4.6 Mandatory Registration of All Service Providers; and Alternate Service Delivery Mechanism (ASDM) for Delegating Authority to Provide the Initial and Periodic Inspection Provided on Behalf of Measurement Canada

4.7 Pre-Packaged and Bulk Commodities

4.8 Complaint Resolution

4.9 Reporting, Monitoring, and Enforcement

4.10Next Sector Review

Appendix A

Appendix B

1.0 Introduction

1.1 Purpose of the Report

This report contains the recommendations for establishing an appropriate level of intervention for Measurement Canada (MC) in the downstream petroleum sector. In addition, the report contains the acceptable recommendations for alternate service delivery mechanisms (ASDMs). These 35 recommendations are the result of extensive consultation with sector stakeholders to ensure the accurate measurement of goods and services at a reasonable cost and risk to the parties involved in the measurement transaction.

The goal of this report is to summarize the consensus positions established through the consultation process and to provide MC senior management with the supporting rationale and considerations behind each recommendation.

1.2 Structure of the Report

The report has been structured to:

provide an understanding of the consultation process used for this project;
identify the stakeholder groups who participated; identify the different measurement applications within the sector;
identify the current services and programs provided by MC and those recommended by the stakeholders;
assess the use of ASDMs;
clarify the role of service providers in the sector; and
confirm the monitoring and reporting needs of the sector.

1.3 Reference Material

Throughout the consultation, minutes were prepared for all stakeholder meetings. A Downstream Petroleum Sector Review (DPSR) report entitled, A Discussion Paper on Establishing an Appropriate Level of Intervention in the Downstream Petroleum Sector, was issued to sector stakeholders in March 2001. The comprehensive information obtained since the inception of this project has been used to formulate this final sector report. All public documentation on this sector review, can be found on the MC web site under the Trade Sector Review section.

1.4 Methodology of Consultation

Beginning in February 2000, the DPSR team contacted a representative sample of sector stakeholders individually, to obtain preliminary feedback on the DPSR project. The comments obtained from the individual consultations identified the corporate structure of the sector, existing levels of mythological control of programs, existing complaint resolution mechanisms, possible alternate service delivery mechanisms, and finally, preliminary comments on a suggested level of intervention for MC in the sector. The information obtained from the individual consultations formed the basis for the DPSR report that was distributed to over 200 stakeholders (Appendix A) who were initially identified at the beginning of the project, for further input. A questionnaire document accompanied this report to seek more specific feedback.

The Downstream Petroleum sector was sub-divided into six discrete sub-sectors including: the Upper Level; the Lower Level; Propane; Aviation; Residual Products; and Natural Gas Liquids (Ethane, Butane and Pentanes). The creation of individual sub-sectors facilitated the consultation process by establishing logical groupings of stakeholders and allowing for the opportunity to determine different levels of intervention to satisfy stakeholder needs. A total of eight multi-stakeholder consultations were held across the country that contributed to the recommendations for this final report.

Despite the sector being divided into individual sub-sectors for consultation, the recommendations of this final report are attributable to the whole Downstream Petroleum sector unless otherwise specified.

1.5 Decision Making Criteria

Throughout the consultation, the team strived to achieve consensus amongst sector stakeholders for all recommendations. The following conditions were used to guide the discussions:

general consensus of the vulnerable parties must support all recommendations;
general agreement from all stakeholders on all recommendations; individual dissenting opinions were captured;
general support from third parties (those who are not parties to the trade transaction);
all decisions/recommendations must be in line with MC’s strategic direction;
all recommendations must be sustainable into the future; and
the recommendations must be both practical and acceptable and not deviate from international metrology standards so as to shed Canada in a negative light in international markets.

The following terms have been used to describe the introduction of certain recommendations for this report:

Consensus - implies that the vast majority of stakeholders agree with the recommendation; the other stakeholders would have preferred a different recommendation, but would accept it.

Unanimous - implies that all stakeholders are in full agreement with the recommendation.

Majority - implies that the vast majority of stakeholders agree with the recommendation; some stakeholders opposed the recommendation and their opinion was noted.

1.6 Impact of Recommendations on Other Trade Sector Reviews

It is understood that some recommendations contained within this report will impact on other trade sector reviews. For instance, certain trade measurement applications within the Downstream Petroleum Sector can be found in other trade sectors, (i.e., vehicle mounted meter systems used in both the Downstream and Retail sectors; railway tank cars used in the Downstream and Chemicals sectors; pipelines used in the Downstream and Upstream, etc.). The DPSR recommendations may be reviewed and possibly considered by other trade sector reviews for adoption, however, the DPSR recommendations will remain applicable within its scope. Trade measurement devices that transcend different trade sectors will be subject to the most stringent requirement.

The scope of the Downstream Petroleum Sector does not include any retail trade measurement. The Retail Petroleum Sector Review, which includes the sale of home heating oil and motor fuel to consumers, is expected to commence in the summer of 2002.

1.7 Stakeholder Reach

MC has ensured that the stakeholders who participated in the consultation were representative of the sector. It was deemed essential to have the input of the vulnerable parties¹ to the trade transaction and all informed comments were taken into consideration.

Note: ¹Party who is the purchaser of a product and who does not own or control the measurement equipment used in the transaction. The degree of vulnerability may vary from nil to high depending upon the capacity and ability of the vulnerable party to detect measurement errors, re-measure the product and have corrective measures taken where appropriate.

Representation from the sector included the major petroleum companies/associations; the independent petroleum companies/associations; commercial and industrial buyers/associations; petroleum equipment manufacturers and dealers; petroleum equipment service organizations; and other provincial and federal regulatory bodies.

The team made a special effort to involve vulnerable parties, however, their level of participation was not always possible at the multi-stakeholder meetings. Subsequent individual meetings with vulnerable parties were required in order to validate the input received at the multi-stakeholder sessions.

A combination of direct mail outs, telephone calls, e-mails, questionnaires, MC internet site and face-to-face meetings were used to solicit input for the consultation.

1.8 Conclusion, Thanks

The DPSR team would like to express sincere thanks to all participating stakeholders involved with this consultation. The exchange of information and dialogue throughout the project was always done in a courteous and professional manner. The team believes that it has met the project obligations by using consultation in achieving the principal goal of determining an appropriate level of intervention for MC in the Downstream Petroleum sector. Should any clarifications be required on this report, the members of the DPSR team are available to provide assistance.

The team would also like to thank the staff of MC for their continued support and valued input received during the project. The team encourages the Senior Management Committee (SMC) of MC to review this report with the expectation of accepting and implementing the recommendations contained herein.

Finally, the team would like to thank the MC team stewards for their continued guidance and support during this project.

Sincerely,

Renald Marceau, DPSR Team Member, marceau.renald@ic.gc.ca , (613) 952-2629

Terry Reid, DPSR Team Member, reid.terry@ic.gc.ca , (403) 292-5477

Ted Kingsbury, DPSR Team Leader, kingsbury.ted@ic.gc.ca , (613) 941-8919

2.0 Acronyms

A list of acronyms used in this document is provided below for the reader’s reference.

AAR American Association of Railroads

API American Petroleum Institute

ASDM Alternate Service Delivery Mechanism

CFTM Canadian Forum for Trade Measurement

DPSR Downstream Petroleum Sector Review

EUB Energy and Utilities Branch (Alberta)

ISD Innovative Services Directorate (Measurement Canada)

MC Measurement Canada

NEB National Energy Board

NIST National Institute of Standards and Technology (U.S.)

NRC National Research Council (Canada)

OIML Organization international de la métrologie légale

PDD Program Development Directorate (Measurement Canada)

RAC Railway Association of Canada

SA-01 Measurement Canada’s Accreditation Standard

TC Transport Canada

TSR Trade Sector Review

VSC Volumetric Standing Committee (Measurement Canada)

WG Working Group

3.0 Recommendations (Summary)

Marine and Tank Gauging

Stakeholders and the DPSR team unanimously recommend that:

1. Measurement Canada exempt from all provisions of the Weights and Measures Act, any measurement based on the gauging of tanks or strapping/gauging for the purpose of trading large quantities of petroleum products under contractual agreements among petroleum companies, petroleum refiners and large industrial customers.

Railway Tank Cars

Stakeholders and the DPSR team unanimously recommend that:

2. Establishment of a railway tank car working group² to review and report recommendations to Measurement Canada in preparation for the next sector review, on

Note: ²Railway working group could involve Measurement Canada, National Institute of Standards, American Petroleum Institute, Association of American Railways, The Railway Association of Canada , Transport Canada, Procor (manufacture), GATX (lessor of tank cars), the International Railway Association of Mexico

both written and physical standards for the calibration methods on railway tank cars, on a North American basis;
the need for approval, initial inspection and certification and periodic re-certification for other devices (e.g., thermometers, density devices, pressure gauges, etc.) used in conjunction with railcar markers during the trade transactions.

Pipeline Meters (liquids)

Stakeholders by consensus, and the DPSR team recommend that:

3. Measurement Canada exempt liquid pipeline meters and ancillary measurement instruments (e.g., temperature, pressure, density instruments) used in conjunction, from the approval and inspection certification requirements of the Weights and Measures legislation;

* Measurement Canada provide legislation to formally require all physical standards that are used for calibration of pipeline liquid meters and ancillary instruments, be approved, calibrated, and certified by Measurement Canada;

* Measurement Canada formally adopt American Petroleum Institute standards for the design, use, water draw procedures and tolerances of pipe provers³.

Note: ³This recommendation is also applicable to all other sub-sectors except Marine and Tank Gauging.

* Measurement Canada require all service providers (device repair and calibration organizations) to be formally registered⁴ by Measurement Canada before being allowed to calibrate pipeline metering systems.

Note: ⁴Information on the proposed registration program can be found under the ASDMs and Service Provider section

* Note: these are referred to in other sections of the report and are only shown here for the benefit of clarifying the needs of the pipeline industry in one location of the report.

Other Trade Measuring Devices in the Downstream Petroleum Sector

Approval of Devices

Stakeholders and the DPSR team unanimously recommend that:

4. Measurement Canada continue to approve measuring devices that are destined for trade use;

5. Measurement Canada maintain the current approval exemption for pre-packaging devices used for standard quantity commodities;

6. Measurement Canada explore ways to expedite the approval process to permit industry to obtain the most current device technology by considering;

i) a complete review of the current Measurement Canada approval process to rationalize the full laboratory evaluation of devices i.e., more performance based criteria rather than a design criteria (especially noted for temperature and pressure instruments) for approval purposes;

ii) clearly define whether ancillary device components (i.e., pressure, temperature, density) be approved separately or as part of the complete measuring system;

iii) the recognition of other countries’ approvals provided the written standards tested to would not result in a lowering of the current Canadian standards. Any approval tests not accounted for (e.g., temperature), the device would be subject to those tests only, in order to supplement the existing approval data from other countries;

Initial Inspection of Devices

Stakeholders and the DPSR team unanimously recommend that:

7. Measurement Canada continue to require an initial inspection and certification program for devices prior to being used in trade;

8. Measurement Canada maintain the current inspection and certification exemption for pre-packaging devices used for standard quantity commodities;

9. Measurement Canada clearly define whether ancillary devices components (i.e., pressure, temperature, density) be inspected and certified separately or as part of the complete measuring system;

Periodic Inspections (Re-Certification) of Devices

The majority of stakeholders and members of the DPSR team recommend that:

10. Measurement Canada provide for mandatory periodic re-certification frequencies for trade devices. An initial frequency of 2 years to be established whereby all trade measurement devices are required to be re-certified;

11. A technical working group be established and made up of industry and Measurement Canada, to study the optimum re-certification frequency of various measuring device types to consider factors such as the type of product being measured (meters), mobile versus stationary, remote locations, and throughput (meters);

Pre-Installation Assessment

Stakeholders and the DPSR team unanimously recommend that:

12. Pre-installation assessment provided by Measurement Canada should remain in place as a voluntary program;

13. Measurement Canada develop standard device installation templates to identify the component layout for compliance to the various measurement applications to assist contractors with the installation and ASDM organizations performing initial inspection and certifications.

Physical Measurement Standards

Stakeholders and the DPSR team unanimously recommend that:

14. Measurement Canada provide for the adoption of legislation to formally require that all Level 3⁵ physical working standards used for the calibration and/or certification of trade devices and ancillary instruments be accepted, approved, calibrated, and certified by Measurement Canada at required intervals;

Note: ⁵A Level 3 physical working standard is used to calibrate trade devices.

15. Measurement Canada provide for the adoption of legislation to formally require all that Level 2⁶ physical reference standards that are used for the calibration and/or certification of Level 3 physical working standards be accepted, approved, calibrated, and certified by Measurement Canada at required intervals;

Note: ⁶In the hierarchy of standards, a Level 2 standard must be used to calibrate a Level 3 physical working standard.

16. Measurement Canada and National Research Council continue to provide necessary standards calibration and certification services, where applicable, to maintain traceability to international standards;

17. Measurement Canada consider the use of Alternate Service Delivery Mechanisms for the calibration of Level 3 working standards;

18. Measurement Canada maintain or adopt necessary requirements for the design, performance, operation, selection or usage, maintenance and frequency of re-calibration of all physical measurement standards;

19. Measurement Canada formally adopt American Petroleum Institute standards for the design, use, water procedures and tolerances of pipe provers⁷.

Note: ⁷This recommendation is also applicable to all other sub-sectors except Marine and Tank Gauging.

20. A technical working group be established and made up of industry and Measurement Canada, to review design criteria for standards and to study the optimum re-certification frequency of various physical standards;

Registration of Service Providers and ASDM of Initial and Periodic Inspection

Stakeholders by consensus, and the members of the DPSR team recommend that:

21. Measurement Canada create a mandatory registration program for all service providers and be designed and implemented in consultation with affected parties; this program would be focused on the following elements:

technical knowledge of the technicians performing repairs and calibrations (continuous in-house technical training program);
knowledge of applicable legislation, proper inspection procedures and enforcement policies; periodic competency checks;
proper use/maintenance of appropriate traceable and certified physical standards and test equipment;
and other quality elements that are deemed essential.

22. Measurement Canada delegates its authority for initial and periodic inspection certifications to service providers under the registration program for those who wish to pursue;

23. Maintenance work that is limited to performing calibration checks and breaking seals on ancillary devices be exempt from the registration program in Recommendation 21 if it has no impact on the device accuracy;

24. Measurement Canada implement adequate monitoring and reporting mechanisms to include audits and product audits to ensure that organizations comply with the requirements of the registration program;

Pre-Packaged and Bulk Commodities

The majority of stakeholders and the DPSR team recommend that:

25. With the exception of the Marine and Tank Gauging sub-sector, the applicable tolerances for bulk commodities should remain in place for complaint resolution purposes;

26. Packaged commodities in the Residual Products Sub-sector (lube oils, greases, etc.) be subject to a pro-active commodity inspection program driven by compliance rates or known problem areas;

27. Packaged commodities, with the exception of transactions by Marine and Tank Gauging, Pipeline, and Railway Tank Cars be subject to a reactive (complaints) commodity inspection program only. This does not preclude Measurement Canada from initiating a corrective short term program where there are known problems resulting from complaints; the applicable tolerances and net quantity declaration requirements should remain in place;

Complaint Resolution

The majority of stakeholders and the DPSR team recommend that:

28. Measurement Canada continue, per its strategic direction to address complaints; review and revise written standards; programs should remain in place per the status quo;

Reporting, Monitoring and Enforcement

All stakeholders by consensus, and the DPSR team recommend that:

29. Where programs and services are maintained, Measurement Canada remain the organization that monitors the marketplace and maintains/develops the necessary reporting mechanisms, to assess on-going performance of the marketplace and effectiveness of its programs; and to be the custodian of this information;

30. If Measurement Canada chooses to publish sector compliance rates for devices on the Measurement Canada web site, the information must be clear and meaningful;

31. Measurement Canada use existing industry associations/contacts and the Canadian Forum for Trade Measurement for gathering input from the sector; the creation of sector advisory panels is not required;

32. Measurement Canada be more proactive in marketing its services to the marketplace to address complaints;

33. Substantial fines/penalties be imposed for non-compliance for device owners and organizations with delegated Measurement Canada authority to serve as a deterrent;

Next Sector Review

The majority of stakeholders and the DPSR team recommend that:

34. The next sector review period be 2-3 years after the full implementation period, and 3-5 years thereafter;

35. A more frequent sector review to be initiated should the following occur:

a decrease in device compliance rates;
an increase in complaints;
a major device technological change; or
a failure of the existing Alternate Service Delivery Mechanism to satisfy the needs of the sector;


		Created: 2005-08-04 Updated: 2005-08-04	Top of Page	Important Notices