LACT

Trends in LACT Equipment Design and Application

JOSEPH ZABA
MEMBER A/ME

Abstract

During a relatively short period of

six years, the method of lease automatic custody transfer (LACT) gained
universal acceptance, and its use has
grown from year to year at a very
fast rate. This testifies to the value
of the method to both the producing
and the transportation branches of the
industry.
The design of LACT units has undergone considerable evolution during
this period with the resulting simplification oj the units and the consequent reduction in their investment
and maintenance costs. The main economic advantage of LA CT is the fact
that it made possible the present accelerated trend toward consolidation
oj field oil-storage facilities, with the
resulting substantial savings in operating costs. Particularly promising is
the arrangement under which the untreated fluids jrom leases with different royalty accounts are metered and
sampled at the individual leases, and
are then commingled and brought to
one central treating and LACT facility. While this arrangement at present
is limited primarily to unitized fields
or to cases where one company owns
the whole field or a large portion of
the field, there is no reason why it
should not find its eventual application
also in fields with diversified lease
ownership through agreements between the operators jor cooperative
surface handling oj oil.
Introduction
Few of the methods used in oilfield operations have gained such a
universal acceptance in such a short
period of time as the method of lease
Original manuscript received in Society of'
Petroleum Engineers office April 2, 1962. ReviS<ld manuscript received Aug. 25, 1962. Paper
presented at SPE Production Automation Meeting, May 17-18, 1962, in Hobbs, N. M.
C'iOVEMBER, 1962

SPE 344

PAN AMERICAN PETROLEUM CORP.

TULSA, OKLA.

automatic custody transfer (LACT).

The fact is even more remarkable
when one considers the many interests which are involved in the transactions covered by this method.
When the producer decides to introduce an innovation in the equipment he uses or in his operating practices, he is dealing with his own
equipment and with oil which is under
his exclusive custody. The same is true
of the pipeline carrier when he decides to employ advanced methods in
the operation of his system. However,
at the point where the custody of oil
is transferred from the producer to
the pipeline (or to use a generally
accepted although incorrect expression, where the oil is "sold" by the
producer to the pipeline), there are
many interests involved.
1. The producer wants to be sure
that he is paid for every barrel of oil
which is transferred to the pipeline.
2. The pipeline carrier wants to be
assured that he receives the same
amount of oil of the same quality as
that which he will transfer to the
buyer at the other end of his pipeline
system.
3. The royalty owner wants to be
assured that he will receive his share
of all the oil produced.
4. The state regulatory bodies, if
proration is involved, use transfer of
custody records for a check on the
compliance with lease-allowable restrictions.
5. The tax authorities are using
these records for determination of
taxes.
Because of this fact, there was a
doubt in the minds of some (even
among those who pioneered the
LACT idea) regarding the acceptance
of the method by the industry in place
of the time-tested conventional methods of custody transfer. Actual facts

exceeded all expectations. In a relatively short period of six years from

the time the first official transfer of
custody was made, the number of
barrels of oil handled every day by
LACT installations has been increasing at an extremely rapid rate, and
all factors indicate that this trend will
continue. This is the best proof that
the basic idea of LACT is sound, and
that it has benefited both the producing and the transportation branches of
the oil industry.
Definition of LACT and ACT
A certain degree of misunderstanding seems to exist regarding the meaning of the expression, "lease automatic
custody transfer". Even some of the
oil companies using the method and
some of the technical and trade publications refer to it sometimes as
"ACT, automatic custody transfer".
Because there is a basic difference between ACT and LACT and because
the latter alone is the subject of this
paper, it would be well to start with a
clear definition of the method.
"ACT", automatic custody transfer,
has been used for many years by the
transportation, refining and marketing
branches of the oil industry in transactions which did not involve the producer. For instance, the method has
been and is being used for unattended
transfer of custody of crude oil from
one pipeline carrier to another, from
pipeline carrier to the buyer, in loading of ocean-going tankers, in handling of products from refineries to
the marketers and among the marketers. In contrast to this, "LACT" specifically covers the transfer of custody
from the producer to the pipeline. In
the American Petroleum Institute's
Bulletin 2502, "API Recommended
Practice for Lease Automatic Custody
Transfer", the LACT system is defined
as " ... an arrangement of equipment

designed for the unattended transfer

of liquid hydrocarbons from producing leases to the transporting carr-ier ... ". Because LACT must meet
conditions uniquely different from
those under which ACT systems are
operating, the differentiation between
the two methods is important and
should be emphasized here.
History of LACT
The first experimental field installation of a LACT unit was made by
the Shell Oil Co. in Feb., 1948, in the
Antelope field, Tex. Other companies
soon joined in this development with
field tests of units of their own design.
However, it was not until Dec. 22,
1955, that the first routine transfer of
custody of oil through an LACT unit
took place in this country. The transfer was made from the lease of the
Gulf Oil Corp. to the Kaw Pipe Line
Co. in the Bloomer field, Kans. In
Feb., 1958, a nationwide survey conducted by the Functional Group on
LACT of the API Committee on
Crude Oil Measurements determined
that 99 LACT units, handling an average of 171,000 BOPD, were at that
time in operation in the whole country. This same API group is now in
the process of conducting another nationwide survey, but the results are
not as yet available.
Because no up-to-date figures are
available on the extent of LACT use,
the experience of one company, Pan
American Petroleum Corp., may provide an indication of the trend of this
method's acceptance. Pan American
was one of three companies who first
pioneered the LACT method through
developing units of their own design
and through field tests. Pan American's first routine (not a test, but a
routine) custody transfer of oil took
place on Nov. 6, 1956, in the Southwest Sholem Alechem field, Okla. At
that time the company had in operation one LACT unit handling approximately 400 BID. On Jan. 1, 1962,
Pan American had in operation a
total of 180 LACT units handling
224,400 BID. With the number of
other installations already approved or
in the process of construction, this
figure will be substantially increased
by the end of 1962.
The API played an important role
in the evolution of the LACT method.
Within the API Committee on Crude
Oil Measurements there was formed,
in Nov., 1952, a group on LACT
which at that time consisted of four
members. At present this group consists of 19 members, representing a
large portion of all the major producing and pipeline companies in the
United States. In Aug., 1956, this
1184

group published Bulletin 2509A, "API

Bulletin on Lease Automatic Custody
Transfer", which helped in disseminating to the industry information on the
advantages of the method, and on the
design of the LACT systems which
then were being used.
Since acceptance of the method
grew at a very rapid rate, the group
agreed that the time had come for formulation of some more specific guides
for the industry regarding the design
and selection of applicable equipment.
On the other hand, they realized that
it was stilI too early for formulation
of a rigid program of standardization
because of the extremely rapid evolution of the equipment used in LACT
and because of the many innovations
which were being made in this equipment on practically a monthly basis.
The compromise agreed upon resulted
in the preparation of a general standard which primarily consisted of (1)
recognizing LACT as an accepted
method of custody transfer and (2 )
outlining certain basic principles underlying the method. This standard
was included in the API Standard
2500 "On Measuring, Sampling and
Testing of Crude Oil", the last edition
of which was published in March,
1961. Standard 2500 is revised only
once every five years. For all the details of design, therefore, reference is
made in this standard to the API Buleltin 2502, "API Recommended Practice for Lease Automatic Custody
Transfer", which was published by the
API on Dec. 31, 1961. The bulletin
of recommended practice can be revised whenever need arises.
The LACT method gained acceptance because, in many cases, it offered
opportunity for substantial savings in
investment and operating costs. The
spectacular growth of this acceptance
has resulted from the evolution of the
equipment design and of the manner
of the method's application.

By counting the number of dumps,

the total volume delivered during any
given period of time was determined.
The manner of obtaining the same
volume of oil in the measuring tank
for each dump varied in different designs. One was the weir-to-weir type
(Fig. 1). The volume of a dump was
determined by the top edges of the
upper and lower weirs, utilizing floats
located in the weir compartments. The
floats actuated the fill line and the
pipeline connection valves, with appropriate time delays being built in.
Another method (Fig. 2) utilized
floats in the restricted areas of the
tank for control of the volume. Even
large errors in position of the float in
the restricted area resulted in only a
negligible error for the whole volume
of the measuring tank. Still another
method (Fig. 3) involved the socalled valve-to-valve principle, in
which the volume of the dump was
measured between the two valves. The
floats served only as a means of closing and opening the valves. There
were several combinations of these
arrangements, one being the valve-toweir combination (Fig. 4). Figs. 3
and 4 also show a later development,
the use of the so-called "sump tank"
below the measuring tank, which converted the batch-type method of delivery into a continuous one.
As time went on, the pipeline companies became interested in LACT,
realizing the advantages which would
accrue to them from this method.
Among these advantages would be increased accuracy of measurements,
better utilization of labor, the opportunity for better scheduling of runs
which would improve the load factor
of pipeline facilities, and elimination,
to a large extent, of the incrustation

Evolution of Design
The LACT method has been developed and pioneered by the producing
branch of the oil industry. It is understandable, therefore, that the original
LACT units were of the measuringtank type. The producer was accustomed through years of usage to
determining in the tanks the volume
of oil being transferred to the pipelines. To gain the producers' acceptance of the method, the designers of
the first units employed measuring
tanks in which a predetermined volume of oil could be accurately isolated. As the tank was filled to its
design volume, the fill line to the tank
was closed and the contents of the
tank dumped into the pipeline system.

Fig. I-Dump-type measuring tank,

conventional floats.

~MEASURED

UNMEASURED

Fig. 2-Dump-type measuring tank,

restricted-area float.
JOURNAL OF PETROLEUM TECHNOLOGY

problems. In contrast to the producer,

the pipelines were accustomed to using the positive-displacement meters
.for determining the volume of oil
being transferred. They had the
"know-how" of properly maintaining
the meters, and they had confidence
in the meters' accuracy. Since the
pipeline has, in effect, the last word
in accepting the LACT unit, the
trend started away from the measuring-tank toward the positive-displacement-meter units. This trend was
accelerated by the fact that, admittedly, the positive-displacementmeter unit was less cumbersome, more
compact and less expensive than the
measuring-tank unit. Although there
are still many who feel that the
measuring-tank unit has definite advantages over the positive-displacement-meter type (one being the fact
that the measuring-tank unit does not
have to be proved periodically), the
fact remains that at present the predominant majority of LACT units in
operation are of the positive-displacement-meter type.
The original LACT units were custom-built. Many changes had to be
made, and each unit probably was
rebuilt several times. They also had a
rather elaborate system of checks. As
previously stated, at the point of custody transfer there are many interests
involved, and extreme accuracy is
needed. Therefore, early designers of
the units provided elaborate instrumentation to assure this accuracy. In
the case of Pan American's first unit,

~MEASURED

_UNMEASURED

PIPELINE SUMP

for instance, there were four separate

checks on the number of dumps made
hy the unit. As the numher of LACT
units in operation increased and as
they started proving themselves to be
accurate and dependable, confidence
grew. Gradually, the instrumentation
of the units became less complex,
which reduced the investment and the
maintenance costs. Some of the early
custom-made units cost in excess of
$20,000 (Fig. 5), whereas the price
of a modem positive-displacementmeter unit ranges from $4,000 to
$7,000, depending on the design and
capacity.
The trend toward simplification of
LACT units continues. An example of
an extremely simple unit, located in a
field in Alberta, Canada, is shown in
Fig. 6. In this particular field, no
water is produced and the oil is sold
on a flat price basis. Therefore, there
is no need for a BS&W monitor or
sampler. The gas-oil ratio is extremely
low so there is no need for a deaerator ahead of the meter, and the unit
is simply a positive-displacement meter
with an arrangement for the proving
loop. Admittedly, this type of condition does not occur frequently. However, the unit is a good indication of
the progress made since the early
days when LACT was first employed.
One new development is a unit
specifically designed for leases with
small production up to 50 BID, for
which a conventional LACT unit
could not be economically justified.
The unit, developed by the Sinclair
Oil and Gas Co., has been designed
on the premise that the standards of
accuracy required are relative and
depend, among other factors, on the
amount of oil being handled by the
unit. Obviously, a higher per cent of
error would be permissible in a unit
handling 50 BID than in one handling 5,000 BID. Every effort has
been directed toward keeping down
the cost of the unit (Fig. 7). An ordinary water meter is used for measur-

Fig. 3--JDump-type measuring tank,

valve-to-valve measurement.

ing the volume. On installations made

to date, meter-proving tests on the
water meter have shown accuracies to
be well within desired limits and even
comparable to accuracies obtained
with more expensive meters. The monitor is a capacitance probe with highly
simplified circuitry. No "start" and
"stop" level switches are used in the
surge tank. Each LACT transfer cycle
is initiated by a timer. Within each
cycle the oil is first circulated from
the surge tank to treating facilities
and back. When the oil is cleaned, it
is delivered to the pipeline. The cycle
is completed by a low-pressure switch
in the suction of the delivery pump.
The whole unit sells for approximately
$1,200.
The design simplifications and reduced costs of the LACT unit have
been important factors contributing
toward the rapid growth of the method's acceptance.
Evolution of Application

As originally conceived, the LACT

unit was simply a replacement for an
individual conventional tank battery.
It offered a high level of accuracy in
measurements and substantial savings
in the handling of records resulting
from the custody-transfer. This saving
was not limited to the immediate handling of records at the field location,
but also included the handling of records by the other offices involved. In
this type of application, the LACT
unit was difficult to justify economically except in two cases: (1) in the
case of a new field, and (2) in the
case of a battery in which tanks were
in a poor state of repair and would

Fig.6-The

imple t form of LACf

unit.

~MEASURED

_UNMEASURED

PIPELINE
SUMP

Fig. 4-Dump-type measuring tank,

valve-to-weir measurement.
NOVEMBER, 1962

Fig. 5-An early type of LACT unit.

Fig.

7~LACT

unit for handling up to

'50 BOPD.
1185

have had to be replaced. This was true

even after improvements in design
substantially reduced the cost of units.
In these two cases, savings on the initial investment alone made LACT
quite attractive.
This saving in investment compared to the conventional tankage is
clearly illustrated by Fig. 8, which
shows a Wyoming field tank battery
which was replaced by a LACT unit.
The battery consisted of 12,000 bbl
of storage. After the unit was installed,
all except two tanks were surplus.
A new impetus toward increased
acceptance of LACT was brought
about by the combining of this method
with consolidation of tank battery facilities. To be exact, it would be more
appropriate to say that LACT made
possible the present trend toward consolidation of individual tank batteries.
Bringing production to one or more
points of a field from a number of
leases which were previously equipped
with individual tank batteries obviously should result in a savings in operating costs. From the investment point
of view, however, such consolidation
would not offer much advantage if the
central point or points would have to
be equipped with the steel storage
required for conventional methods of
custody transfer. In effect, this type
of consolidation would mean moving
of tanks and of other tank-battery
equipment from several separate locations to one point. With LACT furnishing a means of continuous delivery of oil to the pipeline, subject only
to appropriate scheduling of runs by
the pipeline carrier, consolidation of
batteries with LACT eliminated the
need for the storage at the central
point, except for the surge tank and
one or more emergency storage tanks.
This type of consolidation has been
an accepted practice for several years
and is used in a number of different
arrangements. In some cases, the
treating and testing facilities are left
at the original batteries. Tanks, except
for emergency storage, are removed

and treated oil is brought to the central LACT point. In other cases the
testing facilities of several original
tank batteries are moved together to
a point sometimes refenoo to as a
"lease station" or a "satellite battery"
(Fig. 9). From these lease stations, oil
is directed to the central battery to
which the treaters from the individual
leases have been moved. In each case
the clean oil from each lease is metered, and the combined stream is
transferred through LACT to the pipeline. At the end of each run period,
the difference between the LACT
runs and the sum of the metered volumes is prorated among the leases.
The effect of such a consolidation on
the amount of needed equipment is
shown in Table 1.
The next step in evolution in the
manner of application of LACT was
commingling of untreated fluids from
leases with different royalty accounts,
and bringing the commingled fluid to
one central treating and LACT facility. This is a relatively new approach
and one that promises a far-reaching
effect on methods of operation of oil
producing leases. Under such an arrangement, the oil is metered and sampled at the previous tank-battery locations. The commingled fluids are
brought to one or two central treaters.
The clean oil is handled by LACT.
At the end of the run period, usually
once a month, the LACT runs are
compared with the sum total of the
runs of the metered volumes from different leases, and the difference is
assigned to the leases on the basis of
metered volumes and of the samples
showing the volume of free water and
emulsion produced by each lease. The
method offers an opportunity for substantial investment and operating savings. Comparison between the amounts
of money involved in consolidation
of batteries and metering of oil from
individual leases after it is treated vs
commingling and treating the commingled fluid in one central station
is shown in Table 2.

TABLE I-RESULTS OF BATTERY CON~OLlDATION

AND INSTALLATION OF LACT IN A FIELD
IN NEBRASKA

WeilL .. ,...
Tank BaUeries __ _
Tanks __ ...
Treoters. ___ .. _

Separators __ _

Number

Number

Before

:o\ft.r

78
14
98

78
1

176 It
7~metering

2
310 It
9~metering

:, production

Discussion so far has dealt with

conversion of the existing facilities to
those utilizing LACT. In many cases
economics have to be worked out very
carefully to determine whether or
not such a conversion can be economically justified. In the case of a
new field, the approach is much simpler because there is no question of
the savings involved. Formerly, one
of the problems in using LACT for a
new field was the fact that, after the
discovery well was drilled and storage facilities were provided for each
of the step-out wells which were
drilled to define the field, additional
tankage had to be provided for each
new well. By the time the field was
outlined, there were so many tank batteries in operation that the problem
resolved itself again into that of consolidation of existing facilities.
Under the new approach, when a
discovery well is brought in storage is
erected at the well and oil is trucked
to the pipeline terminal. As the outpost wells are being completed, skidmounted test units (such as, for instance, the one shown in Fig. 10) are
installed at these wells. Temporary

TYPICAL CENTRAL LACT

BATTERY

Fig. 9-Consolidation and LACT.

Fig. 8-Replacement of a tank battery by a LACT unit (shown on the left).

1186

Fig. IO-A skid-mounted test unit.

JOURNAL OF PETROLEUM

TECH;\"OLOGY

lines bring the oil to the storage at

the discovery well. After development
of the field reaches the point at which
bringing in of the pipeline is justified,
the most satisfactory location for a
central LACT and treating station is
selected by joint planning of the producer and the pipeline company.
Skid-mounted test units are moved
from the individual wells to the preselected locations for the "lease stations",
and permanent lines are installed. To
illustrate the savings involved, in the
case of a hypothetical field with
20,000 productive acres, 125 wells
and 100 BOPD/well allowable, the
conventional storage and custodytransfer facilities would cost approximately $920,000. With preplanned
consolidation, with 15 lease stations,
two central LACT units and the treating stations, the cost would be around
$550,000.
Future Trends
So far this discussion has dealt with
development of the LACT method
from its inception to the present. Now
consideration should be given to what
can be expected from the future.
One of the factors which did retard the acceptance of the LACT
method, because it slowed down the
lowering of the cost of LACT units,
was a lack of standardization of the
equipment involved in the units. The
evolution of the method was rapid,
and the individuals in the different
companies who were assigned to design LACT installations had definite
ideas about components of the units.
Some of the manufacturers made attempts to provide standard units; however, by the time the changes had
been made to comply with the individual requests, each of the units became, in effect, custom-built-and
therefore expensive.
Fortunately, this phase of development is nearing its end. More and
more companies are developing their
own standard specifications for LACT
units, and go out for bids in acquiring
the units. As this trend continues,
greater uniformity will be developed
and, eventually, working out of API
standards will be made possible.
There is one phase of LACT which
still needs improvement. This is sampling and analyzing the composite
sample to determine the BS&W content and the gravity of the sample.

The evolution of LACY was so rapid

that, as an expedient, the sampling
methods used in conventional custody
transfer were adapted to the LACT
method. This introduced problems. It
is felt that the samplers now available
furnish a r@asonably representative
sample, that is, a sample which can
be considered as representative under
the field conditions and for the purposes intended. The testing of the
composite sample, however, still presents a problem for some cases.
As far as BS&W determination is
concerned, it should be realized that
the sample is stored over an extended
period of time, sometimes for weeks,
before it is analyzed. Free water
which does settle out of the sample is
very difficult to re-emulsify, even by
means of electric stirrers. Therefore,
determination of the BS&W is difficult. Several approaches are being
used to solve the problem. One is an
arrangement under which the whole
sample can be visually inspected and
the percentage of free water and
emulsion determined. The second approach consists of adding certain
chemical compounds which re-suspend
the water for a short period of time
so that the BS&W content can be determined by the conventional methods. A new development involves
samplers which, in effect, are equipped
with small treaters and permit direct
determination of BS&W.
Those who are dealing with this
problem agree that the ultimate solution for determining the BS&W content is through recording and integrating capacitance-type instruments.
These instruments are already available and are used in some installations. The problem is one of economics; the instruments are quite expensive. When further development reduces the cost of these instruments,
the analysis of the mechanical sample
for BS&W content will be unnecessary.
Equally important is the problem
of determining the gravity. Some irregularities have been noted in determining the gravity of the composite sample. In a great majority of
cases, the difficulties have been eliminated by anyone or all of the following: (1) maintaining the composite
sample in a container under pressure,
(2) training the field personnel for
proper removal of the sample for the
purpose of gravity determination or

TABLE 2-COMMINGLING WITH LACT.METERING BEFORE AND AFTER TREATING (FIVE LEASES,
TOTAL PRODUCTION = 2,500 BOPD, LOW WATERCUT)
Metering
IBefore Tre~H;"

After Treating

Treaters _

Separators
Meters and Samplers _

LACT ....

No., Size

Cost

No., Size

lCost

6-6 ft

$14,620

110ft
1 - 4ft
5-21;' ft
5

$ 9,225
4,600
~ 000
2,750
5,500

........... 5

.......... 1

2,750
5,500

$42,870
Saving = $15,795, or 36 per cent
NOVEMBER, 1962

$27,075

determining the gravity in pressure

hydrometers, and (3) taking into consideration the temperature under
which the oil is being run to the
LACT unit. The whole question of
gravity determination is quite complex, and many individuals and organizations are working on it.
The trend toward consolidation of
the treating and LACT facilities will
have one effect. The rapidly rising
curve of the number of LACT units
in use will flatten out. However, the
number of barrels handled by the
units will continue to increase in the
future. To illustrate, about four or five
years ago first consideration was given
to use of LACT in one of the large
fields of Pan American Petroleum
Corp. in the Texas Gulf Coast. The
field consists of 84 leases and has 88
tank batteries. At that time, individual
LACT units for each of the batteries
were considered and the cost, of
course, was prohibitive. Later, in the
course of studies, different types of
consolidation were considered. The
present plan, which is in process of
being executed, involves the use of
one LACT unit for all 84 leases.
There is no question that an increase can be expected in the use of
LACT in conjunction with consolidation of custody-transfer facilities and
of commingling untreated fluids from
leases with different royalty accounts.
There is no reason why this approach
should be limited only to the fields
owned by one operator or to unitized
fields. It is entirely feasible that a day
will come when different operators of
a field with a highly diversified ownership will arrive at a cooperative agreement as far as surface handling of oil
and custody transfer are concerned.
A central treating and LACT facility
would be installed for the whole field,
with one of the operators handling the
installation on behalf of all the operators. The magnitude of operating
savings which would be achieved with
such an approach is apparent. The
present economic situation of the domestic oil industry, dictating the need
for drastic reduction of operating expenses, makes the probability of such
arrangements quite feasible.
LACT is only one phase of automation of oil producing leases. Together with other phases such as, for
instance, automatic well testing and
control, LACT will continue to pass
through different steps of refinements,
leading eventually to the stage at
which field information will be transmitted to a remote office in a form
directly usable in data-processing
machines.
EDITOR'S NOTE: A PICTURE AND BIO-

***

GRAPHICAL SKETCH OF
APPEAR ON PAGE

JOSEPH ZABA

1248.
1187