Title: Flow Measurement from the Manufacturer's Viewport by E.L.

Upp

Flow Measurement from the Manufacturer's Viewpoint

By
E.L. Upp
INTRODUCTION
It has been my privilege to be associated with the flow measurement business for
the last ___ years as a manufacturer of flow measurement and related devices. I
would like to share with you my perspective of the business from a
manufacturer's point-of-view. Not that we don't share a common goal (accurate
flow measurement at a reasonable price), but rather the influences that a
manufacturer must be aware of to properly serve the marketplace and still make a
profit for his stockholders.
MARKET ECONCMICS
In my early days of flow measurement, natural gas contracts were written for 1/2
cent per 1000 cubic feet as contrasted to contracts of a few years back that
were being written at $9.50 an M.C.F. Oil was several dollars a barrel rather
than over thirty dollars a barrel. The economics of flow measurement changed
accordingly. Concern about our measurement went from a field operation that
"just kind of happened" to a major concern of the upper management of energy
companies. The report card of measurement -- purchases balanced against sales,
with allowances for usage between, became a significant dollar consideration in
terms of a company's balance sheet. This did not necessarily reflect in a larger
measurement unbalance than had been experienced before, but simply the dollar
value was increased. Flow measurement was suddenly in the spot-light of
interest.

RECENT MARKET
What this meant to a manufacturer was, that as a supplier of equipment who was
doing his best to try to keep up with supplying increasing demands for present
equipment, he suddenly needed "more accurate flow measurement" and the industry
(manufacturers and users) was not prepared to supply the answer. The
manufacturer's dilemma was one of expanding capacity to build your present
devices and to expend time and money chasing the elusive "more accurate flow
measurement" demand. We opted to do same of both, with an expansion of
production capacity of 100 percent the last five years, to meet the equipment
deliveries that were backlogged; at the same time we expanded our electronic
production capabilities and research budget to find improved measurement in the
readout and control equipment. More recently, in the last year and one-half we
have established a Research and Development group to explore improvement of the
present basic measurement devices as well as studies of new methods that would
make the job of flow measurement better in the future. At the same time these
commitments were made, the market for flow measurement devices in the Petroleum
Industry dropped by at least 50% because of the energy market's decline and
readjustment. The manufacturers have excess capacity while the market has
declined and shows few signs of immediate recovery of any significance. Our
number one problem of a year or two ago of meeting deliveries has now become an
ability to keep our expanded production facilities busy. At the same time we
have increased competition for the remaining market, and the profit margin on
the product sold suffers accordingly. In a market such as just described, it is

difficult to assign a high priority to research to develop new products; how we

have opted to do so.

USERS' INTEREST TODAY

Simultaneously with this rather violent upset in the economics of flow
measurement, the manufacturer was facing the demand for more accuracy, as
mentioned before. In addition to the financial effects on the balance sheet, the
operating companies were no longer in an expansion mode; with the turndown in
their economics they became more concerned with improved efficiencies on their
present installations. Problems that had existed for years now became important
to solve. One of the first of these to occur was a desire for more accurate flow
measurement devices. This included improving present devices as well as new
meters to do the job better. Nobody would fault these desires, but from a
manufacturer point-of-view, how do we successfully meet them? We are in a
conservative follow tradition market. This serves us well as a manufacturer of
the standard of industry meters since the customer is slow to change and we do
not have a continual upheaval of new methods and products. However, when we do
make advances, as we have in the use of electronics, the users have been slow to
make this a profitable investment for us. As an example, electronics has been
available (admittedly not the quality we have today) for well over twenty years.
The total number of billing meters for the large volume natural gas measurement
is done with electronic metering in less than 2% of the stations installed. We
do somewhat better in applying electronics in the liquid metering area. We
believe that the markets will rapidly change; however, we have had similar
beliefs for over twenty years.

USERS' INTEREST TOMORROW

Consider a more difficult problem of bringing out a new meter rather than simply
improving the readout system of a presently accepted meter. If we had a meter
that met your ultimate needs that are something like: Absolute accuracy,
infinite rangeability, withstands all extremes of environmental requirements,
can be installed and operated with our present personnel, requires no
maintenance, and can be bought at a low price versus or present meters, you
(each company) would at best want to try one for a year or two (by comparing it
to your present methods) before adding it to your approved equipment list. The
argument is not whether this is proper or not, because this is a logical
progression on a change in your cash register, but that if we truly need new
procedures or meters there must be a better way of arriving at a "test for
approval" procedure. We have no industry-wide test and evaluation facility where
a manufacturer can get an evaluation of his equipment. So he must develop his
own facilities or depend on mutual tests worked out between himself and a user.
This is less than desirable financially because of the limited usefulness of
these tests. This type of testing only applies to: The one user, a limited set
of conditions, and must be run around the user's own operations, which must come
first. This latter will quite often require a year of operation to be equal to a
month's worth of useful data. On the other hand, even with extremely large
outlays of money, a manufacturer who builds his own test facilities only
approximates the conditions necessary to run an evaluation that is meaningful to
a user. We have requests to expand our test facilities that would run to several
million dollars. This would upgrade our capabilities, but these facilities would
not directly relate to a predictable amount of sales; hence they are difficult
expenditures to justify to ourselves and our stockholders -- particularly in
times of a depressed market. To meet your demand for improved flow measurement,

some means of industry wide approval testing must be put forward.

BETTER ACCURACY -- WILL YOU BUY IT?

Another influence in "more accurate flow measurement" is in the definition of
the words themselves. If I am a net seller of natural gas or petroleum fluids
and find that all of my meters have been reading low (an impossibility) by two
percent, then I would obviously be delighted to use the new, "more accurate
meters." However, if I have a customer who is just as interested in his balance
sheet and if I raise his flow volumes by two percent, then he isn't going to be
too happy with my decision of "more accurate flow measurement." We then run into
a definition of "more accurate" that is based on an evaluation against our
present measurement and the billing developed from it. It is a significant
consideration in our ability to market a new device.

AN EXAMPLE -- FLOW COMPUTERS

In our marketing of flow computers, as an example we have many times run into
"evaluations" that have indicated that they read differently than the present
chart measurement. There are good, solid technical arguments why the computer is
more accurate, but there are also good political and economic reasons that have
been stated by our customers as to why they "cannot use more accuracy if it
lowers my billing." The simple statement that if I change all of the flow meters
to use computers, then these differences will all cancel out assumes that all
present measurements are predictably off a certain amount caused by the readout
systems, and all computers will correct these measurements by the proper amount
to give me an absolute balance in my flow measurements. This is simply not true,
since I have sources of differences that come from other than the readouts. The
other problem here is when two parties are involved, if one party's measurement
is going up, then the other party's is going down, and we sell measurement
devices to both parties. We can't sell a device that measures fast to the seller
and slow to the buyer; however, if there is any tendency for error this is what
both parties want to know. Likewise, most of our customers are both buyers and
sellers using flow measurement equipment. As a manufacturer the only possibility
of meeting these markets is to sell the "most accurate meter device" we know how
to make, and let the customers work out the political and economic consequences.
However, what I wanted to point out was that these influences affect our ability
to bring out new products and get them accepted.

STANDARDS AND GOVERNMENT INFLUENCES

We have other requirements that influence changes in our supplying new
measurement devices. These came from standards bodies and governmental
requirements, which work both for, and against changes. You can't get a standard
written or approval given until there are significant units in use, and the new
meters are difficult to sell without these. We have recently seen a
proliferation of new standards that have created problems for the manufacturers
of "standard meter systems. In addition to the normal individual company
interpretations we have had with the old standard we have the standards
themselves disagreeing as to how to build an orifice meter, for example. As a
manufacturer we can build the orifice to whatever specifications the customer
desires; however, the customer is confused since he doesn't know which standard
is the "best" for him to use. This creates the opposite result of the intention
of a standard since the dif-ferences make the orifice units non-standard. This

has created a major controversy for the domestic and international orifice
users, and is now the subject of a concentrated study sponsored by the GPA and
API in the United States, and another study by governmental agencies in Europe.
On the subject of standards and governmental control of flow measurement there
is a belief by same of these bodies that measurement can be accomplished by
legislation. Experienced practitioners of the art of flow measurement find this
to be, a simple but ineffective way of accomplishing accurate measurement, since
it removes the one item that has been found effective in obtaining accuracy and
that is personal commitment and responsibility to accomplish the job. If the
standard or government says it's correct, then it's not my worry and I really
don't heed to know much about flow measurement.

FLUID CHARACTERISTICS ARE MORE DIFFICULT TO DEFINE

Another area of concern is the increased difficulty of measuring same of the
fluids we handle because of the unknown or highly variable nature of their
pressure, volume, temperature relationships. All manufacturers sell meters that
assume this information will be correctly supplied by the user so that
corrections can be made from flowing conditions to base conditions. However,
when a measurement system balance goes haywire because of fluid characteristics
the user is quick to contact the manufacturer of the meter to find out what's
wrong with the meter they bought. Fluids that fall into this category are
variable ethane-propane mixes, carbon dioxide and ethylene measured near their
critical points; steam, and natural gas with high diluents, to name a few. In
the majority of these cases, which we have studied, flow measurement error comes
from fluid properties problems rather than the basic flow meter.

FLOW MEASUPEMENT OR A FLOW METER?

This brings us to a basic decision that a manufacturer must make: "Do we sell a
meter or do we sell flow measurement?", By "selling a meter" we simply say that
we sell orifice, nozzle, venturi or turbine meters and it's up to the user to
apply than to get flow measurement. That is, he must be aware of all of the
ramifications of the use of the meter in a flow measurement system to get
accuracy. If the user's fluid characteristics are such that no meter will work
within his expectations, then his purchase of a meter will not give him flow
measurement. On the other hand, we have established a Systems Engineering group
whose job is to study the flow measurement job to be done, make recommendations
in changes in the fluid to allow measurement, specify and supply the appropriate
equipment to accomplish the job, and then deliver a completed flow-tested
package to the user.
This is not an inexpensive option to a client, since this service to the client
costs over and above the simple sale of a meter. However, we have been
successful in supplying system where complex measurement jobs are to be done
because it was approached as a flow measurement system rather than "buying a
meter," and the customer has received value for his additional costs. We feel
that customers can be served in this manner because of our specialized expertise
in addressing the entire problem. However, this doesn't make us the lowest
priced option available in the marketplace.

USER MANAGEMENT INFLUENCE

The flow measurement industry is victimized by its own success. Manage-ment in

user companies has never had to worry a great deal about flow measurement
accuracy. Now that it is a significant cost control item, they want it
controlled as they control their other accounting interests. However, more often
than not, the functions of measurement are split between Engineering,
Construction, Operations, Maintenance and Accounting with no definitive overall
responsibility apparent to a manufacturer for the whole process of arriving at
flow volume. This can create a difficult marketing and operating situation where
the manufacturer is caught between departments of his customer company. The
collective user answer to the problem often is that it is a situation where the
manufacturer is caught between departments of his customer company. The
collective user answer to the problem often is that it is obviously the meter
that is causing the error. It is our experience that breaking the flow
measurement responsibility into engineering departments doing the design;
construction departments doing the installation; operating departments
collecting the data; maintenance departments testing the equipment, and
accounting departments calculating the flows, gives us more problems than a
"single authority" organization.
As a manufacturer we are not immune to the same type of problem. The user
expects to be able to contact a single point in our company where he can get
design recommendations, field diagnosis, and service capability without having
to check with several people in different divisions before getting an answer to
his problem that includes possible problems in any one or all of our divisions.
Our growing pains have made it difficult for us to supply a single point where
the user can have his problems solved.

BUYING PRICE
We find that in the present day price conscious market that the customer is less
able to justify buying a slightly more expensive meter to do a job, whereas
several years ago factors other than price alone were given significance in the
decision. If the manufacturer is simply a supply house sending out metering
devices, his costs will be lower versus offering field service and information
on application that a full service manufacturer offers. This creates a concern
to us in our future planning for the changing market.

CONCLUSION
We are not in an adversary position with our customers since we have the same
desire -- accurate flow measurement at an appropriate price. However, we have
examined some of the changing factors that we are considering that will affect
the future of flow measurement at our company. We have presented the discussion
from a manufacturer's point-of-view. We intend to be in the flow measurement
business for many years to come, and we feel that frank discussions such as
presented here will help us to better solve your flow measurement problems by
providing the equipment you desire to do the job in the manner you want it done.