Title: Assignment #1

COURSE : PRODUCTION ENGINEERING

Lecturer: SIMON PAUL

Submitted by: Jovan Edwards 52270

Date: February 19, 2020

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“LACT” is an acronym for Lease Automatic Custody Transfer.
“Lease” references the legal arrangement in place between the two entities. “Automatic”
refers to the automated nature of this transfer. “Custody Transfer” refers to the transportation
of the crude oil or petroleum product from one entity’s possession or custody to another’s
possession. Essentially a Lease Automatic Custody Transfer (LACT) Unit is a piece of
equipment which facilitates accurate measuring of the volume and quality of a petroleum
product as it is transferred by automated means from the custody of one legal entity to
another.

The main purpose of LACT Units is to accurately measure both the quantity and quality of the
crude oil which passes through them. An effective LACT Unit must have a high degree of
accuracy and precision and should give results that are repeatable, linear, and stable.
There are factors which play a significant role in affecting both the quality and quantity of
crude oil. Therefore, it is crucial that a LACT Unit be able to accurately gauge and track
them. Some are as follows:
 Temperature – The temperature of the crude oil affects its overall volume as the fluid
expands or contracts in response to temperature change. However, the way temperature
affects crude oil is not uniform across all crude oil because the crude oil itself is not
uniform. Instead different levels of API gravity will cause the temperature to have a
more or less significant effect on the crude oil.

 API Gravity – API Gravity refers to American Petroleum Institute gravity. This
describes how heavy or light crude oil is in relation to water. If the API gravity is more
than 10 then the crude is light and will float on water. If the API gravity is less than 10
the crude is heavy and will sink. API gravity determines how much the crude is worth
because light crude will produce a higher yield of gasoline or diesel when it is refined.

 Basic Sediment & Water – Basic Sediment & Water, typically abbreviated BS&W
refers to the sediment, water content, and emulsion in the production stream. Naturally
since these are impurities, and not part of the actual merchantable oil, they must be
carefully measured and factored into the value accordingly

LACT is an accepted method used in oilfield operations worldwide and has gained universal
acceptance in a short period of time. At the point where the custody of oil is transferred from the
producer to the pipeline, there are many interests involved. The producer wants to be sure that he
is paid for every barrel of oil which is transferred to the pipeline. The pipeline carrier wants to be
assured that he receives the same amount of oil of the same quality as that which he will transfer
to the buyer at the other end of his pipeline system. The royalty owner wants to be assured that
he will receive his share of all the oil produced. The state regulatory bodies, if proration is
involved, use transfer of custody records for a check on the compliance with lease-allowable
restrictions. The tax authorities are using these records for determination of taxes.

The acceptance of this method by the industry in place of the time-tested conventional methods
was in doubt because of these assurances which needed to be met. Actual facts exceeded all
expectations. In a relatively short period of six years from the time the first official transfer of
custody was made, the number of barrels of oil handled every day by LACT installations has
been increasing at an extremely rapid rate.

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The first experimental field installation of a LACT unit was made by the Shell Oil Co. in
February, 1948, in the Antelope field, Texas. Other companies soon joined in this development
with field tests of units of their own design. However, it was not until December 22, 1955, that
the first routine transfer of custody of oil through an LACT unit took place in the United States
of America. The transfer was made from the lease of the Gulf Oil Corp. to the Kaw Pipe Line
Co. in the Bloomer field, Kansas in February, 1958.

Pan American was one of three companies who first pioneered the LACT method through
developing units of their own design and through field tests. Pan American's first routine (not a
test, but a routine) custody transfer of oil took place on November 6, 1956, in the Southwest
Sholem Alechem field, Oklahoma. At that time the company had in operation one LACT unit
handling approximately 400 barrels. On Jan. 1, 1962, Pan American had in operation a total of
180 LACT units handling 224,400 barrels. With the number of other installations already
approved or in the process of construction, this figure will be substantially increased by the end
of 1962.

The API played an important role in the evolution of the LACT method, releasing an API
Bulletin on Lease Automatic Custody Transfer", which helped in disseminating to the industry
information on the advantages of the method, and on the design of the LACT systems which then
were being used. Since acceptance of the method grew at a very rapid rate, the API agreed that
the time had come for formulation of some more specific guides for the industry regarding the
design and selection of applicable equipment.

On the other hand, they realized that it was still too early for formulation of a rigid program of
standardization because of the extremely rapid evolution of the equipment used in LACT and
because of the many innovations which were being made in this equipment on practically a
monthly basis. The compromise agreed upon resulted in the preparation of a general standard
which primarily consisted of (1) recognizing LACT as an accepted method of custody transfer
and (2) outlining certain basic principles underlying the method.

This standard was included in the API Standard 2500 "On Measuring, Sampling and Testing of
Crude Oil", the last edition of which was published in March, 1961. Standard 2500 is revised
only once every five years. For all the details of design, therefore, reference is made in this
standard to the API Buleltin 2502, "API Recommended Practice for Lease Automatic Custody
Transfer", which was published by the API on December 31, 1961.

The LACT method gained acceptance because, in many cases, it offered opportunity for
substantial savings in investment and operating costs. The spectacular growth of this acceptance
has resulted from the evolution of the equipment design and of the manner of the method's
application.

The LACT method was developed by the producing arm of the oil industry and the original
LACT units were of the measuring tank type. Through years of usage, the producers determined
the tanks and the volume of oil being transferred to the pipelines. To gain a positive reception of
the method by the producers, the designers of the first units engaged the use of measuring tanks,
where a predetermined volume of oil could be precisely isolated. As the tank is filled to its
design volume, the fill line to the tank was closed and the contents of the tank dumped into the
pipeline system. By counting the number of dumps, the total volume delivered during any given
period of time was obtained. The manner of obtaining the same volume of oil in the measuring
tank for each dump varied in different designs.
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One was the weir-to-weir type. The volume of a dump was determined by the top edges of the
upper and lower weirs, utilizing floats located in the weir compartments. The floats actuated the
fill line and the pipeline connection valves, with appropriate time delays being built in.
Another method utilized floats in the restricted areas of the tank for control of the volume. Even
large errors in position of the float in the restricted area resulted in only a negligible error for the
whole volume of the measuring tank.
Another method called the valve-to-valve principle, in which the volume of the dump was
measured between the two valves. The floats served only as a means of closing and opening the
valves. There were several combinations of these arrangements, one being the valve-to-weir
combination and the use of the so-called "sump tank" below the measuring tank, which
converted the batch-type method of delivery into a continuous one.

As time passed, pipeline companies realized the advantages of LACT and became interested.
Increased accuracy of measurements, better utilization of labor, the opportunity for better
scheduling of runs which would improve the load factor of pipeline facilities, and elimination, to
a large extent, of the incrustation problems were among some of the advantages noted.

In contrast to the producer, the pipelines were accustomed to using the positive-displacement
meters for determining the volume of oil being transferred. They had the "know-how" of
properly maintaining the meters and they had confidence in the meters' accuracy. Since the
pipeline has, in effect, the last word in accepting the LACT unit, the trend started away from the
measuring-tank toward the positive-displacement-meter units.

This trend was accelerated by the fact that, admittedly, the positive-displacement meter unit was
less cumbersome, more compact and less expensive than the measuring-tank unit. Although there
are still many who feel that the measuring-tank unit has definite advantages over the positive-
displacement-meter type, the fact remains that at present the predominant majority of LACT
units in operation are of the positive-displacement-meter type.

The original LACT units were custom-built and had a detailed system of checks. As previously
stated, at the point of custody transfer there are many interests involved, and extreme accuracy is
needed. Therefore, early designers of the units provided elaborate instrumentation to assure this
accuracy.

LACT units in operation increased and as they started proving themselves to be accurate and
dependable. Gradually, the instrumentation of the units became less complex, which reduced the
investment and the maintenance costs. The trend toward simplification of LACT units still
continues. Each LACT transfer cycle is initiated by a timer. Within each cycle the oil is first
circulated from the surge tank to treating facilities and back. When the oil is cleaned, it is
delivered to the pipeline. The cycle is completed by a low-pressure switch in the suction of the
delivery pump. The design simplifications and reduced costs of the LACT unit have been
important factors contributing toward the rapid growth of the method's acceptance.