Calculator: How much do testing errors cost your business?

Calculator: How much do testing errors cost your business?

The short answer is: a lot. This explains why oil companies everywhere in the supply chain spend so much on quality and measurement, from sophisticated on-line analyzers and automatic samplers at most custody transfer points, to large annual third-party-lab budgets.

It can be easy to start to think of testing as a nuisance rather than a core function – a cost centre rather than a profit centre – since the benefits of better testing may seem indirect on a day-to-day basis. This is a problem because the accuracy of testing depends strongly on how much people care about it: the managers deciding whether or not to buy a more accurate, but more expensive on-line analyzer, and the operators doing manual processes that ultimately determines testing accuracy.

We built the calculator below as a quick reminder of how important testing is. It shows the impacts of error in three common crude tests (S&W, density, sulphur content) on an oil company’s revenues. Estimates are based on the publicized Western Canadian equalization formulas for crude oil and do not consider added costs associated with upset modes or rerouting off-spec product.