Crude oil is measured at different stages of its flow – i.e.., out of the wells, to Crude oil collection, processing, storage and dispatch installations (GGS - Group Gathering Stations, CTF - Central Tank Farms, CTP - Custody Transfer Points), into tanks & pipe lines, either for flow rate or for inventory positions.
It is a common observation in oil industry that no two meters match exactly. In cases such as crude oil transfer from one location to the other, invariably, the dispatching and receipt meters do have a discrepancy, and sometimes by big margins. This is the point where reconciliation steps in. As long as the differences are within a preset limit, normally caused due to known factors like temperature fluctuations, the difference can be acknowledged as an acceptable reconciliation loss but if the difference is large, this could be due to an abnormal cause such as pipeline leakage or pilferage that needs to be attended immediately. Reconciliation between every two nodes of a crude oil flow provides vital information, not only as a daily tally of crude oil but also as a monitoring tool for the overall chain of flow.
Apart from using elaborate Excel worksheets, previous work in this area has been on the development of stand-alone oil accounting systems specific to Refinery boundaries for monitoring reconciliations and mass balance of oil products, and involves considerable costs. This paper analyses the reconciliation aspects specific to upstream oil industry and suggests a mechanism to monitor these differences between any & every two locations of the crude oil flow, using an ERP package as a backbone, at practically no additional cost.