Title: Flow Measurement Challenges - 1997 by E.L.

Upp

FLOW MEASUREMENT CHALLENGES - 1997

E. Loy Upp
Flow Measurement Consultant

SUMMARY
The challenges of Flow Measurement today are significant. The Energy business,
of which we are a part, is in upheaval. We have moved from a regulated business
to a competitive business. Our flow measurement knowledge requirements are
greater than ever with demands of new governmental regulations, new standards,
wider use of automation and higher efficiencies. The answer to these challenges
is knowledge.

INTRODUCTION
The Flow Measurement challenges today are more significant than at any time I
can remember in my 46 years in the business. In the past, we have been a
relatively conservative, traditional business with steady growth and real
changes happening at an evolutionary pace. Today that pace is changing for many
reasons and these changes affect each and everyone of you in your daily work.
Those of us that are unable to change will be left in the backwash wondering
what has happened. It is my purpose to look at these changes and the related
challenges with you today so that each of you can interpret them and plan on
what they mean to your future in the business.

OUR CHANGING ENERGY INDUSTRY

In the mid-1970's we witnessed an energy shortage in which natural gas were
unable to meet the demands and prices increased at an uncontrolled rate. This
was followed in the mid 1980's by a reduction in usage, an improvement in
efficiency of utilization, a conversion to other sources, and price rollbacks
that sent shock waves through the entire industry. There was an initial feeling
that this was only a temporary adjustment and with a little time the industry
would turn around.
However, usage continued to drop and prognosticators began lengthening the time
before recovery would begin. We have seen in the last three years a realization
that the industry market projection is at best rather flat with little or no
growth projected into the 1990's. The very nature of the business is changing
with fierce competition among producers, pipeliners and distribution groups for
the little growth seen, plus competition for their old markets. Incidentally, we
have already seen a manifestation of this competition with companies becoming
less open at association meetings regarding their immediate plans and
operations. What was once an industry that completely shared their knowledge,
problems, and solutions, is becoming one of protecting any perceived edge at
getting a job done. This has occurred because pipelines have become common
carriers with complete changes in the economics of operation. Producers are in a
market of oversupply and have had to redo the marketing of their present
products and revise their future drilling programs. This has led to producers
competing in each other's market with little overall increase in the total

market. Distribution companies have found considerable reduced growth and

reduced usage by their customers and have had to review their operations and
planning, including competing with other sources of supply for some of their
present markets. In each of these cases we have seen buy-outs, early
retirements, reductions in staff, more complete economic studies of all
projects, delays if not cancellations of projects and total changes in a
company's operating philosophy. We could belabor these points further, but all
we have to do is pick up any newspaper and find the details almost daily. The
results of these changes are affecting each of us and will continue to do so.
Analysts have stated that we are working in a "mature industry"; that growth is
completed and now the business will enter its declining years.
Some credence is given to this happening by one congressional study, which
suggests that natural gas production in the United States will decline between
36% and 56% of the 1980 levels by the year 2000.
This same study suggests that the gross national energy demand by 2020 will be
reduced by 28% based on a per capita consumption of one half of today's rates.
In 1980, 45% of our national energy demand was met with oil and 27% with gas.
These percentages are probably still about correct except the total energy
delivered is less. The other 28% is made up of coal, nuclear power, wind
generators, solar power, hydro-power and bio-mass fuel, all of which the report
stated were to be high growth areas that will fight to increase their share of
the energy market. The industry, then, is facing reduced usage by customers,
increased competition among ourselves, and new competitors.

GOVERNMENT INFLUENCES
Our governmental policies of today have relaxed controls on interstate
transportation of all types. While regulated industries want to be free, the
results of such freedom can be traumatic, if not disastrous, to some of the
companies involved. Witness the airline and trucking industries as two groups
whose deregulation has totally changed the industry with some companies going
out of business and others being totally reorganized. In our industry, one of
the major governmental bodies is the Federal Energy Regula-tory Commission
(FERC). Their approach to deregulation of our industry is being carefully
followed. FERC has made some proposals that dramatically reformed the interstate
gas pipeline regulations.
The dramatic changes that have followed FERC ruling 636 include expanded
marketing activities as a separate entity while the producers and pipelines have
returned to their original business of drilling for oil and gas and pumping oil
and gas, respectively. This has brought new terms of fear into our business downsizing and re-engineering, which is not over yet, with new announcements
coming every week.

Gas Pipelines
The latest major change has been the combining of Natural Gas Pipeline and
Electrical Companies. These form a total energy supply store for customer's
needs.
A pipeline that provides transportation services to one shipper is required to
supply it to any shipper. A shipper has the right to displace the pipeline as a
supplier to one of the pipelines own customers using the pipeline capacity. It

is in the pipelines interest to reduce its transportation costs, since it will

be the pipeline that shippers will want to use. The other ramification of this
is that the pipelines have become competitive shippers on a continual basis with
the less efficient losing contracts and becoming even less efficient.
Pipelines are basically trucking companies with rapid changes in contracts
causing variations in pipeline operations, which effect flow measurement.

CHANGES IN STANDARDS
Our Flow Measurement business traces its rules to standards such as the API
Manual of Petroleum Measurement Standards 14.3 Parts 1, 2, 3, and 4 (AGA -3), as
well as our contracts. The industry has been very active in the area of
upgrading and rewriting these standards, many of which had remained unchanged
for years. The basic purpose of these changes has been to upgrade the flow
measurement requirements based on new knowledge, expansion of the ranges of
application, coverage of new methods and equipment as they are developed, and
reduction of accuracy tolerances on the measurements obtained.

Gas Measurement
In the gas measurement area, two new standard editions, 1985 and 1992 have been
issued. The formats are changed and the usage of them require more than a minor
review of changes.
They give differences in the volumes obtained; change some field testing
practices, and add "clarifications" that may be at odds with some of your
present practices. It is a change that has caused confusion and will continue
until it is digested and put into practice. Depending on your contracts and
agreements with your customers, these changes will have to be managed so that
you are on the same wavelength.
The 1985 AGA-3 was published with no great changes. In 1990-92 the new AGA-3 was
presented broken down into 4 parts that has made significant changes to the
mechanical requirements, the calculation procedures and the equation data base,
that gives a different answer than the 1985 standard. The implementation of
these new standards has been entering the measurement field in varying degrees
from no change yet, to complete adoption of the standards. This has caused
confusion and consternation. The new standards represent the best knowledge to
date. The only concerns are to get them implemented to minimize the cost effects
on our operations and procedures.

AUTOMATION
Another influence that has been around for a number of years is receiving
serious study, and implementation at many companies is an enhanced degree of
automation. Its purpose is to improve operating efficiencies. In the past it was
more or less thought to be something of value for the future, but no real
commitment was made to use it as extensively as now being studied. It is
becoming more of a requirement because of a much less stabilized operation in
the pipelines when the previously mentioned effects of deregulation are felt.
The automation of flow measurement is only a part of the overall automation
programs being planned by producers, transporters and distributors. Generally
the industry is looking across department lines with data handling,

communication, pipeline, compressor or pump station, accounting, and management

personnel involved. And, the measurement people are usually contributors to a
"committee decision".
FERC ruling 636 has made real time measurement information almost a necessity,
so many more companies have added computerization of their operation for control
purposes. It has encouraged the development of storage capabilities, both in the
production and distribution areas of the country to stabilize the supply and
delivery ends of the pipelines.
The Measurement need is part of a system for data handling for the whole
company. The overall system must properly meet the requirements of measurement.
We have seen the disappearance of the Measurement Department of twenty years ago
being replaced with Operating groups who have responsibilities beyond
measurement. There has also been a trend to move the measurement function to the
field areas with a large reduction in headquarters staff. This has followed some
experiences of increasing loss and unaccounted for in the pipeline companies.
It is interesting to see this turning around right now with the reformation of
Measurement Departments of sorts to establish a responsibility authority
relationship.

EFFICIENCY
The emphasis now is on efficient operation of our present facilities, so that
our products can be delivered more cost effectively. The measurement man is
directly involved in this, since a major portion of the input data for
efficiency studies will be from flow measurement.
We are requested to improve our analysis of compressors and pumps, and pipeline
efficiencies. The operation of our facilities change often and the requirements
of delivery to individual customers are highly variable. Short-term contracts
require continual monitoring so that proper scheduling can be planned, resulting
in the lowest cost of delivery of the products.
This requires the addition of new equipment and new design concerns for new flow
measurement stations along with upgrading of present installations. Remote
operations have become common place. Obviously, one of the impacts is the
extensive use of data/communications equipment now available. There is no
question that the equipment is available in all shapes, forms and cost ranges just visit the exhibit hall and you will see a number of options. The deciding
question, however, is cost justification. There are many questions of initial
cost, operation costs, maintenance costs, mean time between failures, problems
associated with increasing level of dependence on the new technology, staffing
requirements, redundance, failure modes contract requirements and the like. All
of these considerations most be balanced against the savings anticipated by the
equipment use. If there are minimal or no savings - the investments will not be
made in the present restrictive economic climate of the energy business.
Economics has put pressure on the supplier to have less costly computers
available for low dollar volume metering sites. The major oil companies that
have sold off their marginal properties to a number of independents. These
companies are much more cost control practitioners. One detriment of the past to
the use of computer equipment that has been removed, is the retirement of a
large number of pipeline personnel hired in the early fifties. They were trained

prior to the electronic explosion. Their retirement has allowed the degree of
technical sophistication of the field and office work force to be upgraded with
less of the reluctance to change because of the training required of the
existing work force of the recent past.
The retirement of experience has speeded up the acceptance of the computers, but
to a degree has put more emphasis on the read out equipment with less concern
about the primary meters. This has led to reduced maintenance, which has ended
up as increased measurement controversy.
Over a million computers a year have been sold since 1980. So there is no
scarcity of available personnel with backgrounds in the computers use and
usefulness at all levels of the work force. At the same time, more training in
the basics of the energy business is required since less personnel is available
to do the work and we will become more than measurement people or computer
people. On the other hand, over sophistication of a work force that feels that
all problems are solvable on a computer can have its problems also.
The picture of a meter technician today is one of an employee with an electronic
test unit rather than one with a wrench in their hand.
We see an increase in demand for more real time data. Pipelines that once
operated in a stable market place have converted to common carriers, each
competing for the business of transporting gas at the cheapest price. Base loads
without base contracts demand that full knowledge of costs and cost reduction
methods are important. This data has to be available on a continuous basis to be
useful in this type of operation.
This has happened with the requirements of the 636 bulletin boards.
The 636 rules do not allow for the loss and unaccounted for differences of gas
volumes to be considered in the rate base. Therefore, any loss is a direct
deduction from profits. Management will push for zero loss and unaccounted for
that will add pressure to a measurement mans work.

CONCLUSION
What is the answer, then, that we individually can look to? The answer is
knowledge: knowledge that the industry is changing, knowledge the industry is
upgrading, knowledge that must change or we will be left out. Where do I get
that knowledge:
From my company, my fellow workers and from schools such as the one you are
attending here. When should I start - immediately, if not yesterday. How do I do
it - attend the classes, attend the exhibits. Don't be bashful. Ask all of the
questions you have. Discuss your problems with the others at this school and
recognize that what you are doing at this school could well affect your future
in this changing industry. I give this to you as your challenge. I believe it is
real. I wish you luck in the pursuit of the knowledge that I feel will be the
source of your best answer to this challenge of our changing industry.