Custody Transfer Basics
There are two types of custody transfer systems used in the oil and gas industry. One is referred to as ACT and the other LACT. Automatic custody transfer (ACT) has been used for many years by the transportation, refining and marketing branches of the oil industry in transactions that do not involve the producer. Examples of this transfer are the unattended transfer of custody of crude oitl from one pipleline carrier to another, from pipeline carrier to the buyer, loading of ocean-going tankers, handling of products from refineries to the marketers and among the marketers.
Lease automatic custody transfer (LACT) specifically covers the transfer of custody from the producer to the pipeline or truck transporting the crude oil from the site. The American Petroleum Institute (API) defines a LACT system as “….an arrangement of equipment designed for the unattended transfer of liquid hydrocarbons from production leases to the transporting carrier…..” LACT units must meet conditions that are uniquely different from the ACT systems.
These systems are there for the purpose of measuring the amount of goods so that those either moving or purchasing them can have an agreed upon system of measurement from which to purchase or trade.