Technical Basis and Value Proposition for Oil Accounting

Oil accounting is the business process of measuring, validating, reconciling and publishing all the flows and inventories into, within and out of a refinery, and its practice varies widely in the industry, say Pierre Grosdidier, Mike McLaughlin and Jack Davis

Introduction
Oil accounting is the business process of measuring, validating, reconciling and publishing all the flows and inventories into, within and out of a refinery, and its practice varies widely in the industry. Some refiners are content to use a spreadsheet to tabulate and compare shipments, receipts and inventory changes on a monthly basis. This simple business model is adopted by a few refiners who are only interested in matching physical quantities in and out of their plant to paper transactions. In effect, a monthly balance around the fence confirms that material invoiced corresponds to measured physical quantities, and nothing more substantial is asked of the oil accounting process. Individual unit engineers record unit balances on the basis of the historian (should one exist) and there is no effort to integrate these balances among themselves, let alone with the oil accounting spreadsheet.
At the other end of the complexity spectrum, refiners carry out a comprehensive daily analysis that involves not only the afore-mentioned in-out quantities, but also all the flows and movements inside the refinery, including combustible utilities (fuel gas, fuel oil, FCC coke) and non-hydrocarbon materials, such as sulfur (Fig.1) The goal of this analysis is to produce a unique and coherent set of material balances for the entire refinery, its units and its tanks, at the close of each operating day and following industry-accepted production accounting rules [1]. Such a detailed daily analysis requires a topological model of the refinery, wherein units and tanks are represented as nodes connected by pipes, together with well-defined business processes for gathering, validating and publishing production data. Thus, daily oil accounting comes at a cost, and its benefit, at a strict minimum, is that it avoids the month-end chase for past errors that is the persistent bane of monthly balances.
Why do some refiners deploy sophisticated oil accounting systems while others get away with only the most elementary oil accounting procedures?
What value do the first derive from their systems and, conversely, what is the latter missing out by simply matching invoices against inventory changes? The purpose of this article is to explain the technical arguments for deploying an oil accounting system and to develop quantitative estimates of the benefits they can deliver to their users.

Oil Accounting Basics
While the details vary from site to site, the business process of oil accounting can be broken down into four basic and successive steps:

• Data gathering, validation and processing
• Gross error detection and correction
• Reconciliation
• Reporting

  

  Figure: 1 Download

Data Gathering, Validation and Processing
A comprehensive oil accounting analysis requires flows, movements, inventories and laboratory data, all of which must be secured from disparate sources in the refinery and centralized in a single dedicated system for the subsequent steps (Fig.2; see also [2]). Flows are normally imported from the refinery’s data historian and inventories from the tank gauging system. Movements in, out and within the refinery are typically imported from a set of spreadsheets wherein the movements are logged manually by offsite operators (rarely are movements loaded automatically from an oil movement system.) Flow, inventory and movement measurements must be imported with matching temperatures and pressures for compensation to standard conditions. The laboratory information system (LIS) supplies the densities

Figure 2 Download

for measurement compensation and volume-to-weight conversion, as well as the gas heating values for fuel oil equivalency calculations.
For reasons of employee productivity, it is essential that the data import process be as automated as possible and well-defined quality control steps to ensure that the right data is imported into the system, especially insofar as oil movements are concerned. Indeed, the lost-time cost of correcting data after import is high. Refiners are well advised not to underestimate the importance of this first step, as the old adage “garbage in – garbage out” applies distressingly well to oil accounting systems. ...

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