Services		CFTM		Approvals		Electricity		Volume
Sector Review		Authorized Service  Providers		Consumer Page		Natural Gas		Mass

Propane Sub-Sector Meeting Calgary

PDF Version [34 Kb]

Downstream Petroleum
Trade Sector Review
LOWER/PROPANE Sub-sector Meeting
Calgary, Alta
Nov 27 - 28, 2001

1. Meeting Attendance
The following is a list of stakeholders who were sent an invitation to attend. The check marks in column two and column three indicated who confirmed their plan to attend and who effectively attended the meeting.

2. Purpose of the meeting
Stakeholders to establish Measurement Canada’s level of intervention in the Downstream Petroleum Sector and in the Lower and Propane sub-sectors 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. It was recognized that the end user vulnerable party participation was limited at this meeting and further follow up with a representation of these types of stakeholders, would be required by Measurement Canada.

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
• Alternate service delivery - direction

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 the Propane 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, rail tanker cars, loading and unloading meters, truck mounted meters, pipeline meters as well as 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 may exist in a few areas of Eastern Canada 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. For propane, pipelines are used extensively for movement of large volumes of product. Pipelines are not used to ship to end commercial users.

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 and Propane sub-sectors. There is no need for device approval or inspection programs for this part of the industry. No need for further legal written standards. Voluntary industry standards are adequate for pipelines devices.

Railway Tank Cars
There was an assumption made that all product is either metered in and out of the rail cars or the rail cars are weighed, for this sub-sector. It was confirmed that there are many sites which rely only on the stencilled volume on the rail car along with the markers and strapping tables to determine the volume. A service provider stated that clients perceived the rail cars as trade devices. A producer stakeholder indicated that measurement by this type of transportation mode be left with the industry as there does not seem to be any problems. The Alberta regulator from the Energy Utilities Board (EUB) and a commercial buyer (reseller) would like to see the API guidelines applied.

It was brought forward previous meetings, the subject of rail tank car calibration and measurement by tank cars/gauges should be further investigated and looked at from a North American context. It was recognized that the impact of adopting regulations in Canada only would have a very low impact on the marketplace as rail cars manufactured and calibrated in Canada by Procor represent only 2% of the total North American population of approximately 250, 000 tank cars. While some cars may be suspect as far as measurement, most transactions are handled on a contractual basis. It was also brought forward from previous meetings that, Measurement Canada, Transport Canada, North American rail car manufacturers such as Procor, the Association of America Railroads, and the petroleum industry may form a working group to review all measurement related issues in this sector to determine the extent of any measurement problems.

The Association of American Railways have industry standards that state how tank cars are designed and built. For calibration the standard refers to an API standard for calibration. This API standard is an older standard that requires static volumetric measures of known volume be used to water draw the railway tank cars. Most manufactures now use a master meter on water for calibration now which differs from the API standard.

It was recognized that there are some discrepancies using rail cars. Other variables that contribute to calculating the volume are the temperature and pressure instruments that should be looked at when the whole industry is reviewed on an North American basis

It was agreed that: 

• MC to look at following up with Canadian representatives (TC, Procor, GATX, etc.) to the AAR (a recommendation brought forward from other sub-sector consultation sessions);
• as rail cars are used throughout the Downstream Petroleum Sector, any decisions will be subject to feedback from other sub-sectors
• if reviewed, then the whole process must be looked at (eg. pressure, temperature devices used in conjunction
• clarify to industry the status of rail cars being used as devices for measurement transactions

Marine and Tank Gauging
There was limited involvement from the participating stakeholders in this area and there were no strong arguments either for or against the proposals.

Loading Rack/Truck Meters/Tanker Trucks/Unloading Meters/Rail-Vehicle Scales/Other Scales
These types of trade devices was deemed to warrant a higher degree of MC intervention.

It was recognized that if these devices (vehicle mounted meters specifically) are used for dual purposes (retail and commercial) they may be subject to review again during the retail trade sector review. The Downstream Petroleum Sector Review (DPSR) team had realized this during the early stages of the review but decided to leave them in this trade sector for those transactions that involve commercial deliveries.

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 (OIML) or other countries’ device approvals is acceptable to stakeholders as long as it does not result in the recognition of 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.

During the discussion about current device compliance rates, it was confirmed that some meters may not be tested as frequently as they should be 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, but may need to vary with application type (e.g. meters on propane versus diesel fuel and meter versus scales) or be based on throughput for meters. Some suggested proving between summer and winter for some products like propane . Some stakeholders that have in-house measurement personnel, had concerns about secondary and tertiary devices having to be done by MC or ASD. As "in-house" expertise exists within large oil companies, it may be possible to 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.

An 80% compliance rates to target for industry was suggested for accuracy and perhaps a separate category for non-measurement noncompliance.

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
• Periodic Certifications - Stakeholders unanimously agreed that a period re-verification frequency be established for this part of the industry. The ideal frequency should be looked at during the implementation phase - hinted at a 2 year window but may want to look at the application. This should be determined through technical forum. End user vulnerable parties’ input is needed and will be further consulted on this issue as well, as their representation was lacking at this meeting.
• Pre-Assessment of Installation - no formal requirement was wanted, concerns with turn around times and emerging technology, should be informal/voluntary, some stakeholder, thought it would be a good idea to have a set of templates of approved configurations.
• Written Legal Standards - yes for approvals, initial inspections, and re-verifications
• Guidelines - they become standards when adopted

It was also recognized that during the implementation there should be concern for devices currently out there that do not meet MC’s requirements (ie. Propane Loading Racks) as to whether they get grand fathered or a time period to comply.

Packaging Devices
Devices used to package containers of the same size are currently exempt from approval and inspection, however, devices used for packaging varying weight containers are required to be approved and initially inspected. Devices that fill propane cylinders of 33 pounds and above were considered commercial and varying weight (different tare weight for each bottle).

It was concluded that these types of prepackaging devices for varying weight/volume, should have the same requirements as the loading rack meters and truck scales whereby approval, initial inspection, and periodic inspection be required.

Devices used for prepacking containers of the same weight/volume can continue to be exempt from approval and inspection.

Physical Standards (Pipe provers, open provers, pressure gauges, thermometers, master meters, master scales, test weights, etc.)
Measurement Canada (MC) 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), and regardless of sub-sector, is traceable, calibrated and certified at proper intervals. The legislation would address standards’ design/performance, accuracy, selection, usage and frequency of re-calibration. It was suggested that master meters if adopted as a standard, may not necessarily be subject to full design but rather a design/performance criteria.. Measurement Canada needs to address emerging technologies when it comes to approving. This issue on master meters, is currently being addressed through engineering at Measurement Canada. Gravimetric Provers are also considered to be a "transfer" standard with no real design criteria as compared to the weights, hydrometer and thermometer standards. Certain design must be met to ensure correct weighing of the scale.

The 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 whenever a seal is broken and/or a calibration adjustment is required regardless of whether a legal certificate is issued or not.

Measurement Canada would provide calibration and certification services ensuring traceability but would assess the feasibility of this service for ASD. Calibration and certification services, for physical standards, through accredited third party laboratories would also be acceptable to stakeholders as long as there is enough competition not just one dominate party. It must be limited to only level 3 working standards but stakeholders may be willing to recognize equivalent bodies (e.g. NIST) for level 2 standards.

The following was agreed: 

• requirement for mandatory traceability and certification of physical standards by MC or through ASD, should be adopted
• approval of design/performance 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
ITS Caleb Brett, a third party service provider, stated they have their measuring tapes, thermometers, lasers checked with reference standards before each use. Once a year the supplier of the equipment checks their reference standards and issues a certificate that is traceable to NIST.

To level the playing field for the entire downstream petroleum sector, it was felt that the standards used in this industry for tank and marine gauging should be traceable and be certified. Participants were of the opinion that MC should ensure traceability of standards in this area. However, it should be noted that the stakeholders at this meeting had very little involvement in marine and tank gauging and the final proposal would include other stakeholders’ input from meetings in other sub-sector of the downstream petroleum sector.

The following was agreed at this meeting: 

• tapes, thermometers, density devices and any other standards used to calibrate tanks, ships must be traceable and certified by Measurement Canada or an acceptable ASD.
• MC to look at formally recognizing other certifiable institutions (eg. NIST, etc) where appropriate

Master Meters, Master Scales and Associated Equipment (thermometers) for Calibrating Railway Tank Cars
Rail cars manufactured and calibrated in Canada represent only 2% on the North American population of rail cars. Since there is no logistical way of regulating the use of only Canadian made cars, this issue is recommended to be studied on a North America context through the tank car group of the Association of America Railway, the Canadian Railway Association, Transport Canada, GATX and Procor.

There seems to be some concerns over the physical standards used for calibrating rail cars (the master meter and the standard it is calibrated with) and the consensus was that standards used to calibrate rail cars should be traceable and certified. This would include the standard used to calibrate the master meter, and thermometers used and frequency of the master meter calibration.

The following was agreed:

• MC to follow up with US industry (AAR)
• standards used for calibration of railcars must be traceable and certified
• because rail cars are used throughout the Downstream Petroleum Sector any decisions will be subject to feedback from other sub-sectors

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, too prescriptive and costly. Rather, they recommended a registration or certification program that would focus on knowledge and proper enforcement of applicable legislation and other Measurement Canada requirements and application of inspection procedures. 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 adhere 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. Measurement Canada would not assess technical competence in relation to installing or repairing the device outside the scope of the requirements of the legislation.

There was a recommendation to the effect that organizations should be required to have and maintain a technical training program that would ensure that all technicians are technically competent. They would have to demonstrate that to MC

Transport Canada was used as an example for re-certification of propane cylinders that is required to be done on a periodic basis. Once a company is registered, they must show training and what it consists of, and what equipment they have to certify with , but no requirement for ISO documentation.

Mandatory registration of service providers for all calibrations in areas where Inspection Services are deemed necessary
The stakeholders support the adoption of a legal requirement which would allow only "licensed", "authorized" or "registered" service organizations to service (break seals, adjust, test, calibrate) trade devices where the MC intervention is required. Stakeholders would like ability for non-registered personnel to take the device out of service and repair the device (e.g. replace metering chamber) but before it is put back into service, have it re-calibrated by a recognized service provider if the repair affects the accuracy of the device. Certain provisions may have to accompany this to control who can break seals.

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 as 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.

It was brought forward from previous consultations sessions that the maintenance "non-metrological" work, performed on trade device secondary components (ATC probes, pressure transmitter, etc.) by internal personnel is not subject to this requirement. The current reporting requirements when seals are broken would be maintained but may necessitate a legal requirement to be resealed. 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 them. As long as no seals are broken nor calibration functions are performed, there would be no need for a service company to be registered if only doing an accuracy check. If no seals were broken but the entire primary metering element was replaced with a previously inspected one it would require re-calibration if it is not a "stand alone" system. If it is was a purely "stand alone" system with no other registration or temperature/pressure inputs, and provided it was certified for the application, then it would not need a re-calibration.

For loading rack propane and possibly for gas/diesel, some service providers only provide a proving service for the meter performance and do not look at the whole system such as the flow computers, pressure and temperature sensors. When proving these types of meters there is typically another representative present for the flow computer and possible someone else for the temperature/pressure sensors. This person is usually the dealer or manufacturer of the secondary and tertiary devices. They are responsible for entering in the appropriate information given by the proving company for the primary device. In this scenario, all parties may have to be recognized, licenced, and/or registered to some degree.

A service provider views a possible conflict of interest if the same company that is repairing now has to certify it (inspection versus repairs). Petroleum companies would address this as any company found taking advantage of this situation would not be employed again by this company and word would get around. Business agreements would take care of any potential conflict of interest.

It was agreed: 

• mandatory registration program for service providers when they provide mandatory services on behalf of MC
• 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 company service providers could be recognised
• reporting requirements to MC
• Railcars - should be addressed under the North American context
• Pipeline Meters, Marine and Tank Gauging- n/a
• Repairs and maintenance can be done by non registered personnel,. however any significant repair that may affect accuracy, must be followed by a re-calibration performed by registered service organizations (n/a to pipelines or marine/tank gauging)

Reporting requirements would be needed from service providers for initial and periodic inspection and any calibration work in between inspections. Some stakeholders would like to see the reporting requirement passed on to the device owner. Other stakeholders do not see a problem reporting back to Measurement Canada who are doing work on behalf of Measurement Canada, but the reporting requirements must be clear and concise. One method may be an electronic upload or email. Document retention periods must also be established for service providers.

Publication of service provider compliance would be difficult and not well received, however, what should be published is a list of service providers that hold current registrations with MC and the scope of their registration.

Re-certification requirements for device owners, documentation must be kept by the owner of the device to prove that certification has taken place but the reporting requirements of the certification rests with the service provider to report this to MC. MC will enforce the requirement on device owners, to have the device(s) certified within the required legal time interval.

It is understood that MC may have to develop a new database for clients’ measuring devices in order to ensure that devices are flagged if they have not been inspected within the required time period..

Other concerns over the enforcement was raised. Service providers will be required to report non-compliance to MC and it will be up to MC to ensure they are brought back into compliance. MC will take enforcement action against device owners that are not compliant. Owner education may be warranted.

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

Products and Services (Pre-packaged and Bulk)
There is limited pre-packaged products in the Lower sub-sector that are marketed in Canada. Some bulk pre-packaged rail cars or kerosene barrels or commercial propane bottles fall into this category. There was concern expressed regarding lack of end users not present at this meeting. Their view should be sought as to whether a pro-active program should be made mandatory. The stakeholders present, indicated there is not a need for a pro-active program and to maintain the existing level of requirements (tolerances and net quantity declaration) for products measured in bulk determined loading/unloading rack metering systems, vehicle mounted metering systems, rail car loading and unloading metering systems, and vehicle/rail scales, as well as any pre-packaged products. Reactive enforcement of the requirements is sufficient and could be expanded in the future to correct known problems in the industry.

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

The status quo with regard to written standards and programs is recommended throughout this sub-sector; binding compensation is not necessary. Maintain an investigative role, correct measurement problem by ensuring the device(s) is repaired/calibrated and provide statement of investigation to the complainant.

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. One way sharing of information of the results of surveys have limitations, but if the information was shared amongst all stakeholders, then it would be more useful and beneficial.

Compliance rates were seen as a good indicator as long as they are clear as to what they mean (e.g. # error against buyer) and be representative of the industry device population. Compliance rates, if used, may very well go down in the first year or so, since many device owners may not have had their devices calibrated recently. Perhaps after one or two cycles of the periodic inspection frequency, the compliance may start to go up again.

Participants (some) were skeptical about the direction of the results of compliance rates presented by Measurement Canada. The data points out that more errors are against the buyer than the seller. Most service providers see the reverse, more errors against the seller than buyer. It was learned during the meeting that most service providers only get called in when the seller suspects they are losing product by giving it away through the measuring device. It was also learned that Environment Canada has stiff penalties if the company cannot account for loss of product within certain tolerances. This could help explain why most service providers would expect to see more errors against the seller rather than the buyer.

Complaints should be used as an indicator to monitor trends but need to be valid complaints and not just "sour grapes". Also, if the availability to complain becomes easier, then the number of complaints may well go up and may not be related to what is happening out there so some caution is advised.

Comments from stakeholders is that MC should reduce administrative processes and go out and audit for compliance under the rules.

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.

Service providers were thought to be a key role and should be monitored closely to ensure there are sufficient numbers available and are capable of MC recognition. One caution may be to not change too much for the first review period to give the industry time to adjust and accept the changes.

It was noted that the Retail Petroleum sector review will be starting next year and some areas that may overlap (e.g. delivery truck for wholesale and retail) may factor in to the implementation of the recommendations.

Measurement Canada should play an "information conduit" role to facilitate and help solve problems on an ongoing basis. An advisory panel could possibly be made up from end users participation and not so much the industry, as it may be perceived as self serving by end users. Service providers should get together more often to discuss issues as it will be critical during the implementation phase.

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 almost all cases and the recommendations received general support.

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 winter.

Ottawa, December 2001