Offshore Gathering: Operations

and Custody Measurement

Geoffrey Gauthier, Tal Saunier, Mike
Plasczyk, and Jason Dollar

Shell Pipeline Company LP

USA
Agenda
 Introductions
 Operating Philosophy: Measurement
 Fundamental Types of Measurement
 Typical Pipeline Gathering System
• Loss/Gain Units
• Line Integrity Units (within Loss/Gain Units)
 Measurement Activity: How Operations Translation to Business
 Example: Performance vs. Targets

 Additional Information

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Introductions
 Geoffrey Gauthier – US Pipelines, Offshore Operations Manager
6+ years with Shell, 15yrs overall. In his current role as Operations Manager, Geoff oversees the
operations of all the Shell US Gulf of Mexico region pipeline facilities, including 3800 miles of oil
and natural gas pipelines, 4 transportation platforms, and over 130 other platform
locations. Previously, Geoff served in commercial capacities with Shell Trading and Shell
Pipeline, including business development in the Onshore and Offshore region and joint venture
development and negotiation activities. Prior to Shell, Geoff spent 10 years in Washington, DC in
economics and consulting for the US Defense and Intelligence industry. Geoff earned a Masters
of Business Administration from Purdue University and a Bachelor of Arts in International
Relations from Boston University.

 Tal Saunier – US Pipelines, Operations Liaison to Major Projects

25+ years with Shell. In his current role, Tal serves as the key link between Pipeline Operations
and Engineering to move projects from design to implementation and through to the
commissioning of the equipment into active service. Tal manages the risks involved with moving
through this process to a flawless start-up. Previously, Tal has served in several different
capacities in the Downstream transportation business both Onshore and Offshore, including:
Maintenance, Tank Farm and Marine Terminal Operations, Control Center, Oil Movements
Scheduling, Operations Supervisor, and Gulf of Mexico Region Measurement Supervisor. Tal also
spent 2.5 years in Russia as Shell’s Senior Pipeline Operations Supervisor to our Sakhalin Joint
Venture. Tal earned a Bachelor of Science Degree in Geology from Nicholls State University with
a secondary concentration in Business Administration.
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Introductions (cont’d)
 Jason Dollar – US Pipelines, Offshore Senior Engineer
24+ years with Shell. In his current role, Jason provides Technical Assurance mainly to offshore
deep water and shelf facility and pipeline projects and also to marsh and onshore projects.
Jason is involved in projects from the front end engineering development phase through the
execution/operations phase. Jason has spent the majority of his career in offshore facility and
pipeline projects execution in the Gulf of Mexico starting as a Project Engineer and later as the
Manager of the Offshore Technical Group. He has also spent 8+ years total providing technical
support to operations, managing a team of Facility Engineers and Craft Technicians for the Gulf
of Mexico assets. He has also worked on numerous third party connections to existing Shell
assets. Jason earned his Bachelor of Science in Mechanical Engineering degree from The
University of Texas at Austin in 1990.

 Michael Plasczyk – US Pipelines, Manager Measurement & Quality Services

34+ years with SPLC, of which 30 years have been involved in various positions in the liquid
hydrocarbon measurement field. Mike has a Bachelor of Science Degree in Civil Engineering and
started his career with SPLC as a Summer Hand in 1976. Michael hired on full time as a Field
Engineer, followed by positions as a Measurement Analyst, Measurement Specialist,
Measurement Supervisor, Measurement Engineer and in 2004 became the Manager of the
Measurement & Quality Services Department. Michael actively participates in workgroups, task
groups and is Shell’s representative in American Petroleum Institute Committee of Petroleum
Measurement and teaches at the International School of Hydrocarbon Measurement.
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About Shell

Recognised for technical Committed to social &

Employs 94,000 people in more
innovation & mega-project environmental
than 70 countries
delivery sustainability

Produces the equivalent of Partners in innovation with

2,200 barrels of oil every Scuderia Ferrari
minute F1 team

Active in alternative Sells transport fuel to some

One of the world’s well known
energies such as 10 million retail customers
(or recognized) brands
biofuels & wind a day

Shell Pipeline Company LP

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DRIVING COMPETITIVE ADVANTAGE THROUGH
INNOVATION AND TECHNOLOGY

Operations Today Delivering Growth Shaping the Future

 Safety and reliability  Oil and gas exploration  Tight gas and tight oil
 Enhanced oil recovery  Deep-water operations  Heavy oil
 Operational excellence
and facilities  Arctic resources
 Liquefied natural gas (LNG)
 Margin optimization  Renewable energy and
 Gas-to-chemicals future fuels
 Product differentiation
conversion
 Biofuels
 Handling contaminated gas

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Shell Pipeline Company (SPLC) Assets
Pipelines Tanks
3,747 Operated Miles 286 Tanks
• Total 17,300,000 bbl
• Avg size: 60.5k bbls
Shell Pipeline Company LP
Facilities
98 Facilities
• 50 onshore mainline
stations
• 24 onshore P/L tank farms
• 21 offshore facilities
• 3 jetty / dock facilities
+ 100’s of valve &
meter sites
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Operating Philosophy: Measurement
 Crude oil and natural gas are valuable commodities and accurately
measuring the volume and composition (marketable crude oil versus
sediment and water) of the liquid stream is essential to safety and
profitability

 Measurement is core to any operating philosophy in a competitive

market - accurate measurement is essential to our business:
• Driving consistent and profitable financial performance
• Ensuring superior environmental and safety performance

 Key components include:

• Custody Transfer: Loss/Gain Units
• Safety and Control Systems: Line Balance Monitoring
• Performance: Equipment and personnel competence
• Management System: Setting goals to make the optimal investment
decisions and measuring performance against said goals

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Fundamental Types of Measurement
UPSTREAM MEASUREMENT DOWNSTREAM / PIPELINE MEASUREMENT
Allocation Meters Custody Transfer Meters
• Allocation to each well • Used for measuring total volume of oil into (receipts) and out of
(deliveries) pipeline network as basis for tariffs & loss/gain
determination.
• Basis for royalty payments
Production

Pipeline To Delivery
M
Process

Destinations
Remote M Custody
Wells Custody Transfer
Shipping
Transfer Meters Out
Pumps
Meters In

Typical Offshore Platform

Direct Vertical
Access Wells
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Fundamental Types of Measurement
The approach to measurement allows for different control throughout a pipeline
system from the well to the market (both liquids and gas):

UPSTREAM
 Allocation: meters that allow for proper measurement of production at the
platform from wells/fields prior to introduction into the pipeline.
DOWNSTREAM/PIPELINE
 Custody Transfer: meters that account for crude oil volume and quality (liquid
stream composition)
• Essential in a multi-platform and/or multiple pipeline (gathering) system to
account for various volumes and streams
 Line Integrity: meters that provide nominal volumetric monitoring of stream to
assist Pipeline Controllers in detecting releases

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Typical Pipeline Gathering System
Interconnecting Pipelines (operated by others)
Operated Pipelines

6”

6”
12”
12” 24” 6”

12”

8” 6”
6”
8”
10”
10”
12”

10” 10”
12”
6”

8”
6”

16”

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Typical Pipeline Gathering System
Interconnecting Pipelines
Custody Transfer Meter

6”

6”
12”
12” 24” 6”

12”

8” 6”
6”
8”
10”
10”
12”

10” 10”
12”
6”

8”
6”

16”

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Typical Pipeline Gathering System
Loss/Gain Unit
• Compare receipts vs deliveries monthly to calculate losses or gains for the system. Interconnecting Pipelines
• Accuracy of all custody transfer meters is important when determining loss/gains. Custody Transfer Meter

6”

6”
12”
12” 24” 6”

12”

8” 6”
6”
8”
10”
10”
12”

10” 10”
12”
6”

8”
6”

16”

Shell Pipeline Company LP

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Typical Pipeline Gathering System
Interconnecting Pipelines
Custody Transfer Meter
Line Integrity Meter

6”

6”
12”
12” 24” 6”

12”

8” 6”
6”
8”
10”
10”
12”

10” 10”
12”
6”

8”
6”

16”

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 Typical Pipeline Gathering System
Line Integrity Meters
• Added to create several units within the overall loss/gain unit Interconnecting Pipelines
• Allows quick detection of which unit has an imbalance issue for response Custody Transfer Meter
• Additional line integrity meters can be added to further segment the overall system Line Integrity Meter

#5 6”

6”
12”
12” 24” 6”
#1
12”

8”
6”
#4 6”

8”
10”
#2 10”
12”

10” 10”
12”
#3 6”

8”
6”

16”

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Custody Transfer: Driving Financial Performance
Field Devices Houston Control Center Quality
Control

Flow
Computer

Accounting
Shell Pipeline Company LP System 1
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Monthly Loss / Gain Calculations
 To understand the overall measurement performance of volume transported
through a pipeline network/system, a Loss / Gain calculation should be
conducted at least monthly. The equation is:

Opening Inventory + Receipts – Deliveries – Closing Inventory = Loss or Gain

 In crude measurement, to accurately understand your measurement

performance, the Loss / Gain data should be determined for:
• Gross 60: Total volume corrected to standard Temperature and Pressure
• S&W: Sediment & Water volume
• Net: Gross 60 volume – S&W volume

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Example: Tracking Performance vs. Targets
Key Topics: EXAMPLE
SSPL OFFSHORE SYSTEM 2014 ( ) indic
DEL IVERY (L )/G Ba rrels (L )/G %
BBL S. (NET) Gr 60 S&W NET NET
 Loss/Gain: was the volume of crude JANUARY 4,321,565 (2,270) (475) (1,795) (0.042%)
FEBRUARY 6,574,016 293 (1,326) 1,619 0.025%
oil and S&W the same measured in MARCH 7,542,435 (848) 1,628 (2,476) (0.033%)
APRIL 7,311,773 (418) 1,421 (1,839) (0.025%)
to the system as measured out? MAY 7,415,899 1,621 1,916 (295) (0.004%)
JUNE 6,410,201 514 1,674 (1,160) (0.018%)
JUL Y
 Factors that impact this: accounting AUGUST
6,354,289
5,256,756
(1,697)
(1,066)
(50)
34
(1,647)
(1,100)
(0.026%)
(0.021%)
SEPTEMBER 5,229,388 (65) (3,755) 3,690 0.071%
timing, pigging, and quality of OCTOBER 5,694,398 (1,141) 815 (1,956) (0.034%)
NOVEMBER 4,824,442 (280) (601) 321 0.007%
connecting measurement systems DECEMBER 5,982,841 140 922 (782) (0.013%)

 Loss Allocation: loss allocation YTD TOTAL 72,918,002 (5,218)

Mthly Target +/-: 0.050%
2,202 (7,421) (0.010%)
YTD Target +/-: 0.025%

agreement between shippers and

2014 System Performance
pipeline creates performance and Loss/Gain
0.100% will fluctuate 0.10

investment incentives each month due to timing,

0.050% 0.05
large volumes, etc.
 Metrics can drive improvement A high level of accuracy
0.000% 0.00
1 2
requires a higher level of
3 4 5 6 7 8 9 10 11 12

-0.050% investment by the pipeline -0.05

company
Shell Pipeline
-0.100%Company LP 1 -0.10
Gr 60 S&W NET 8
Regulatory Discussion

The United States government does not directly regulate measurement or

requirements, but sets minimum design standards and promotes market incentives:

 American Petroleum Institute (API) standards: US Federal regulation of the design

and calibration of meters requires meeting API standards

• Royalty payments point to these standards for Allocation and Custody Transfer
meters on production platforms

 Loss/Gain arrangement between shippers and pipelines for loss/gain allocation is

left to market agreements to allow for behavior-based incentives for investment

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 BACK UP
 CUSTODY TRANSFER METER SCHEMATIC
 MEASUREMENT MANAGEMENT SYSTEM
 PROCESS MAP
 MEASUREMENT SYSTEM: OPERATIONS
CONSIDERATIONS
 OTHER PERFORMANCE CONSIDERATIONS

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Typical Custody Transfer Quality
Metering System
Static Mixer:
ensures
Prover: used to
homogeneous
4-way valve: diverts flow in bi- determine accuracy of
sample Water Monitor:
directional prover during meters
monitors stream of
calibration water content

Strainers: prevent
debris from damaging
meters

Sampling System: gathers

sample proportional to
flow to determine
Sampler: retrieves
sediment & water content
sample from flowing
stream
Selecting Valves: allow Meters: multiple meters to
Control Valve: ensures remote operation of cover flow range and
adequate backpressure meter runs provide redundancy. May Not Shown: pressure & temperature
on meter & controls be positive displacement or transmitters, flow computer, supervisory
delivery rate helical turbine depending control & data acquisition system.
on viscosity
Shell Pipeline Company LP 2
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MEASUREMENT MANAGEMENT SYSTEM
DOCUMENT STRUCTURE

• Measurement Management Policy

• Owned by Top Management
MMP
Operating
• Measurement Operating Standard
Standard &
• Measurement Design Standards
Design • Owned by Measurement Management
Standards

Measurement • Owned by Measurement Management

Processes

• Technical Measurement
Procedures & Guidelines
Measurement Manual • Owned by Measurement
Management

• Site Specific Application of

Measurement Local Operating Procedures
Practices (MLOP’s) • Owned by Operations
Leadership

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PMMS Core Processes
Establish Meet
Objectives & Requirements &
Define Achieve
Requirements Objectives

Company
Company
• MMP Compliance
• Measurement • Proper Installation &
Management Policy Operation
& Objectives Establish Measurement
Loss/Gain Update • Fit Procedures &
• Design & Operating System Analysis Process Guidelines
Standards Targets Reporting
• Successful
• Technical Procedures Inspection,
& Guidelines Verification &
• Site MLOP’s Calibration

Regulatory / Industry
Regulatory / Industry
• Government Agency
• Government Compliance
Agencies

Physical • API Standard

• API Standards Loss/Gain Participation &
Measurement Reporting Compliance
Process Process

Shell Pipeline Company LP

Custody Transfer Measurement
 Measurement performance can have both immediate and long-term
impact on a company’s profit.
 Errors can lead to the possible loss of customers, adverse publicity,
potential penalties and legal liabilities.
 It is essential that custody transfer measurement is precise and accurate
with a minimum of bias errors, which could be met by optimizing the below
items:
• Proper Design / Installation to meet required system performance
• Proper Operation / Maintenance
• Proper Performance Analysis
• Proper Reporting

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Requirements to Meet Accurate
Measurement
 Proper Design / Installation
• Right Equipment for the Crude Characteristics
• Right Operating Conditions
 Proper Operation
• Right People
• Right Procedures
• Right Instruments
• Right Inspection, Verification & Calibration Frequencies
 Proper Performance Analysis
• Right Technical Recommendations
• Right Decisions
 Proper Reporting

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Typical Custody Transfer Quality
Metering System
Why invest in multiple meter runs?
 2 meter runs improves measurement uncertainty.
 3rd meter run is a back-up spare

Shell Pipeline Company LP 2

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Typical Custody Transfer Quality
Metering System
Orifice Meter (Natural Gas)

Note: Meters may either be Orifice or Ultrasonic type.

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Gross 60 – S&W – Net Relationship
Receipt Measurement
1,000 bbls
Gross 60 0F Barrels

Net 60 0F Barrels
100 bbls
( 900 bbls)

S&W Barrels
Delivery Measurement 1,000 bbls
Gross 60 0F Barrels

Net 60 0F Barrels
( 700 bbls) 300 bbls

Gained this amount of Sediment & Water 200 bbls

Subsequently:

Lost the same amount of oil 200 bbls

Shell Pipeline Company LP 2

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