The "Btu condition" used to determine the gross heating value (HV) of gas delivered to sales (i.e., custody transfer) should be routinely verified to ensure that you are being paid for the total energy of the delivered gas. The method used to determine the Btu content and HV should be identified in the gas contract or purchaser's agreement, including the base conditions for the calculated volume (Mcf) and Btu content, as well as whether the expressed Btu condition should be "Wet," "Dry," or "As Delivered."
By way of example, a recently completed measurement audit on behalf of a natural gas supplier for a 15-month period found a loss of approximately 1.77% in the total MMBtu reported by the purchaser, as compared to the check-measurement totals reported by the supplier. Often, a discrepancy below 2% is not closely examined by suppliers and may continue unresolved. In this particular case, however, since the monthly delivery averaged 1,500,000 MMBtu, the loss amounted to 20,500 MMBtu per month...an amount clearly worthy of further investigation.
The purchaser reported the Btu condition as "Dry," but recalculating the Btu content based on the reported gas composition at base conditions showed that they were actually using a "Wet" Btu value. This error over the 15-month audit period amounted to a loss of 344,954 MMBtu. Following a formal adjustment request, the supplier was credited for this amount...and based on the average price of natural gas for the audit period, received payment of nearly $1.5 million for the correction.
Small differences and simple mistakes made in reporting should not be ignored. Systematic errors that are left uncorrected can easily add up to a substantial amount. For this reason, a routine review of the purchaser's measurement should be made by all gas suppliers.
The analytical error mentioned in the case above is just one of many sources of measurement error. More information on gas sales verification, common sources of measurement error, and related technical topics can be found by clicking here
"It's the little details that are vital.
Little things make big things happen."
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