SGS - LNG Accuracy Measurement

8/13/2019 SGS - LNG Accuracy Measurement

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© Gastech 2005

How accurate is the Shipboard Custody Transfer

Measurement system? An independent research by SGS.

AUTHOR: Gerrit Vermeiren, Manager Oil, Gas & Chemicals – BeneluxCO-AUTHOR: Sven Lataire, LNG Business Development Manager

No part of this publication may be reproduced or transmitted in any form or by any means, including photocopying andrecording, or by any information storage and retrieval system, without prior written permission of SGS.



© Gastech 2005 Vermeiren – Lataire 2

1. SGS and LNG

SGS (Société Générale de Surveillance) has been involved since many decades in the measurement, quantity and qualitycontrol of Liquefied Natural Gas movements.

SGS is represented in over 120 countries, with a network of 1000 offices and world class laboratories and a professionalstaff of more than 39000 people.

The SGS Oil, Gas and Chemicals (OGC) division is a world leader in inspection, measurement and testing and a full range

of technical services to the petroleum, chemical and gas industry. SGS surveyors are inspecting LNG shipments in orderto establish, as an independent and impartial party, the facts and details ‘Custody Transfer’ operations of a wide range ofpetroleum products, chemicals and liquefied gases.SGS OGC developed a number of independent specific services to assist clients in the safe and economic transfer of LNG,from the loading port to the final port of destination.

LNG - Liquefied Natural Gas - is by far one of the most difficult commodities to transport because of its characteristicsand physical property regarding its extreme low temperature. LNG is transported at ‘fully refrigerated’ conditions at atemperature of -161.5°C (at boiling point) for the economical reason of transporting LNG as a liquid. At these lowtemperatures, measuring, sampling, quantification and testing of LNG is therefore the work of experts. Due to this lowtemperature, the measurement and sampling creates a number of practical problems, and the accuracy of the obtainedresults under these circumstances requires expert intervention. This should not be underestimated.

LNG is presently shipped in vessels with an average capacity of 138000 m³, containing about 64000 tons of liquid productand expressed in energy terms it contains about 3200000 MMBTU’s. The full load of one shipment represents a cargovalue of about 21 mio US $, or 16 mio Euro.

In case of the trade of normal liquids, like oils, chemicals, etc.the highest accuracy or precision measurement expertshope to reach varies between 0.2 to 0.3 % accuracy. If we could consider this as the overall accuracy of an LNG transferthen these ‘high’ precision levels are still representing a cargo value uncertainty of about 43500 - 65300 US $ and this isregarded using present measurement techniques, as the best that can be achieved.

Systematic errors, built into the system, higher than these ‘ideal’ values (e.g. 0.5 %) can lead to a yearly revenue lossesof more than 3,3 mio US$, considering that a normal LNG carrier can do some 30 voyages per year. And what about theloss or gain over a contract period of 20 years!

Spurious errors or obvious mistakes can even result in higher inaccuracies and consequently be the cause of moreconsiderable cargo losses and subsequent claims.

The cargo value is based on following measurement parameters:

Level Pressure Temperature Volume calibration Sampling Gas testing Cargo (vapour/liquid) remainders

Vapors displaced/boil-off

Measurement of each of these individual parameters is the potential origin of uncertainty and consequently can lead toover- or underestimation of Bill of Ladings for the cargo shipped.

If these test parameters are not adequately measured and, if measurement instruments are not properly calibrated underthe expert eyes of an independent party the chances of having an accurate overall measurement and energy quantity,expressed in MMBTU’s, is going to be very doubtful and could result in unsatisfied LNG customers (buyers) claiming forso-called losses of financial damages

Throughout the years we have been supervising and monitoring LNG cargo shipments and based on this experience wewould like to give you some of our findings and conclusions in relation to LNG measurement.






Even if parties agree on using the same ISO norm as their measurement standard, there might be potential conflict ofinterest if at load port one party is using e.g. ISO 6976 ‘calculation of calorific values, density, relative density and Wobbeindex from composition’ and at discharge port ISO 6578 ‘static measurement – refrigerated hydrocarbon liquids –calculation procedure’.Similar standards might give on first sight identical values for certain constants; molar mass, compression factors,calorific values, etc. but a close look at these, so called ‘similar or identical’ method shows that many values are differentand given in varying significant digits or round-off figures.Knowing that a minor change or difference in these parameters and values might have a serious impact on the totalenergy transferred, we can only plead for a far better and more detailed standard and procedures manual to be adopted.

As an example SGS can demonstrate for instance that a density calculated with the revised Klosek Mc Kinley might give avalue of 464.269 kg/m³ but under the same conditions this density calculated with ISO 6578 will give 464.230 kg/m³. Ona total cargo load this minor difference represents about 6 tons of cargo having a value of 1840 US $.

An alternative is to use the same method and the same physical and measurement constants, carefully monitored andcontrolled by the same independent inspection company at load-and discharge port. Any reputable independentinspection company will also calculate the cargo at load-and discharge port with its own ‘unique’ measurement standardso that in case customers are using their contractual agreed method, which is possibly different at both ends, one canverify if differences are due to the use of different methods/standards. Then it is unto the independent specialist toinform the parties involved.Therefore the parties to the LNG sale/purchase contract should instruct this independent survey company to use, next tothe contractual method, the independent ‘in-house’ standard rather than forcing them to use the standard of the buyerand/or seller only which might be incomplete and probably different when used at load- or discharge port. In inspectionterms this verification is called the ‘Ullage’ calculation!

4. Losses due to measurement ignorance

In my introduction I have highlighted the difference between:

Spurious errors: obvious mistake or misreading And/or Systematic errors: build into the measurement concept

In this section I would like to review some of the obvious errors SGS encounters regularly.

Spurious errors and straight mistakes or misinterpretations;

use of different standards and/or edition date for gas chromatographic analyses, density and gross heatingvalues at load-and discharge port (see also item 3)

use of the same standards but different applications for physical constants, interpolation procedures, numberof digits used and rounding-off practices

use of the same physical properties but at different conditions; e.g. standard (15°C) or normal (0°C/25°C)temperature, gross heating value, gas density, …

measurement of the same volume in the same tank but by using different levelgauges (automatic/manual) and the freedom of applications and averaging of the temperature indicators.The use of different instruments may generate different values. What about the impact of one temperaturesensor (out of order) – reading 150°C and five others indicating -162°C. The cargo value difference between

a cargo calculated at an overall average temperature of -162°C and conversely a calculation at a temperatureof -160°C (average of 5 times -162°C and one time -150°C) is approximately 131 kUS$. Wrong or inadequate sampling techniques can lead to important errors amounting

up to ± 1%. The procedure for sampling but above all the installation, location and set up of the samplingsystem is of crucial importance. In case the location of the sampling system is wrong, e.g. too close to a pipeelbow, the gross heating value will be under-or overestimated.

Not taking into account of quantities remaining (ROB) or displaced (vapour) on boardis a very common mistake, as parties seem to ignore these quantities. Here below we have calculated thevalue of these amounts, in order to estimate the impact of the occurred losses on an average LNG shipload.

o Full or empty liquid lines on board ( before versus after loading/discharge) Average vessel: 46 tons → 15935 US$

o Vapour phases accounted before/after discharge/loadingDifference: 192 tons → 59370 US$

o Gas boil off (vapour return) during loadingEstimated 300 tons → 92765 US$




Gas received by LNG carrier when unloadingEstimated 192 tons → 59370 US$

---------------------------------→ 227440 US$

All the above mentioned cargo quantities and subsequent energy values are in many cases notaccounted for and surprisingly ‘ignored’?

The only value in this context, parties are concerned about, is the ‘boil-off’ percentage of ± 0.15 % per day, but this isnot the complete picture and of less value if the above quantities are not taken into account.

5. Losses and/or discrepancies due to measurement errors

5.1. General

The value of the cargo is based on the measurement and quantity computation of the cargo on board of the vessel. Thevessel in fact becomes the measurement object. This is very unusual as in the modern trade of many commodities; oil,chemicals, fertilizers; the cargo value or quantity is expressed in ‘shore’ figures. These shore based calculations areusually the official basis for quantity transfer and the cargo invoice. Most shore tanks are in these circumstances certified

and controlled by an official state/government certified body (calibrated tanks and/or volume meters).When such shore based measurement devices (tanks/meters/instruments) are used under ideal circumstances, the short-term accuracy varies between 0.12 and 0.15 % absolute, whereby the long-term accuracy can go up as high as 0.3 %.But this is achieved under ideal ‘shore based’ circumstances with products handled at normal temperature and pressure(1 bar abs.).Compared to a fully certified and controlled shore based system what can we expect from the estimated measurementaccuracy from a floating measurement object (vessel), which is not necessarily calibrated according an official method,nor by an independent calibration institute? Next to these considerations, we still have to realise that the extreme lowtemperature condition will have an important impact on the accuracy of the overall measurement of the vessel.

In the normal trade of liquid products one has sufficient data to verify the various floating measurement objects (vessels)against the shore based measurement objects (tanks and/or reading meters). By comparison, evaluation of voyage data

and multiple sets of measurements one can get a historical differentiation of each vessel measurement performanceagainst the official or accredited shore based systems. By this the so called ‘Vessel Experience Factor’ ( VEF) isdetermined indicating the overall inaccuracy of the vessel against accredited (official) shore based systems. For mostvessels (oil tanker/product tanker/chemical carrier) the VEF ranges between 0.2 and 0.5 % which again illustrates thepoor performance and high inaccuracy of the vessel as measurement object. Professional operated terminals as far asmeasurement is concerned can reach better accuracies below 0.2%.

5.2. Shipboard measurement – calibration tables

The basis factor for any reliable shipboard measurement is the ships calibration (volume) table. This table gives themeasurer the possibility to derive the actual liquid volume (at the actual liquid temperature) for each measured liquidlevel (height) or vapour space height (Ullage).

Most LNG carriers are officially calibrated by a standard method such as ISO8311, ISO9091 – 1, ISO9091 – 2, etc.However ship owners tend to ignore that a calibration table should be reviewed regularly, and checked. If necessary thetank should be recalibrated every ten years and in case modifications have taken place to tanks, piping, pumps,membranes, etc…the calibration should be done instantly!

Several LNG carriers have been operating for more than 10 years and in some cases even above 20 years without anyform of re-check or re-calibration. However the European directive with regard to this point is very clear. Tanks used forthe official custody transfer and quantity determinations should be re-calibrated every 10 years. Instrumentation used onboard like; level, pressure and temperature indicators should be re-calculated and certified after every 2 years.

Considering the importance of accuracy of the calibration table SGS has adopted the standard method ISO8311 andISO2550 section 7 and 8a and over the years modified and upgraded this method to a higher level of accuracy. SGS isable to guarantee its clients an overall accuracy of ± 0.05 % on tables provided by us, whereby the most commonaccuracy guaranteed by other methods or other calibration institutions is usually ± 0.2 %. If tanks have been damagedor where changes and modifications to the tanks have taken place such as newly installed piping and pumps ormembranes (altering tank volume) over the years, as mentioned above, the calibration table inaccuracy might be higherthen 0.5 %.




5.3. Shipboard measurement - Level/Temperature/Pressure

Level: commonly used on board is an independent set of level gauges, installed (minimum 2) per tank. One is theprimary and the other is the secondary. On many vessels it is not clear however which one is the primary andwhich one the secondary. Both level gauges are usually of a different type and frequently one is based on amechanical float gauge principle and one on an automatic gauging principle (capacitance, radar, microwave).The LNG industry considers the accuracy of level gauges to be good at ± 7.5 mm. For your reference the error of± 7.5 mm on a fully loaded tanker represents 11 tons and has a cargo energy value of about 3800 US $.

We believe however that most level measurements under real testing conditions, in a floating measurementobject (vessel) and with a constantly ‘boiling’ cargo will produce a much greater error in the order of ± 1 to ± 2cm. The latter represents a difference in tonnage of 15 to 30 and a cargo value of 5000 – 10000US$.The overall accuracy on the volume assumed by the industry is +/- 0.21 %. Our experience is that this is notbetter than ± 0.3%.

Temperature: Most LNG carriers are equipped with a number of temperature gauging devices. These devices arebuilt into the cargo tanks in thermo wells or installed as single probes on the inner or outer shell of the tank. Theprobes are evenly mounted at regular interval heights. Usually 5 or 6 probes are designed to give a single read-out or an average per tank.The temperature gauges are mostly of a ‘resistance’ type – PT 100 system. The accuracy is said to be as good as± 0.3°C. We believe however that due to the practical working conditions the single accuracy of each probemight be in this order but the overall average measurement of the liquid and or vapour temperature is about ±

0.75°C.This error results on a loaded vessel in a difference of cargo quantity of 150 tons, representing a cargo value of52 kUS$.

Pressure: Pressure readouts are important for safety reasons and for monitoring the boil-off process. Consideringthe cargo is transported at or close to its boiling point, the measured pressures are small (millibar) and do notrepresent a major error in the custody transfer measurement system. The accuracy of pressure readouts is about± 1% of full scale.

6. Losses and/or discrepancies due to wrong sampling

Sampling is the most sensitive part of the ‘custody transfer measurement system’.Based on an AVERAGE and INDEPENDENT sample of the cargo loaded or discharged the value (Bill of lading) and invoiceof the cargo transferred is defined. Following important parameters are calculated from the samples composition:

Density Calorific values – gross/net (higher/lower) Wobbe index

If the sample is not truly representative for the entire cargo volume, then differences and errors will be found in thedetermination of the above mentioned parameters.

Accurate and high precision sampling can only be achieved if one can obtain and secure:

Repeatable samples Reproducible samples

Fixed sampling conditions and parameters Standard procedures

Most loading terminals have throughout the years investigated these various parameters and have developed systemsand procedures to increase the accuracy of the sampling method.

On loading terminals these investigations, combined with historical data research, have lead to reasonable accuratesystems and procedures.The main parameter affecting the accuracy of the sample is the control of a constant and steady flow of LNG through thepiping system. These constant set conditions together with the very carefully planned location and type of samplingsystem, is due to the nature of the operation far better achieved at load port than at discharge.

At discharge the vessel is not able to operate under the same steady and regulated flow engineered conditions andtherefore the accuracy of the sample at a discharge port will obviously be lower than at an equivalent load port.




Many factors are influencing the accuracy of the sample and although the sample station maybe constructed accordingspecific International standards and operated by professionals, it’s of vital importance that an independent party checksand verifies all parameters affecting the accuracy of the sample and thereby can really certify the accuracy of thecalculated values: density, heating values, etc…

7. Accuracy of gas analysis

In addition to the importance of good sampling, the accuracy of the gas analysis will be the basis of the accurate density

and calorific values computation.The testing standards for LNG gas provided by ISO, BS or GPA will all use the principle of ‘gas chromatography’(ISO6974/GPA2261/…). Based on this technique LNG is analysed and its composition determined.Every official test method will provide the user with details of the accuracy obtained by the test method expressed inrepeatability and reproducibility terms. The inaccuracy is related to the concentration of a component in the sample.Providing the method is precisely followed and the instrument professionally calibrated with a ‘high quality’ calibrationstandard, the total inaccuracy of the calculated gross calorific value is about 1% (relative) for concentrations between 1-10%, 10% (relative) for concentrations between 0.1-1% and below these concentrations the repeatability is around30%.The above standard method precision limits are considered by the industry as ‘very’ inaccurate and therefore the industryand certain LNG producers, buyers have adopted their own ‘modified’ test methods which usually are giving a muchhigher accuracy compared to the standard (official) method.The basis of this increased accuracy is to be found not only in the testing technique used (GC column, detection system,

etc…) but merely in the high precision calibration technique and use of reference standards.If LNG analyses are conducted without adequate and professional calibration, properly verified ‘under the careful eye ofan independent specialist’, the accuracy and consequent value of the gas composition should be questioned and not betaken as basis for the total energy calculation delivered to the customer. We believe that many LNG cargoes in thetoday’s market are not properly tested and not professionally supervised when it comes to calibration.

At many load-discharge ports the parties involved accept results from laboratories without appropriate and adequateindependent calibration and verification. Usually the independent inspection task, ordered by the parties involved, is onlya matter of monitoring and registration of data and events. Obviously under such circumstances Independent inspectioncompanies cannot guarantee the measured and tested results and the impartial certification of the Energy transferred isquestionable.

8. Overall inaccuracy of the Custody Transfer Energy Transfer measurement.

Based on our global experience we are concerned about some of the measurement practices actually taking place atmany load- and discharge locations. We know that the LNG industry tries to coordinate its efforts to come to globalstandards for measurement and computation of the cargo energy transferred.Despite these ongoing efforts, we notice that there is not enough concern about consistency and standardizationdemonstrated in the making of contractual agreements between buyers and sellers. We advise the industry to pay farmore attention to the aspect of measurement accuracy, sampling and testing procedures in the preparation of theircontracts, as this will be the basis of a mutual partnership aiming for economic correctness and trust in their future andhopefully long-term relationship. “Good friends make good contracts” Buyers and sellers of LNG are still considering LNG as a ‘low cost’ raw material whereby the accuracy of the Energy Bill isconsidered as less important and whereby mutual understanding is preferred (fixing) rather than having this based on

true scientific evidence and independent certification.Here below we give you an overview of the overall inaccuracy of the various measurements as found by the LNG industrycompared to our historical data and research.The total accuracy or inaccuracy, better defined as discrepancy, of an LNG Custody transfer can therefore amount to asubstantial error or loss as shown below:




Industryperception ofuncertainty

Real worlduncertainty ofmeasurement

VOLUMELiquid + vapour boil-off + vapour displaced ± 0.21% ± 0.30%DENSITYNBS estimate of uncertainty on computation method ± 0.10 % ± 0.10 %Gas analysis (NBS) ± 0.09 % ± 0.09 %

Temperature measurement ± 0.15 % ± 0.20 %Overall density inaccuracy ± 0.27 % ± 0.31 %GROSS CALORIFIC VALUEInaccuracy sampling (NBS) ± 0.3 % ± 0.3 %Calibration gas (NBS) (weighting process) ± 0.03 % ± 0.1 %GCV of the components (NBS) ± 0.04 % ± 0.04 %Overall GCV inaccuracy ± 0.35 % ± 0.41 %TOTAL INACCURACY OBTAINED FROM QUADRATICCOMBINATION OF THESE MEASUREMENTS

± 0.49 % ± 0.60 %

In Energy value this inaccuracy represents according:

INDUSTRY REAL WORLDInaccuracy ± 0.49 % ± 0.60 %Energy value in US$ 107 kUS$ 130 kUS$Est. loss over 20 years contract 64 mio US$ 78 mio US$

9. Conclusion and guidelines

This measurement inaccuracy or risk is so substantial that parties should take a far better consideration to the variousmeasurement parameters adding on to this inaccuracy/error of the LNG Energy Invoice.

As said before special attention is to be given to:

Vessel calibration tables accuracy Technical performance of the custody transfer measurement systems on board Sampling station – installation/procedures Gas testing and calibration

Al these parameters should have one thing in common to achieve the highest accuracy. Standard and trust (certitude) ofthese measurement aspects should be designed, controlled, maintained, calibrated and certified by Independent experts.The parties involved in the Custody transfer of LNG should agree and establish procedures and guidelines. This is therole, importance and responsibility of the Independent company whose only objective is to establish the true andaccurate Energy quantity transferred.

In this procedure it will be necessary to include the following instruction for this Independent party:

The full control and supervision of all parameters and measurements (pressure, temperature, volume, etc…) Verification and certification of the calibration standards (tanks, gas testing, etc…) Independent verification and calculation of the quantity of energy transferred Full certification and consequent veracity of the cargo transfer

At the moment, this is not yet established.Today LNG is shipped from and to many terminals in the world and most of these shipments are indeed under thesupervision of an Independent Inspection company.Without generalizing, SGS is of the opinion however, that the instructions given to the independent inspection companiesand the role the industry gives to these inspection companies is limited, this under-rates the value that a professionalinspection organisation can add. We recommend that you take a close look at the role of your inspection servicessupplier. The inspector must not be a passive ‘note taker’ or recorder of observations. To the contrary value can only be

protected, risk managed and value added if the inspector is an expert technical participant.




LNG - MONITORING

SGS’ observation is that the industry has been inadvertently drawn in to being comfortable with an inspection that is forthe most part reduced to ‘monitoring’ the cargo transfer. Whereby, the inspection is effected by following the loading andor discharge process and recording all facts and findings as reported to them by the Captain of the vessel, the Laboratorytechnician, the terminal Manager, the measurement specialist, or other third parties.Rarely does the independent inspector intervene and independently verify the sampling and testing conditions. He or shewill monitor the temperature and level measurement, but will not verify or calibrate these measurements. This is also the

case for the reporting of the analytical composition and vessel measurement, whereby the calibration of GC analyzers,ship instrumentation/calibration tables is only a matter of reporting findings without actual verification, checking andproper calibration. The most the industry requires is that the inspector verifies that analyzers are in line with a standardgas tested.

Often it is perceived that the Independent Inspection company report ‘certifies’ these findings. This cannot be the case. Itis our opinion that no professional party can stand behind results or measurements as “true values” that have not beverified or ascertained by that party. If parties to the sales and purchase contracts are satisfied with this level ofintervention, they should realise that in case there is potential for important errors, cargo disputes, or even cargodamage or claims and the values produced cannot be considered binding as they were simply noted following the actionsof other parties.The only real value contained therein is that it will be low cost. The cost of the LNG surveyor is therefore reduced to thecost of manpower and that’s disproportionate to the potential savings in case of accurate measurement and overall

reliable inspection.

LNG – INSPECTION WITH VALUE ADDED

Considering the magnitude for potential financial risk we can only advise industry to change its practices and to adopt ahigher standard for ‘Independent Inspection’.This paper clearly illustrates what the problems are when LNG has to be measured, sampled, tested and quantified.By upgrading the inspection level and as such increasing the accuracy level of all custody transfer measurementparameters it is our opinion that the cost of the intervention will be an insignificant proportion of the value added and therisk reduced.The only limitation for the upgrade of this type of inspection is that you need to contract top-experts to supervise thistype of operation. To meet the growing demand for LNG and the improved controls that will be required to protect our

clients interests as the trade in LNG evolves, SGS has focused considerable resources on recruiting and training thenecessary expertise and transferring expertise and knowledge throughout our network. We are proud of our leadingtechnical position in this field and we recommend careful consideration of the impact on your business when you selectyour inspection supplier. If yours does not meet these criteria – SGS remains at your disposal.

In addition, our global LNG Competence Centre based in Antwerp is at the disposal of our clients, for references,assistance, projects, problem solving, training and consultancy related to all aspects of measurement, sampling andtesting of LNG.The International coordination, training and upgrading of our staff for the LNG is also governed by this centre. It providesa unique and coordinated approach to provide the LNG industry with the required global expertise.

I trust that this paper has added to your appreciation of the complex requirement for quantification of LNG and the riskthat might be associated with poor or inappropriate measurement. I hope that this translates into increasing demand forhigh level of professional expertise and a different attitude toward the added value that this service can bring whenexecuted to the highest professional standards.

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SGS - LNG Accuracy Measurement