality of the oil they deposit or retrieve.
Additionally, most LACT units are located in remote and often austere areas, far from conventional communications channels. As a result, skids lack the on-site infrastructure required for cost-effective data collection and transmission for invoice processing. The physical distances also increase the cost of supporting and maintain the LACTs.
Hutto and Riggs knew customers would welcome a ticketless solution to improve billing accuracy and timing. In spring 2013, they turned to Rockwell Automation to explore automation and information solutions to help them meet these goals. The outcome would quickly usher the LACT industry from pre-information age to the height of modern automation and information technology.
Working closely with Trigg to address the unique challenges with LACT operations, Rockwell Automation designed and developed a turnkey asset performance management (APM) solution, leveraging the Microsoft® Windows Azure™ cloud platform. Data from the LACT's Allen-Bradley® CompactLogix™ programmable automation controller – as well as information coming from an Endress+Hauser Coriolis mass flowmeter, and a sediment and water detector – are displayed on a local HMI or industrial PC screen and transmitted into the Windows Azure cloud.
Once in the cloud, Rockwell Software® applications combine real-time and historical data into dashboards that provide contextualized information on transfers, overall oil quality, and well productivity over time. These measured variables and diagnostics can be seen from any location via a secured Internet connection.
At the LACT, truck drivers input an identification number into the HMI, start the transfer and watch as their “tickets” are automatically populated when they unload or fill up on crude. This information is sent to the cloud via a cellular or satellite connection (depending on the LACT location and available cellular networks). An invoice is then immediately and automatically generated, and sent to the customer address linked to that identification number.
A condition-based monitoring interface and high-water content alarm alert on-site operators and remote stakeholders of any operational issues. If water content into the LACT is higher than set parameters (which vary across regions), the LACT automatically turns off the pump. Repeat offenders can have their identification numbers banned from transfers at certain units, providing a new level of quality protection in hydrocarbon transfers.
“With the cloud, everything the truck drivers are seeing and doing is also available to verified users in maintenance, operations and management,” Riggs said. “The immediate impact is to improve invoicing, maintenance and product quality, but the Rockwell Automation cloud-based solution also opens the door to a vast amount of untapped data that LACT units can offer.”
In field testing, Trigg LACT skids with the Rockwell Automation solution reduced time from different company billing cycles. The accuracy of hydrocarbon-composition information improved compared to manual systems. With information automatically pulled from the LACT control system to populate e-tickets, billing errors are virtually eliminated.
“Considering the vast amount of crude oil a single LACT skid can transfer, the impact of such errors can be truly enormous,” Hutto said. “For example, consider a LACT unit with a daily lease production of 3,000 barrels. If the accuracy is off just a single percentage point, the annual loss of revenue at $100 per barrel oil would top $1 million dollars.”
Maintenance is also less costly and more timely. With its proactive alarming capabilities, the Trigg LACT alerts users to urgent situations, via text or email, for immediate response. For example, in field testing, a pump motor was shut down remotely when maintenance operators received an alert that pump energy use parameters had been exceeded. When operators tapped into cloud-based trending capabilities, they determined a strainer filter was wearing out, and were able to schedule a routine maintenance checkup. This prevented both a potential pump failure costing over $5,000 and an unnecessary but costly emergency site visit. The cloud-based system also provides the flexibility to perform system updates or modifications centrally, with immediate impact across the network.
Trending capabilities also allow site and operations managers to better understand the type of oil coming out of each well. This allows them to plan for long-term production across a number of wells or they can mix oil from a variety of wells to produce a more consistent product.
“Field testing has been extremely successful,” Riggs said. “Now that our customers are starting to understand what they can do with this information, they are empowered and they want more.
“We've had discussions about adding tablets and mobile phones or apps to the solution, so truck drivers have a direct connection to a dispatcher. That person can send them to the LACT with the shortest line, to speed up loading and unloading,” Riggs continued.
“Some folks are interested in adding hydrogen sulfide gas monitors, tracking and alarms for improved environmental safety. We've even begun discussing a system modification for saltwater-disposal operations. It's like we've found the ‘easy button' for custody transfer.”
“We started this project trying to get invoices out more quickly and accurately,” Hutto added. “But we've seen how the right control and information infrastructure can turn data into information. Contextualized, that information becomes knowledge that improves accountability and collaboration. This knowledge evolves into institutional wisdom."
The results mentioned above are specific to Trigg Technologies' use of Rockwell Automation products and services in conjunction with other products. Specific results may vary for other customers.