Trends in LACT Equipment Design and Application
Authors: Zaba Joseph 
Published: December 2007

During a relatively short period of six years, the method of lease automatic custody transfer (LACT) gained universal acceptance, and its use has grown from year to year at a very fast rate. This testifies to the value of the method to both the producing and the transportation branches of the industry. The design of LACT units has undergone considerable evolution during this period with the resulting simplification of the units and the consequent reduction in their investment and maintenance costs. The main economic advantage of LACT is the fact that it made possible the present accelerated trend toward consolidation of field oil-storage facilities, with the resulting substantial savings in operating costs. Particularly promising is the arrangement under which the untreated fluids from leases with different royalty accounts are metered and sampled at the individual leases, and are then commingled and brought to one central treating and LACT facility. While this arrangement at present is limited primarily to unitized fields or to cases where one company owns the whole field or a large portion of the field, there is no reason why it should not find its eventual application also in fields with diversified lease ownership through agreements between the operators for cooperative surface handling of oil.

Introduction

Few of the methods used in oilfield operations have gained such a universal acceptance in such a short period of time as the method of lease automatic custody transfer (LACT). The fact is even more remarkable when one considers the many interests which are involved in the transactions covered by this method. When the producer decides to introduce an innovation in the equipment he uses or in his operating practices, he is dealing with his own equipment and with oil which is under his exclusive custody. The same is true of the pipeline carrier when he decides to employ advanced methods in the operation of his system. However, at the point where the custody of oil is transferred from the producer to the pipeline (or to use a generally accepted although incorrect expression, where the oil is "sold" by 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.

Because of this fact, there was a doubt in the minds of some (even among those who pioneered the LACT idea) regarding the acceptance of the method by the industry in place of the time-tested conventional methods of custody transfer. 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, and all factors indicate that this trend will continue. This is the best proof that the basic idea of LACT is sound, and that it has benefited both the producing and the transportation branches of the oil industry.

Definition of LACT and ACT

A certain degree of misunderstanding seems to exist regarding the meaning of the expression, "lease automatic custody transfer". Even some of the oil companies using the method and some of the technical and trade publications refer to it sometimes as "ACT, automatic custody transfer". Because there is a basic difference between ACT and LACT and because the latter alone is the subject of this paper, it would be well to start with a clear definition of the method."ACT", automatic custody transfer, has been used for many years by the transportation, refining and marketing branches of the oil industry in transactions which did not involve the producer. For instance, the method has been and is being used for unattended transfer of custody of crude oil from one pipeline carrier to another, from pipeline carrier to the buyer, in loading of ocean-going tankers, in handling of products from refineries to the marketers and among the marketers. In contrast to this, "LACT" specifically covers the transfer of custody from the producer to the pipeline.

JPT

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