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

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.

A gross calorific value of the allocated supplied gas is calculated from the final allocated energy and volume of each field group for the production day.

SUBSTITUTION

The Dimlington allocation deed allows the principle of substitution to take place between field groups. As defined earlier, substitution is the process by which one field group will produce gas on behalf of another to meet the latter's sales commitments.

The deed defines two types of substitution. The first is a method in common with many gas contracts, allowing the automatic transfer of gas between parties within the contract day. This helps field groups to meet nominations should they suffer unplanned production difficulties, and it gives the PSO some flexibility.

The second substitution type allows for planned substitution between field groups. Field groups can substitute when performing routine maintenance, for long periods of interrupted production (simultaneous drilling-production restrictions), or preferentially to produce wells to aid reservoir management.

The two methods have strict limits attached to them:

System substitution occurs within the production day and is the responsibility of the pipeline operator.
The operator continuously monitors field groups' production towards their daily nomination, and if for any reason a field group is in difficulties, the operator can either use the line pack or increase another field's production to help that group meet the target.
The allocation-attribution process run at the day end then sorts out the initial ownership of gas and, if system substitution has taken place, transfers the gas across to the needy field group.
System substitution is short-term and very flexible and as such has tight limits imposed. The field groups are limited to a specified volume when receiving gas (substituting IN) or providing gas (substituting OUT).
If they exceed this figure, they can no longer take system substitution until they repay sufficient substitution to go under the threshold.
Notified substitution is requested 24 hr in advance by the field group representative. This type of substitution is used when potential production constraints are known in advance.
As such the limits on notified substitution are much larger than system substitution limits.
Once again if the limits are reached the field group must repay gas before it can take notified substitution again.
The two types of substitution are exclusive. A field group can be ineligible for system substitution (that is, past the threshold) but still ask for notified substitution.
If a field group has undertaken to repay substitution gas, however, and provides insufficient gas to meet the receiving group's nomination, any shortfall penalty suffered by that group is transferred to the repayer.
A "bank balance" is kept of the status of the field group's substitution balances and field groups are encouraged to repay substituted gas as soon as possible.

ATTRIBUTION

The process of attribution attempts successfully to apportion sufficient production for each field group to meet its nominations from British Gas and any other delivery requirement.

BG nominates delivery requirements before the start of the contract day and can increase or decrease the nomination during the day. Depending on when the nomination increase occurs, a field group can have a lower requirement and an upper requirement to meet.

Failure to fulfill the lower requirements will trigger financial penalties; failure to fulfill the upper requirement will not.

The process of attribution attempts to ensure that all field groups meet their contractual requirement-the lower requirement-and then shares out the remaining production to meet the upper requirements of the field groups and, if applicable, any excess gas nomination.

Because Villages fields produce gas for BG and BP Chemicals, the estimated BP Chemicals offtake must be added to the BG nomination to give the target production for the Villages field group.

The attribution process takes the BP Chemicals production into account when sharing the total produced gas between the field groups.

The attribution logic requires:

Allocated gas volume, mass, and energy to each field group
Supplied gas to BG (volume, mass, and energy)
Nominations for each field group (volume only)
Gas supplied to BP Chemicals from the BG network (volume and energy).

The gas supplied to BP Chemicals is called "sellers use gas" (SUG) and is supplied from the national network at a different calorific value than the gas supplied to BG and allocated to Villages.

In order to compensate for this difference, the volume supplied to BP Chemicals must be adjusted by the allocated calorific value before the BP Chemicals' volume can be subtracted from the Villages' allocated volume.

Once adjusted, the SUG volume and energy are subtracted from the Villages' allocated volume and energy. The remaining volume is used by the attribution program to satisfy the BG nominations for Villages. Similarly, the Ravenspurn North allocated volume is used to meet the Ravenspurn North nominations.

If a field group has agreed to provide notified substitution, the agreed volume and energy are transferred to the receiving group. The providing field group will meet the 11 properly nominated" quantity before transferring the notified quantity.

The thermal value of the substituted gas is calculated with a constant calorific value.

Should one field group not meet its nomination and the other have gas additional to its needs, the extra gas is transferred across, with system substitution to the group in need.

The thermal value of this substituted gas is calculated with the constant-substitution calorific value.

Editor's note: To allocate and attribute the supplied gas to BG in accordance with the Dimlington allocation deed, the Southern North Sea gas-pipeline hydrocarbon accounting system (SHAS), a computer program, was developed. Its operation is the subject of the conclusion to this series.

ACKNOWLEDGMENT

Thanks are due to Brigid McMahon, Hilary Hill, and lain Wright for their assistance in preparation of this article and to BP for permitting its publication.