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Lower Level Sub-Sector Meeting Toronto

Downstream Petroleum Trade Sector Review
LOWER Subsector Meeting
Toronto
Oct 15 - 16, 2001

1. Meeting Attendance
The following is a list of stakeholders who were sent an invitation to attend and confirmed their intention to attend and those who attended the meeting.

2. Purpose of the meeting
Stakeholders to establish Measurement Canada's (MC) level of intervention in the Downstream Petroleum Sector and in the Lower sub-sector in particular; to define criteria for an acceptable alternate service delivery mechanisms in area where intervention through inspection programs and services are deemed necessary; to define the type and level of reporting and monitoring mechanism necessary for the sector; and to determine an appropriate sector review frequency.

3. Participant's Expectations
Stakeholders were asked for their expectations of the meeting.

• knowing the future of role of MC, petroleum companies, and service organizations
• impact of own operations
• learn about accreditation
• see what is going on - future
• see direction taken by MC and impact in the industry

4. Criteria for making decisions at the meeting
Decisions and recommendations at the meeting:

• consensus among primary stakeholders (buyers and sellers of petroleum products);
• general agreement of vulnerable parties (typically the buyer of the product who does not control the trade device) required for level of intervention and selection of alternate service delivery mechanism;
• general support from third party (service providers) for alternate service delivery mechanisms;
• decisions are in line with Measurement Canada's mission and strategic direction;
• decisions and recommendations are sustainable;
• decisions and recommendations are internationally acceptable.

5. Record of decisions and recommendations from the meeting participants.
Please consult the Lower Section and Appendix D of the Discussion Paper on Establishing an Appropriate Level of Measurement Canada Intervention in the Downstream Petroleum Sector for more information regarding the levels of intervention originally proposed.

• Trade Devices (Measuring Devices used for Custody Transfer of Products)

  Trade devices include all primary measuring devices such as truck scales, vehicle scales, platform scales, rail tanker cars, loading and unloading meters, truck mounted meters, pipeline meters as well secondary devices such as thermometers, pressure devices, density devices. Tertiary devices such as flow computers/electronic registers are also included.

  Pipeline Meters
  Pipeline meters in the Lower sub-sector exist in odd remote areas cases whereby fuel oil is delivered to commercial establishments and a meter is present at the delivery end of the pipeline. These are generally covered by contractual agreements where by both parties enter into an agreement on the measuring device used and the parameters around it. It was stated that there are very few of these types in Canada.

  There was limited knowledge in this area amongst the participants and there were no strong arguments either for or against the proposals for pipeline meters. It was generally felt that Measurement Canada does not need to intervene to ensure equity and accuracy in trade transactions by pipeline in the Lower however dependant buyers of this type of transaction were not present and may need to be consulted further.

  Railway Tank Cars
  Stakeholders reserved comment for Railway Tank Cars as there was limited knowledge in this area amongst the participants. There were no strong arguments either for or against the proposals. It was confirmed that there are transactions that rely solely on the markers in the railway tank car. Recommendations from other consultation sessions were brought forward by Measurement Canada for information. For further information on this please see the minutes from the Upper and NGL consultations sessions.

  Marine and Tank Gauging
  Stakeholders reserved comment for Marine and Tank Gauging as there was limited knowledge in this area amongst the participants. There were no strong arguments either for or against the proposals.

  Loading Rack/Truck Meters/Tanker Trucks/Unloading Meters/Rail-Vehicle Scales/Other Scales
  Discussions took place around the vehicle mounted meters whether it should be left for the retail sector. The majority of truck mounted meters that deliver to commercial establishments will be used to deliver retail home heating. It was recognized that if the majority of these devices are used for dual purposes, they may be subject to review again during the retail trade sector review. The DPSR team had realized this during the early stages of the review but decided to leave them in this trade sector review for those transactions that involve commercial deliveries.

  The trade devices for this part of the subsector was deemed to warrant a higher degree of MC intervention. Primary, secondary, and tertiary devices would be required to undergo approval, initial certification, and to re-introduce a periodic certification. Seconday devices such as pressure and temperature devices should be accepted on a performance based specification rather than design. Some concerns were voiced as to devices that needs to be approved, should be more precisely defined (eg: air eliminators, software etc.).

  Measurement Canada should maintain the mandatory approval and initial certification programs for devices of this group as well as the applicable existing written standards. Recognizing l'Organization internationale de métrologie légale or other countries' device approvals is acceptable to stakeholders as long as it does not result in lower standards. Perhaps a screening program to see if any additional tests, during the approval process, may be warranted that may not have been done by another country, should be implemented prior to accepting other country's approvals. It was suggested that a "What's New" section on MC's web site be established to assist industry to be knowledgeable when new approvals are posted. Suggested a category to select descipline (eg. mass,volume, etc) for notification be set up.

  Industry guidelines should be status quo.
  During the discussion about current device compliance rates, it was confirmed that some meters may not be tested as frequently as they should and would warrant a re-introduction of a periodic re-certification frequency set at a maximum window. This window was suggested to be 2 years. The time of year may play into the equation as well due to variances found between winter and summer calibrations. This may be a factor if trying to establish an optimun inspection frequency by monitoring performance over time. Also stakeholders would like to see the compliance data broken down further to separate the split compartment tests, fast flow tests, and slow flow tests. Frequency should not to refer to calendar years as a device could be inspected Jan 1, 2000 and then on Dec 30 2002 (35 months as apposed to 24), suggested wording "must be re-verified during a time not to exceed 24 months from last verification". Some stakeholders would like to see the frequency based on volume throughput for meters. Some stakeholders had concerns about secondary devices having to be done by MC or ASD as "in-house" expertise exists within large oil companies and could have a "mini-accreditation" process for this to enable monthly checks of RTDs for example in order for these types of devices to be re-sealed. This was discussed again in more detail under the agenda topic of service providers.

  The following was agreed to;

  • Approval - yes, however MC to recognise other jurisdictions' approvals (NMI, PTB, NIST etc) and installation requirements that go along with the approvals, approval of design of secondary devices (eg, RTDs) should be performance based.
  • Initial Certifications - yes, by MC or through ASD. This program is believed to help weed out the non-approved devices and poor installations and reassure the device purchaser they are getting what they are suppose to be getting.
  • Periodic Certifications - There was a general agreement with concept. Concerns over increased costs to device owners/service providers were voiced. Canadian Independent Marketers Association (CIPMA) to poll their members to determine the frequency in which they get their meters calibrated. Re-verification frequency should be looked at during the implementation phase - hinted at a 2 year window but should be determined through study. Vulnerable parties will need to be further consulted on this issue as well as they would not adequately represented at this meeting.
  • Pre-Assessment of Installation - no formal requirement is needed, concerns with turn around times and emerging technology, should be informal/voluntary, although some stakeholders thought it would be a good idea to have a set of templates of approved configurations especially for truck mounted metering systems
  • Written Legal Standards - yes for approvals, initial inspections, and re-verifications
  • Guidelines - n/a

  Packing Devices

  Devices used to pre-package products was briefly discussed with the recommendation that these devices have the same requirements as for loading rack meters, truck mounted meters and weigh scales. It is acknowledged that scales are the primary packaging device used in this sub-sector.

Physical Standards (Pipe provers, open provers, pressure gauges, thermometers, master meters, master scales, test weights, etc.)

Measurement Canada to provide for the adoption of legislation requiring that any physical standard used for testing and calibrating trade devices (custody transfer), whether or not they are used by a Measurement Canada's inspector or Alternate Service Delivery Mechanism (ASDM), is traceable, calibrated and certified at proper intervals. The legislation would address standards' design, accuracy, usage and frequency of re-calibration. It was suggested that these should be published on MC's web site. Any parts that could be adjusted or moved that may affect accuracy, should be sealable on any standard. Guidelines should also be established to address the proper selection, use, storage, transportation and care of them.

These requirements would apply to physical standards used to test pipeline meters, loading rack, and vehicle mounted metering equipment, metering systems used to load and unload railcars, tanker trucks, and scales whether or not a legal certification is issued. Requirements for master meters should be included as well.

Stakeholder suggested specifications for open neck provers should be further defined to limit the variety of provers with respect to valving arrangements, cross sectional area, top loading and bottom loading design. The top loading versus bottom loading seems to be a concern when performing prover comparison checks in the field. It was suggested that a study be undertaken, under controlled conditions, to address the best design criteria, as this has been a concern in the past. This should be addressed through the MC Volumetric Standing Committee.

Measurement Canada would provide calibration and certification services to ensure traceability. Calibration and certification services through accredited third party laboratories would also be acceptable as long as there is enough competition and not only one dominate party. It is clearly defined as to what written standard these laboratories would be recognized for (eg. ISO 17025). The scope of what they would be recognized for would also be needed.

Frequency of certification of standards should be reviewed and should capture data to see if current frequency, as determined by MC, is appropriate eg. portable versus fixed, movable part versus non movable part.

The following was agreed;

• requirement for mandatory traceability and certification by MC or through ASD, should be adopted
• approval of design by MC specifications
• mandatory re-certification, frequency to be established based on type/need and that current W&M regulations that specify re-certification periods should be re-visited to ensure appropriate periods.

Marine and Tank Strapping
Proposals were not discussed with the stakeholders as they were not well versed in this area.

Master Meters, Master Scales and Associated Equipment (thermometers) for Calibrating Railway Tank Cars
Proposals were not discussed with the stakeholders as they were not well versed in this area.

• Alternate Service Delivery Mechanisms (ASD) and Requirements for Service Providers

  ASD for the Delivery of Measurement Canada's Services and Programs
  In accordance with Measurement Canada's strategic direction, initial certifications and periodic mandatory re-certifications of trade measuring systems will be performed by third party organizations to which Measurement Canada will delegate the necessary certification authorities.

  Participants, including primary stakeholders and service providers, recommended that Measurement Canada design and implement an ASD simpler and less costly that the current measurement Canada accreditation program. They felt that the quality assurance component (ISO 9002 model) of the current accreditation program is unnecessary and too costly. Rather, they recommended a registration or certification program that would focus on knowledge and proper enforcement of applicable legislation, procedures and other Measurement Canada requirements. In order to be recognized or certified, an organization would basically be required to use traceable and certified physical standards, would have to be trained and assessed periodically by Measurement Canada. They would also have to enforce the legislation as required and use the prescribed inspection procedures, would have to issue certificates and report the results of their inspection as prescribed. Measurement Canada would assess competencies, perform audits and product audits to ensure compliance.

  Some concerns were raised about service to remote areas where they may be one service provider recognized by MC. After a few years this service provider was not able to pass the competency tests or product audits. Is it possible that Measurement Canada would not be in position to "fill in"? What would be the result? Measurement Canada must consider this scenario in any ASD initiative it undertakes.

  Mandatory Registration of Service Providers for Any Metrological Work
  The stakeholders support the adoption of a legal requirement which would allow only "licensed", "authorized" or "registered" service organizations to service (repair, break seals, adjust, test, calibrate) trade devices where the MC intervention is required for initial certifications and mandatory re-certifications. The "licensing" or "registration" program would have to take the form of an ASD described in the previous paragraph: mandatory use of certified standards, mandatory training, assessment by Measurement Canada, monitoring and reporting mechanisms, etc. No need for a costly - quality based (ISO) system. Any added cost to the industry for this requirement would be offset by the benefit of having a MC recognized service provider which must meet certain criteria.

  Under the current regulations, there is no control on the quality of work performed by service providers and the testing equipment they use. Service providers present at the meeting view such a registration system an opportunity to create a level playing field, and an opportunity for Measurement Canada to implement measures that will contribute to enhanced device maintenance work. Discussions took place as to if a company or an individual should be licenced. One suggestion was to have the company registered with licenced technician/s for the various scopes of competence. This would ensure that a company would have the administrative support for reporting requirements and the responsibility for training.

  MC confirmed from previous consultations sessions that the maintenance "non-metrological" work, performed on trade device secondary components (ATC probes, pressure transmitter, etc.) by internal personnel, that do not impact on accuracy of the device is not subject to this requirement. The current reporting requirements when seals are broken would be maintained. If internal personnel from owners were recognized by MC in a "mini accreditation" format, it would allow them to adjust their own temperature probes during monthly checks without having to get an ASD company or MC in to certify and reseal it.

  Concerns were raised over companies that may be accredited and those only going for registration or licencing. This may upset the playing field causing it not be level. MC must be careful to balance this concern as well as to not create monopolies in some geographical areas. Petroleum companies would like to receive the same information as the service provider will receive under the training portion, to ensure their service providers are doing what they are supposed to be doing; over and above any MC audits.

  It was agreed;

  • mandatory registration program for service providers, where MC intervention is warranted, to be adopted
  • minimum training would be required
  • required to use certified standards
  • use approved and standardized test procedures
  • service providers be subject to audits by MC
  • no full ISO requirement ("a watered down accreditation program would be welcomed")
  • requirement would focus on calibration not repair
  • internal service providers could be certified/licenced
  • any trade device maintenance/servicing must be performed by a registered service provider if deemed to require MC certification (n/a to pipelines or marine/tank gauging)

  Note from Measurement Canada: implementing a mandatory licensing or registration program may require important changes to the legislation.

• Products and Services (Pre-packaged and Bulk)
  There is limited pre-packaged products in the Lower subsector that are marketed in Canada. Stakeholders recommended to maintain the existing level of requirements (tolerances and net quantity declaration) for products measured in bulk by loading/unloading rack metering systems, vehicle mounted metering systems, rail car loading and unloading metering systems, and vehicle/rail scales. Reactive enforcement of the requirements is sufficient.

• Disputes and Complaints
  Measurement Canada will remain the last recourse in case of complaints and disputes.

  The status quo with regards to written standards and programs is recommended throughout this subsector; binding compensation is not necessary.

  Stakeholders agree that further measurement Canada involvement in the resolution of disputes is unnecessary although the vulnerable parties may need to be consulted further.

• Monitoring and Reporting
  Equity and Accuracy: 

  Stakeholders' need for monitoring and reporting mechanisms to assess on-going performance of the sub-sector is minimal. Any mechanism would simply be to satisfy Measurement Canada's requirements. MC must maintain the appearance of equity in the marketplace in order for the confidence level to be high. There may be a risk if too much is given to third party organizations without the proper checks in place.

  The types of indicators may include periodic surveys every 24 months with results compared from survey to survey. Compliance rates were seen as a good indicator as long as they are clear as to what they mean (eg # error against buyer) and be representative of the industry device population. Considerations must be made to alleviate any concerns over the winter/summer performance factors. Complaints should be used as an indicator as well but need to be valid complaints and not just "sour grapes".

  Stakeholders recommended that a review of the Sub-Sector is performed about 3 years following the implementation of the decisions regarding MC level of intervention. Events that would trigger an earlier review: at the request of industry or MC; major turn over of service providers or not enough of them; decrease in compliance rates, or increase in complaints - but use with care.

  An advisory panel could possibly be made up from end users participation.

  MC should be the depository for all information in this sub-sector.

  6. Conclusion
  The above summarizes, in our opinion, the recommendations of the participants to the meeting. We felt that consensus was reached in most cases and the recommendations received general support.

  Certain proposals such as the registration of service providers, products and services, railway cars, marine and tank gauging will be carried over from previous sector meetings as well as coming sector meetings for discussion.

  The recommendations summarized in the document will serve along with the recommendations received at the other meetings of the Downstream Petroleum

  Sector to draft the final report later in the fall.

  Ottawa, October 2001