Hydrocarbon Management
HM 60
Guidelines for the auditing of
measurement systems for the
UK upstream oil and gas industry
HYDROCARBON MANAGEMENT
HM 60 GUIDELINES FOR THE AUDITING OF
MEASUREMENT SYSTEMS FOR THE
UK UPSTREAM OIL AND GAS INDUSTRY
HYDROCARBON MANAGEMENT
HM 60 GUIDELINES FOR THE AUDITING OF
MEASUREMENT SYSTEMS FOR THE
UK UPSTREAM OIL AND GAS INDUSTRY
November 2007
Published by
ENERGY INSTITUTE, LONDON
The Energy Institute is a professional membership body incorporated by Royal Charter 2003
Registered charity number 1097899
The Energy Institute gratefully acknowledges the financial contributions towards the scientific and
technical programme from the following companies:
BG Group
BHP Billiton Limited
BP Exploration Operating Co Ltd
BP Oil UK Ltd
Chevron
ConocoPhillips Ltd
ENI
ExxonMobil International Ltd
Kuwait Petroleum International Ltd
Maersk Oil North Sea UK Limited
Murco Petroleum Ltd
Nexen
Saudi Aramco
Shell UK Oil Products Limited
Shell U.K. Exploration and Production Ltd
Statoil (U.K.) Limited
Talisman Energy (UK) Ltd
Total E&P UK plc
Total UK Limited
Copyright © 2007 by the Energy Institute, London:
The Energy Institute is a professional membership body incorporated by Royal Charter 2003.
Registered charity number 1097899, England
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to ensure the accuracy of its contents, the Energy Institute cannot accept any responsibility for any action taken, or not
taken, on the basis of this information. The Energy Institute shall not be liable to any person for any loss or damage which
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ISBN 978 0 85293 484 5
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CONTENTS
Page
Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii
Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . viii
Introduction and scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1
Auditing requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.1 Auditing requirements - An overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.2 Legal and statutory issues and UK fiscal regime . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.3 Areas of audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
The audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1 The audit body . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2 The auditor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.3 Types of measurement audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.4 Ranking of audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3
The audit process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.1 Audit purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.2 Audit planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.3 Audit criteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.4 Auditor responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11
11
11
12
13
4
Conducting the audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.1 The audit team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.2 The 'kick-off' meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.3 The opening meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.4 Conducting the audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.5 The closing meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.6 Non-conformity Reports/Corrective Action Requests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.7 Recommendations for corrective action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.8 The audit trail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15
15
15
15
16
17
17
18
18
5
Audit reporting and follow-up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.1 The Audit Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.2 Audit frequency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.3 Audit follow-up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19
19
22
22
Annex A
Annex B
3
3
4
5
Glossary of terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Audit process map . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
v
vi
FOREWORD
The EI Hydrocarbon Management Committee is responsible for the production and maintenance of Standards and
Guidelines covering various aspects of static and dynamic measurement of petroleum and hydrocarbon gases. The
Upstream Hydrocarbon Management Committee (HMC 7) deals with measurement applicable to the upstream sector
of the industry which includes measurement for fiscal reporting, product allocation and streams associated with
emissions trading.
This document has been instigated and managed by the Energy Institute’s Upstream Hydrocarbon Management
Committee, HMC 7 forming one of a series of Guidelines linked to HM 54, Guidelines for Management of
Measurement for the Upstream UKCS.
Operators are required to ensure compliance with BERR Contractual Requirements, Relevant Measurement
Standards and Emission Controls as well as satisfying the requirements of sales and transportation contracts.
Therefore, the auditing of petroleum measurement systems is a critical activity for all operators producing
hydrocarbons in the UKCS and beyond. This activity has become more important of late due to the number of
satellite fields that are being developed using shared infrastructures and transportation systems which are owned and
operated by others.
This publication has been produced as a high level Guideline on auditing for use by all of those involved in the
Measurement process in the UK upstream oil and gas industry. Whilst reasonable care has been taken to ensure the
accuracy and relevance of its contents, the Energy Institute, its sponsoring companies, the document writer and the
Working Group members listed in the Acknowledgements who have contributed to its preparation, cannot accept
any responsibility for any action taken, or not taken, on the basis of this information. The Energy Institute shall not
be liable to any person for any loss or damage which may arise from the use of any of the information contained in
any of its publications.
This Guideline may be reviewed from time to time and it would be of considerable assistance for any future revision
if users would send comments or suggestions for improvements to:
The Technical Department,
Energy Institute,
61 New Cavendish Street,
London
W1G 7AR
e: [email protected]
vii
ACKNOWLEDGEMENTS
The Institute wishes to record its appreciation of the work carried out by the following individuals:
Roger Cox (principal author) and Gilbert Tonner of KELTON® Flow Measurement Consultants for the preparation
of these Guidelines.
Active members of the HMC 7 Working Group especially those who have assisted with steering the project and for
providing valuable expertise:
Lol Coughlan
David Geach
Keith Hart
Denis Pinto
Douglas Griffin
Geoff Freter
Baron Bennington
Michael Almeida
Rod Bisset
Sandy Hay
Ian Bates
Gary Moses
Eddie Spearman
Endre Jacobsen
Jason Laidlaw
Alan Spence
Derek Wilson
Bob Peebles
Gary Miller
Shell UK Exploration & Production (Chairman)
ConocoPhillips (Vice Chairman)
Energy Institute (Facilitator)
Caledonian Flow Systems Ltd. (Honorary Secretary)
BERR
Chevron Upstream Europe
Talisman Energy (UK) Limited
Hess Corporation
Britannia Operator Limited
BP Exploration Operating Company
Total E&P UK
Maersk Oil North Sea UK Limited
CNR International
Statoil
Metco Services Limited
SREL Intertek
Petrofac Performance
PI Group Limited
TUV NEL Limited
The Institute also wished to recognise the contribution made by those who have provided comments on the draft
document which was issued during an industry consultation period.
viii
INTRODUCTION
AND SCOPE
system (£1 600 per TJ), total annual revenue = £584M.
The commercially accepted exposure (±1%) equates to
£5.8M.
Routine flow measurement auditing ensures that
this exposure is not exceeded (and in many cases it can
be reduced) – experience suggests that it is not unusual
to have an embedded bias (say !0,5% due to incorrect
densitometer coefficient configuration). This cannot be
regarded as an exposure but a definitive revenue loss of
£2.8M. Routine auditing will help prevent this situation
for <0,2% of the potential bias example.
Measurement System Auditing has become a critical
activity for all operators producing hydrocarbons in the
UKCS and beyond.
For this document an audit is generally defined as
a 'Technical Review of a measurement system, by an
Independent Authority, against agreed criteria to
ascertain if acceptable equipment, processes,
procedures, management and personnel competency
levels are in place'.
Unlike other types of audits, e.g. ISO 9000, the
auditor requires a technical knowledge of the processes
and standards used in the Measurement Industry as a
necessity to conduct 'Measurement System Auditing'.
Auditors should be fully trained and qualified and their
independence and traceability must be considered.
From the operators’ point of view this means that
all aspects of product measurement in oil and gas
production are fully auditable and traceable. Operators
must be capable of demonstrating that they have taken
all practical and reasonable steps to ensure their
measurement systems are properly designed,
maintained, verified and operated.
In today’s UKCS auditing has become more and
more important. This is due to more secondary fields
being developed and produced through existing
infrastructures to process and transport the produced
fluids. As most oil and gas fields are jointly owned by
a number of companies, it is not unusual for a nonoperating partner to perform a measurement audit to
ensure their financial interests are secure.
All parties are duty bound to ensure compliance
with BERR Contractual Requirements, Relevant
Measurement Standards and Emission Controls.
We are all at risk of exposure or bias in any
metering system e.g. on a typical 1 000TJ/d gas pipeline
SCOPE
This document is not intended to be prescriptive, but
has been produced as a high level Guideline on auditing
for use by all of those involved in the Measurement
process in the UK upstream oil and gas industry.
The intention is to highlight the key areas of each
of the activities an operator and auditor must consider
when embarking on the auditing of a measurement
system.
The approach to, and concept of, 'Measurement
System Auditing' within this document is equally
relevant internationally. Operators outside of the UK
will have different regulatory regimes that will apply in
place of the UK’s.
These Guidelines cover all aspects of Measurement
System Auditing from the conceptual stage, through
licensing and design, to operation, calibration/validation
and reporting, of any measurement system to be used in
the Oil and Gas industry for fiscal or environmental
purposes.
1
HM 60 GUIDELINES FOR THE AUDITING OF MEASUREMENT SYSTEMS FOR THE UK UPSTREAM OIL AND GAS INDUSTRY
and planning of the audit, the audit
criteria, and the auditor and auditee
responsibilities.
The Document is arranged into five main sections:
Section 1
Section 2
Section 3
Auditing requirements, defining the legal
and statutory requirements for
measurement system auditing, looking at
the various UK laws, transportation
agreements, risk exposure, environmental
and other internationally agreed
documents.
The audit, highlighting the types of
measurement audits, the audit service
provider, the auditor/auditee and the
ranking of audits.
The audit process, covering the purpose
2
Section 4
Conducting the audit, outlining the
methods used to audit a measurement
system from start to finish.
Section 5
Audit reporting, covering the audit report,
audit frequency, audit follow-up.
Annex A
Contains a glossary of technical and
industry terms used in the document.
Annex B
Audit process map