American Oil and Gas Reporter - February 2021 - 63

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SpecialReport: Crude Purchasing
mountainous landscape with steep grades
and narrow, twisting and turning roads
that can be difficult to navigate under
ideal conditions, let alone during snowy
winters and rainy springs. Lease accessibility impacts not only the timing of
when a tank volume can be picked up,
but can also affect per-barrel pricing
based on how much oil can be hauled in
a single trip, Andreychek explains.
" The more oil we are able to get on
one truck the better in terms of pricing.
A load of 60-100 barrels is priced differently than a load of 150-plus barrels
based on the cost associated with transporting the oil, " he says. " If there is an
opportunity to get more oil in one truck
run, there is an uptick in the economic
benefit for the producer. "
According to Andreychek, Ergon cooperatively conducts site evaluations with
operators to recommend improvements
to make locations accessible for tractortrailers. " For a lease that produces a load
a couple times a year, the producer may
be better off hauling the oil with a triaxle

or straight truck. But on a lease that produces a load once or twice a month, the
producer could get higher valuations by
getting a semi to the tank battery to load
more oil in each trip, " he offers.
The same access issues that complicate
crude transport apply to water hauling.
" The lower the BS&W the better for
pricing, but we generally allow a little
higher BS&W tolerance on the oil we
pick up than the standard 1%, " he relates.
" That helps reduce the amount going
into the water tank on the lease and
lessens the need for water hauling. It is
another way we can work with producers
to allow them to get better value for the
crude from conventional legacy assets. "
To improve logistics management, the
company has implemented a new dispatching and routing software system
across its crude hauling and transportation
fleet, he reports. " This technology has
been instrumental in improving the operational efficiency of our trucking arm.
It is making our trucking services an
even more well-oiled machine. "

Crude Oil Cash Register
In a business environment where so
many producing companies are committed
to funding operations internally through
cash flow, no producer wants to have a
tank of " bad oil " rejected or see what
they thought was the measured tank volume " shrink " because of quality issues.
Generating economic value from every
drop of oil and condensate produced on
a lease is where lease automatic custody
transfer (LACT) units come into play,
says Thomas Gentry, chief executive officer of Joshua, Tx.-headquartered UMC
Energy Solutions Inc.
" The LACT unit is the cash register in
the production process. No one would
operate a movie theatre or restaurant without a cash register. It is really no different
for a production site or pipeline, " likens
Gentry. " Once the producer has a properly
designed LACT unit installed, they can
be sure their sales volumes are being accurately measured and accounted for. "
The purpose of a LACT unit is to not
only precisely meter quantity, but also

FEBRUARY 2021 63


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American Oil and Gas Reporter - February 2021

Table of Contents for the Digital Edition of American Oil and Gas Reporter - February 2021

Contents
American Oil and Gas Reporter - February 2021 - 1
American Oil and Gas Reporter - February 2021 - Cover1
American Oil and Gas Reporter - February 2021 - Cover2
American Oil and Gas Reporter - February 2021 - Contents
American Oil and Gas Reporter - February 2021 - 4
American Oil and Gas Reporter - February 2021 - 5
American Oil and Gas Reporter - February 2021 - 6
American Oil and Gas Reporter - February 2021 - 7
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American Oil and Gas Reporter - February 2021 - 63
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American Oil and Gas Reporter - February 2021 - 69
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American Oil and Gas Reporter - February 2021 - Cover3
American Oil and Gas Reporter - February 2021 - Cover4
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