Improving Well Pad Lease Tank Oil Custody Transfer

Onshore oil & gas well pads have long used small lease tanks to hold the crude oil before transferring to be hauled away, typically by crude hauling trucks. Traditionally, this custody transfer process has involved operators climbing up the lease tanks, opening the thief hatch and using a measurement stick to manually gauge the level of the crude oil in the tank. This process subjects these operators to hazardous areas, potentially dangerous fumes, and less than ideal conditions in high winds, rain and freezing weather.

Emerson's Michael Machuca


In an American Oil & Gas Reporter Editor’s Choice article, New API Method Adds Custody Transfer Options, Emerson’s Michael Machuca describes how the new API MPMS Ch. 18.2 standard provides guidance for lease tank custody transfer.

This standard, Custody Transfer of Crude Oil from Lease Tanks Using Alternative Measurement Methods, provides options for safer, more reliable options such as guided wave radar-based automatic tank gauging.

American Oil & Gas Reporter Editor’s Choice article, Method Adds Custody Transfer OptionsMichael opens noting the purpose behind the new standard:

The goal is to allow existing technology and standards to be used for custody transfer while eliminating manual tank gauging and the opening of thief hatches.

API Ch. 18.2 defines three zones where the quantity and quality of oil being loaded from a lease tank to a truck trailer can be measured. The zones are defined as the tank zone, transition zone, and trailer zone.

The standard highlights six types of data required for custody transfer:

  • Merchantability;
  • Indicated/observed volume;
  • Product temperature;
  • API gravity and observed temperature;
  • Suspended sediment and water; and
  • Calculated volume (gross and net standard volumes, as referenced in API MPMS Ch. 12).

Using automatic tank gauging for the hazardous tank zone area using wired or wireless guided wave radar level measurement technology:

…has provided validation of well production rates, off-lease transfers of produced water, and tank gauging operations for oil custody transfer. Many operators have standardized around using guided-wave radar and have an installed base of instruments.

Operators now can realize additional benefits by adopting the technology for custody transfer. They also will need to develop procedures for obtaining product quality measurements in the transition zone to achieve the safety benefits of keeping their personnel off tanks.

Michael shares an example where a well pad with a 900 bbl./day production rate and a 1% manual gauging error rate adds up to $164,000USD annually at a $50/bbl. sales price. Operational issues such as production separator upsets resulting in water in the oil tanks or oil in the water tank are additional sources of potential lost revenue if not monitored and recovered.

Lease Automatic Custody Transfer (LACT) units have been another way to accurately transfer custody of produced oil and associated natural gas liquids. A LACT unit:

…offers unattended measurement while maintaining accuracy of ±0.25 percent or better.

Coriolis flow meters are well suited since the measure the fluid with high accuracy, are insensitive to high viscosity fluids, and maintain accuracy and reliability in changing operating conditions. These measurements are validated periodically through pipe provers, compact provers and other proving methods.

Based on production volumes, current measurement inaccuracies and associated labor costs, a business case may be possible to justify the costs of a LACT unit. Read the article for more on automation systems and savings reported by companies applying some of these technologies to replace traditional manual gauging.

Join our oil & gas team this Thursday, April 13 at 10am CDT (15:00 UTC) for a webinar: Stay off Tanks and Reduce Lost Production with API 18.2 Compliant Solutions, for deeper understanding of the different technologies and methods that can be used to ensure measurement compliance, reduce uncertainty and increase worker safety.