PIPELINE MANAGEMENT-1 GAS-ALLOCATION SYSTEM YIELDS FLEXIBILITY, COMPLICATES

ACCOUNTING
07/15/1991

Matthew E. Wilks
BP Exploration
Easington, Hull, U.K.
Since August 1990, the multi-user Southern North Sea pipeline has been delivering
gas and condensate from several offshore fields to different customers, according
to varying demand.
The gas from each field is of different quality and price and must be allocated to
sellers and purchasers on an equitable basis.
Gas sales at the onshore terminal are allocated on the basis of offshore
production. Substitution of gas sales by one field group on behalf of another
allows considerable operational flexibility but complicates hydrocarbon
accountancy.
The logic and rules of allocation and substitution are governed by the Dimlington
(terminal) allocation deed and are covered in this first of two articles.
These rules are managed by a computer program SHAS (Southern North Sea gas pipeline
hydrocarbon accounting system), the subject of the final article.
SOUTHERN BASIN FIELDS
Ravenspurn North and the Villages fields (Cleeton and Ravenspurn South) are gas
fields in the southern basin of the U.K. North Sea (Fig. 1).
Along with small quantities of associated condensate (0.3-3.8 bbl/MMscf), the
fields produce gas with a range of calorific values: Ravenspurn North, 990
BTU/standard cu ft; Cleeton, 1,030 BTU/standard cu ft; Ravenspurn South, 1,011
BTU/standard cu ft.
Ravenspurn South produces gas from 23 wells via three platforms which are normally
unattended. Ravenspurn South operations are controlled from the Cleeton field
production and quarters platform (Cleeton P/Q) whose wellhead tower contains five
wells drilled to access the Cleeton reservoir (Fig. 2).
When the Villages fields were developed, BP Exploration decided to construct a gas-
gathering system with an oversize gas sealine to allow for the entry of third-party
gas, the first of which has been Ravenspurn North.
Nine wells are currently drilled into the Ravenspurn North reservoir-five from the
wellhead tower next to the concrete main platform and four from the unattended
satellite platform.
The 34.5-in. ID submarine pipeline runs 36.5 miles from the Cleeton P/Q platform to
the shore processing terminal at Dimlington. Cleeton acts as a hub by receiving gas
from the other fields and reservoirs.
At the terminal, the gas is processed before being exported to the adjacent British
Gas plc (BG) terminal at Easington. The condensate is stored at Dimlington prior to
export to BP Chemicals at Saltend.
The gas-gathering system currently comprises two feeder lines, a 14.5-in. ID
pipeline running 12.5 miles from the Ravenspurn South reservoir and a 22.5-in. ID
pipeline connecting the Ravenspurn North field 15.5 miles from Cleeton.
The pipeline system operator is BP Southern North Sea.
Maximum planned system throughput is currently 800 MMscfd. The terminal has a
design capacity of 950 MMscfd, and the pipeline has a design capacity of 2 bscfd.
The terminal can be easily expanded to accommodate the full capacity of the
pipeline.
At the Cleeton platform, the quantities of gas and condensate delivered into the
main sealine from the Cleeton and Ravenspurn South fields are metered independently
before they are commingled. Ravenspurn North production is metered at the
Ravenspurn North platform upstream of the feeder line to Cleeton.
SALES CONTRACTS
The Ravenspurn North partnership (accompanying box) has contracted to sell all of
its produced gas to BG. The produced condensate is exported by pipeline to BP
Chemicals.
The partnership pays a tariff to BP Exploration for the transportation and
processing of the gas and operation of the pipeline system.
Villages gas is sold to two customers, BG and BP Chemicals. The BP Chemicals gas is
transported from Dimlington to BP Chemicals (Hull) via the BG pipeline grid,
incurring a tariff charge from BG.
Demand for gas is usually indicated in a weekly forecast and a subsequent daily
nomination and is measured over a 24-hr period. The nominations can be changed
during the day.
The changes in nominated quantities are governed by time limits linked with
percentage change. If the change in nomination is outside these limits, the field
group may, but is not obligated to, produce this increased nomination.
Deliveries of gas which fall short of the nominated quantities incur financial
penalties if there is an absolute obligation to deliver.
Villages field group not only must supply gas to meet the BG nomination but also
the forecast offtake from the grid by BP Chemicals. Villages field group relies on
BP Chemicals to update the pipeline-system operator of potential changes in
offtake.
Typical peak gas demands are: Ravenspurn North, 325 MMscfd; Villages (BG), 350
MMscfd; and Villages (BP Chemicals), 60 MMscfd.
The agreements with BG allow (under prescribed conditions) for fields to produce on
behalf of each other to meet sales commitments (substitution). Calorific-value
corrections must be done on gas delivered to BG to allow for substitution.
As BP Chemicals takes gas from the national network, the gas is of a quality
different from what is allocated to the Villages fields. Therefore, the gas
delivered to BG from Villages (for transportation to BP Chemicals) must be volume
adjusted on a daily basis thermally to match the BP Chemicals offtake.
Although this system represents a relatively simple network, in gas-transmission
terms, complications arise from the necessary complexities of the allocation deed
used to apportion total deliveries to BG back to the suppliers and hence to the
individual sales agreements of the pipeline users.
These complications are compounded when fields use the process of substitution to
produce on behalf of each other to meet sales commitments.
AGREEMENTS
BP and the Ravenspurn North partnership have separate sales agreements with British
Gas for the Villages and Ravenspurn North gas, respectively.
These agreements specify the annual contractual gas offtake, the daily delivery
requirements, the BG nomination limits, and the price schedule. The agreements also
include the "right of substitution"; the principle of substitution is a qualified
contractual right of each field group.
The method of substitution is not included in the sales agreements but is detailed
in the allocation deed, more about which presently.
With the price paid by BG for Villages gas differing from that paid for Ravenspurn
North gas, accurate allocation is essential. While the Ravenspurn North agreement
has simple price schedules, the Villages agreement has many price "tranches"
depending on the volume produced. (See accompanying box for definition of "tranche"
and other terms.)
This complex pricing emphasizes the need for very accurate apportionment of
delivered gas between the two field groups. Inaccurate allocation of the gas can
affect which price tranche the delivered therms fall into.
BP has an additional agreement with BG for the delivery and transmission of gas to
BP Chemicals. This agreement, known as the supplemental agreement (supplemental to
the principal sales agreement, a modification of its clauses), sets out the
delivery parameters that BG will accept and gives tariff and charges incurred for
transporting the gas.
BP (as Villages operator) and the Ravenspurn North partnership are co-signatories
of the transportation agreement. This appoints BP as the pipeline system operator
(PSO) and specifies the duties of the PSO. In return for transporting Ravenspurn
North gas, the PSO charges a tariff.
The Dimlington allocation deed details the methods of allocating and attributing
the delivered gas to the producing fields. The deed includes clauses on the
validity of BG nominations, the method of substitution, and its limits.
DIMLINGTON DEED
The Dimlington allocation deed between BG, BP (in its capacity as the system
operator), BP (as owner of the Ravenspurn South/Cleeton field), and the Ravenspurn
North partnership sets out the method of allocating the gas supplied to BG by the
users of the pipeline.
The deed also contains the rules for substitution between fields and the accounting
process after substitution has taken place, known as "attribution."
The deed originally started life as the "Dimlington allocation agreement." The
agreement was written to account for any number of fields using the system and
contained principles of attribution and substitution.
The agreement was to come into force from Oct. 1, 1990, when Ravenspurn North
started up and commingling of gas took place. However, the original document
contained only basic principles of attribution-substitution.
Immediately after it was signed (October 1988), negotiations began to expand the
principles into a working method.
The final logic for attribution and the rules of substitution were included in the
redrafted document which became the "Dimlington allocation deed." This document was
completed by July 1990, leaving only 2 months for the PSO to create the allocation
and attribution sections of the computer program which is discussed in the
conclusion of this series.
The Dimlington allocation deed assumes instantaneous transportation of gas from
source to delivery point. It does not recognize the time delay for exported gas to
reach the terminal, neither does it recognize the time for a pressure pulse caused
by a production-rate change to work through the system to the delivery point.
The deed requires the use of gas chromatographs offshore and onshore at the
terminal. The gas chromatographs are in continual sampling mode and generate hourly
average molar compositions of the metered production gas streams and the supplied
gas to BG.
BG required extensive and prolonged chromatograph trials before the chromatograph
data were accepted for use in allocation.
The gas delivered to British Gas and BP Chemicals is allocated to Ravenspurn North
and Villages by a simple component mass-balance method.
ALLOCATION
The supplied gas to BG is fiscally metered in energy, volume, and mass after the
end of a contract day (06:00). It is allocated on a component-mass basis between
the producing field groups.
This is achieved as follows: The mass fraction of each component in the gas stream
from each field, in the liquid stream from each field, and in the gas supplied to
BG is calculated from a daily weighted average of the 24 hourly molar-gas
compositions (obtained from the offshore and terminal chromatographs).
Cleeton and Ravenspurn South metered masses and compositions must be corrected for
water and methanol content before use in the allocation program. At present, this
is done with a PC program.
Software modifications will be installed in the chromatographs and flow computers
to perform this task automatically.
The component mass flow for the gas stream from each field, the liquid stream from
each field, and the gas supplied to BG is then calculated from the fiscally metered
mass flow and the derived mass fractions.
The field group's mass flows are calculated by summing the individual component
mass flows of the particular stream.
On Cleeton, some fuel gas is extracted downstream of the fiscal metering point. The
component masses of Cleeton's gas stream must be corrected by subtracting the
metered fuel-gas usage from them.
ALLOCATION
On each day, the mass of each component in the supplied gas to BG is allocated to
each field in the ratio that the sum of the mass of that component in the field's
gas stream and the mass of that component in the field's liquid stream holds to the
masses of the same component in the gas and liquid streams for that day for all
producing fields.
The mass of the gas supplied to BG having been allocated to each of the producing
fields, the supplied gas volume and energy must be allocated to the fields.
The density of each component in the supplied gas is also calculated daily.
The derived molar fractions of the supplied gas are used to calculate the
compressibility factor. The factor together with the component molecular weight and
an ideal molar-density constant are used to obtain the density.
The component densities are used to calculate the volume of each component mass
allocated to the field. The total volume of supplied gas initially allocated to the
field is obtained by summing the component volumes.
The volume of supplied gas, fiscally metered and agreed between BG and BP, is
finally allocated to each field in the ratio that the initial allocated volume
holds to the sum of initial allocated volumes for all fields.
The field group's allocated volume is the sum of all volumes finally allocated to
each field owned by the field group.
The energy of each component mass allocated to each field is also calculated with
calorific-value constants (megaJoule/ton) to convert the component mass into the
megajoule (MJ) equivalent. The total energy of supplied gas initially allocated to
the field is obtained from a summing of the component energies.
The energy of supplied gas in therms (BTU/standard cu ft), fiscally metered and
agreed between BG and BP, is finally allocated to each field in the ratio that this
initially allocated energy (MJ) holds to the sum of initial allocated energies (MJ)
for all fields.