glossary of the oil gas and industry and conversion … · glossary of the oil and gas industry and...

GLOSSARY OIL GAS

OF THE AND INDUSTRY

ANDCONVERSION FACTORS

'YETUNDE OMOTOSHOADEOLA ADENIKINJU

FISÓYÈ DELAN? Ì

January, 2018

A NN OD I I ATNNOV

$cN

Y Y

Published by

Centre for Petroleum, Energy Economics and LawUniversity of Ibadan, Nigeria

GLOSSARY OIL GAS

OF THE AND INDUSTRY

ANDCONVERSION FACTORS

Copyright © 2018

'YETUNDE OMOTOSHO, ADEOLA ADENIKINJU & FISÓYÈ DELAN? Ì

Published by

ISBN: 978-978 876...

All rights reservedNo part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means electronic or mechanical, including photocopying, recording or otherwise, without permission in writing from the copyright owner.

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Centre for Petroleum, Energy Economics and LawUniversity of Ibadan, Nigeria

Glossary of the Oil and Gas Industry and Conversion Factors

Contents

v

AAbandonment: The act of terminating all operations, plugging wells, removing all surface equipment and restoring the surface to the original condition. Offshore, it would involve platform decommissioning and/or removal…

BBack-In Interest: Form of carried interest in which the latter converts to a regular working interest after payout, that is, after the carrying parties have recouped their costs, the carried party converts to a regular fractional working interest, paying its share of costs and receiving its share of revenues….

CC&F (Cost and Freight) - Cost refers to the cost of goods and freight refers to all other costs relating to all the means of transportation of the goods….

DDayrate: The daily rate paid by an operator to a drilling contractor under a daywork contract. (See also Footage and Turnkey Contract)…

EEconomic Interest: An Economic Interest is possessed in every case in which an investor has acquired any interest in oil and gas in place and secures the revenue derived from the extraction of the oil and gas to which the investor must look for a return of his capital…

FFarm In: When one company drills or performs other activity on another company's lease in order to earn interest in or acquire that lease…

Preface ix

1

4

8

17

23

26

vi

GGamma-Ray Logging: A technique of exploration for oil in which a well's borehole is irradiated with gamma rays. The varying emission of these rays indicates to geologists the relative density of the rock formation at different levels….

HHang The Rods: To pull pump rods out of the well and hang them in the derrick on rod hangers…

IIFC (International Finance Corporation) …

JJack or Unit: An oil-pumping unit. The pumping jack's walking beam provides the up-and-down motion to the well's pump rods…

KKelly Bushing: Part of the drilling rig. The Kelly is a long hollow steel bar that connects to the upper end of the drill string…

LLag Time: The time it takes for cuttings to be carried (circulate) from the bottom of the borehole up to the surface by the mud system…

MMarginal Contingent Resources: Known (discovered) accumulations for which a development project(s) has been evaluated as economic or reasonably expected to become economic but commitment is withheld because of one or more contingencies (e.g., lack of market and/or infrastructure)….

NNatural Bitumen: Natural Bitumen is the portion of petroleum that exists in the semisolid or solid phase in natural deposits. In its natural state, it usually contains sulfur, metals, and other nonhydrocarbons…

30

33

35

37

38

39

43

46

vii

OOctane: A hydrocarbon of the paraffin series. It is liquid at ordinary atmospheric conditions, although small amounts may be present in the gas associated with petroleum….

PPacker: A flexible rubber sleeve that is part of a special joint of pipe…

QQuitclaim Deed: A document by which one party (grantor) conveys title to a property by giving up any claim which he may have to title (although he does not profess that claim is necessarily valid)…

RR & D: Research and Development.

SSales: The quantity of petroleum product delivered at the custody transfer (reference point) with specifications and measurement conditions as defined in the sales contract and/or by regulatory authorities. All recoverable resources are estimated in terms of the product sales quantity measurements…

TTOP (Take or Pay): Take or Pay is a common provision in gas contracts under which, if the Buyer's annual purchased volume is less than his purchase obligation (the Annual Contract Quantity minus any shortfall in the Seller's deliveries, minus any Downward Quantity Tolerance), the Buyer pays for such a shortfall as if the gas had been received…

UUnassociated Gas: Natural Gas that occurs alone, not in solution or as free gas, with oil or condensate. (See Non Associated Gas)…

VVapour Pressure: The pressure exerted by a vapor held in equilibrium with its solid or liquid state…

49

52

60

61

67

74

78

80

viii

WWall Sticking: A condition in which a section of the drill string becomes stuck on deposits of filter cake on the wall of the borehole on a well…

ZZone: A specific interval of rock strata containing one or more reservoirs. Used interchangeably with “formation”…

Conversion Factors

References

81

84

85

90

Preface

The Centre for Petroleum, Energy Economics and Law (CPEEL) was

established in 2011 through a research grant by John D. and Catherine

T. MacArthur Foundation, as a regional Centre of Excellence, in the

training, research, and publication in energy. It is a multidisciplinary

Centre which brings together diverse energy professionals working in

the areas of energy. It is the first of its kind in Africa.

As part of its contributions to the training and research in energy,

three members of the Centre have jointly produced a Glossary of the Oil

and Gas Industry and Conversion Factors. This is a follow-up to the first

Glossary produced for the electricity supply industry. These two

monographs will be handy materials for students, researchers, industry

practitioners, policy makers and other stakeholders in the energy sector

who are interested in quick reference materials.

I want to thank the authors who have put in significant efforts to

compile the Monographs. Of course, there are still rooms for improvements

and we will be counting on your suggestions and inputs in the future

edition of the publications. I thank Mrs Yetunde Omotosho for leading

the efforts and Engr Fisoye Delano for providing significant inputs to

making the final product in your hands quite befitting. Needless to say,

that the errors and flaws contained in the publication remain the sole

responsibility of the authors.

The Centre will continue to lead the efforts in conducting research

and producing relevant materials to aid training, research and

understanding of the energy sector.

You can visit our website at www.cpeel.org.ng for more information.

Adeola Adenikinju, PhD

Professor and Director

Centre for Petroleum, Energy Economics and Law (CPEEL),

University of Ibadan, Ibadan

Nigeria.

ix

A

Abandonment: The act of terminating all operations, plugging wells,

removing all surface equipment and restoring the surface to the original

condition. Offshore, it would involve platform decommissioning and/or

removal.

Abstract of Title: A chronological history of ownership of a tract of

land.

Accumulation: An individual body of naturally occurring petroleum in

a reservoir.

Acidizing a Well: Increasing the flow of oil from a well by pumping

hydrochloric acid into the well under high pressure. This re-open and

enlarges the pores in the oil-bearing limestone formation.

ACQ (Annual Contract Quantity): The Annual Contract Quantity

(ACQ) is the volume of gas which the Seller must deliver, and the Buyer

must take in a given contract year.

Acre: The most common of land measure. A square 210 feet on a side

(44,100 sq. ft.) would be a bit larger than an acre (43,560 sq. ft.). There

are 640 acres in a square mile.

Acre-Foot: The thickness of a pay zone is measured in feet, and the area

of the reservoir is measured in acres. An acre-foot is a volume of

reservoir rock that is one acre in area and one foot thick.

ADP (Annual Delivery Program): The Annual Delivery Program

(ADP) is a schedule of gas volumes to be delivered on definite dates or

within definite periods in an imminent contract year in a long-term

contract.

1

AFE (Authorization for Expenditure): An estimate of the costs of

drilling and completing a proposed well, which the operator provides to

each working interest owner before the well is commenced.

AG (Associated Gas) is gas which is produced with oil in a primarily oil

field. Associated Gas is found in contact with or dissolved in crude oil in

the reservoir. It can be further categorized as Gas-Cap Gas or Solution

Gas.

Aggregation: The process of summing reservoir (or project) level

estimates of resource quantities to higher levels or combinations such

as field, country, or company totals. Arithmetic: summation of

incremental categories may yield different results from probabilistic

aggregation of distributions.

AIPN: (Association of International Petroleum Negotiators)

Air Drilling: A form of rotary drilling that uses compressed air instead

of mud. Used predominantly in shallow, low pressure areas.

ALARP: (As Low as Reasonably Practicable)

Allowable: The amount of oil and/or gas a well is permitted by the

government regulator to produce. Not all government regulators impose

“allowables”.

Analogous Reservoir: Analogous reservoirs, as used in resources

assessments, have similar rock and fluid properties, reservoir

conditions (depth, temperature, and pressure) and drive mechanisms,

but are typically at a more advanced stage of development than the

reservoir of interest and thus may provide concepts to assist in the

interpretation of more limited data and estimation of recovery.

Anticline: A geological term describing a fold in the earth's surface with

strata sloping downward on both sides from a common crest. Anticlines

frequently have surface manifestations like hills, knobs and ridges. At

least 80 percent of the world's oil and gas has been found in anticlines.

APCI: (Air Products & Chemicals, Inc.)

Annulus, or annular space is the space between a well tubular such as

drill pipe, casing, tubing and whatever surrounds it. For example, the

space between a well's casing and the wall of the borehole or the space

between the surface casing and the inner, producing wellbore casing.

CPEEL2

API gravity = 141.5SG

131.5–

API: American Petroleum Institute (API), a petroleum industry

association that sets standards for oil field equipment and operations.

Approved for Development: All necessary approvals have been

obtained; capital funds have been committed, and implementation of

the development project is underway.

Arbitrage is buying and selling the same commodity in two different

locations or markets to take advantage of variances in price.

Assessment: See Evaluation.

Assignment: The sale, transfer or conveyance of all or a fraction of

ownership interest or rights owned in real estate or other such

property. The term is commonly used in the oil and gas business to

convey working interest, leases, royalty, overriding royalty interests

and net profit interests.

The annulus, or annular space is the space between a well tubular

such as drill pipe, casing, tubing and whatever surrounds it. For

example, the space between a well's casing and the wall of the borehole

or the space between the surface casing and the inner, producing

wellbore casing.

Glossary of the Oil and Gas Industry and Conversion Factors 3

API gravity: Is a measure of how heavy or light a petroleum liquid is

compared to water: if its API gravity is greater than 10, it is lighter and

floats on water; if less than 10, it is heavier and sinks. The formula to

calculate API gravity from Specific Gravity (SG) is:

B

Back-In Interest: Form of carried interest in which the latter converts

to a regular working interest after payout, that is, after the carrying

parties have recouped their costs, the carried party converts to a

regular fractional working interest, paying its share of costs and

receiving its share of revenues.

Barge Rig: A drilling rig that is placed on a towed barge for shallow

inland water, swamp and river applications.

Barrel (BBL): Unit of volume measurement in the petroleum and its

products. 1 barrel= 42 U.S gallons, 158.97 litres. The first 'b' in its

abbreviation (bbl) comes from the early days of the oil industry when

Standard Oil Company painted their uniform size barrels blue.

Barrels Per Day: The customary term of measurement of the rates of

production from a well or oilfield, throughput of pipelines, refineries

and other petroleum facilities. Generally, the reference is to average

number of barrels per calendar day over a specified time, usually a year.

BOPD: Barrels of Oil Per Day.

BOE (Barrels of Oil Equivalent) : See Crude Oil Equivalent.

BOEPD: Barrels of Oil Equivalent Per Day.

BL (Base Load): The proportion of delivery (or demand) below which

send out (or demand) is not estimated to fall during a given period.

B/L (Bill of Lading)is a document issued by a carrier which details a

shipment of merchandise and gives title of that shipment to a specified

party. Bills of lading are one of three important documents used in

international trade to help guarantee that exporters receive payment

and importers receive merchandise.

Basement Rock: Igneous or metamorphic rock lying below

sedimentary formation in the earth's crust. Basement rock does not

contain petroleum deposits.

4

Basin: A depression in the earth's crust in which sedimentary

materials have accumulated. Such a basin may contain oil or gas fields.

Basin-Centered Gas: An unconventional natural gas accumulation that

is regionally pervasive and characterized by low permeability, abnormal

pressure, gas saturated reservoirs, and lack of a downdip water leg.

Battery: A group of at least two storage tanks in an oilfield.

BCF: Billion Cubic Feet. The cubic foot is a standard unit of measure for

gas at atmospheric pressure.

Behind-pipe Reserves: Behind-pipe reserves are expected to be

recovered from zones in existing wells, which will require additional

completion work or future recompletion prior to the start of

production. In all cases, production can be initiated or restored with

relatively low expenditure compared to the cost of drilling a new well.

Best Estimate: With respect to resource categorization, this is

considered to be the best estimate of the quantity that will actually be

recovered from the accumulation by the project. It is the most realistic

assessment of recoverable quantities if only a single result were

reported. If probabilistic methods are used, there should be at least a

50% probability (P50) that the quantities actually recovered will equal

or exceed the best estimate.

BFIT: Before Federal Income Tax

BHP (Bottom Hole Pressure): The pressure of the reservoir or

formation at the bottom of the hole. A decline in pressure indicates

some depletion of the reservoir.

Bitumen: See Natural Bitumen.

Bleeding Core: A core sample of rock so highly permeable and

saturated that oil drips from it.

Blind Pool: Refers to an oil and gas limited partnership which has not

committed to specific prospects, leases or properties at the time of

capital formation.

Block: Any assembly of pulleys on a common framework; in

mechanics, one or more pulleys mounted to rotate on a common axis.

The crown block is an assembly of pulleys mounted on beams at the top

of the derrick or mast. The drilling line is passed through the grooved


wheel on the pulley of the crown block alternately with the pulleys of

the traveling block, which is raised and lowered in the derrick or mast

by the drilling line.

Blowout Insurance: An insurance policy that protects the insured

party (working interest owner) from liabilities which might arise from

a blowout during the drilling, completion or production of a well.

Blowout: A sudden escape of oil or gas from a well, caused by

uncontrolled high pressure. It usually occurs during drilling.

Blue Sky Law: State regulations governing an offering to sell securities

within the state.

BOG (Boil Off Gas)- The small amounts of LNG that boil off from LNG

storage tanks in LNG plant operations and are recovered, or during

transportation. BOG gas on LNG tankers can be used as a fuel to drive

the ships.

Boiler Plate Offer: A term often used to describe a standard company

lease offer. Boiler plate leases generally grant many rights to the

company that an informed landowner would strike out. Some of these

often include royalties paid after expenses are deducted, free storage

and free pipeline right of ways.

Bonus: A monetary incentive given by the company to the mineral

owner for executing or ratifying an oil, gas and mineral lease.The

money paid by the lessee for the execution of an oil and gas lease by the

owner of the mineral rights. In the international industry, it is referred

to as Signature Bonus. Other overseas bonuses paid to the host

government include Discovery Bonus, paid at the time of the first

commercial discovery. Production Bonus, paid at the commencement

of production from the block.

BOP (Blowout Preventer): An assembly of heavy-duty valves

attached to the top of a well casing to control pressure.

BOPM: Barrels of Oil Per Month.

Border Price (BP) is the price at which gas is traded at the border

between two countries.

BOE (Barrels of Oil Equivalent): See Crude Oil Equivalent.

BOEPD: Barrels of Oil Equivalent Per Day.

CPEEL6

Bottom Hole Pressure (BHP): The pressure of the reservoir or

formation at the bottom of the well. Flowing bottom hole pressure and

shut-in bottom hole pressure are measured under flowing and shut-in

conditions respectively. A decline in pressure indicates some depletion

of the reservoir.

Bottom-Hole Pump: A compact, high-volume pump located in the

bottom of a well, not operated by sucker rods or a surface power unit.

Bridle: The cable link between the “horsehead” and the pump on a

pumping unit.

British thermal unit (BTU): A standard measure of heat content in a

fuel. It is the quantity of required to raise 1 pound (453.6g) of water

one-degree Fahrenheit from 58.5 to 59.5 degrees Fahrenheit under

standard pressure of 30 inches of mercury at or near its point of

maximum density. One Btu equals 252 calories, (gram), 778 foot-

pounds, 1,055 joules or 0.293-watt hours.

BS&W (Basic Sediment & Water): Material pumped up with oil and

gas which must be separated out.

Butane: A hydrocarbon associated with petroleum. It is gaseous at

ordinary atmospheric conditions.

Buy Back Agreement: An agreement between a host government and

a contractor under which the host pays the contractor an agreed price

for all volumes of hydrocarbons produced by the contractor. Pricing

mechanisms typically provide the contractor with an opportunity to

recover investment at an agreed level of profit.

B/L (Bill of Lading) is a document issued by a carrier which details a

shipment of merchandise and gives title of that shipment to a specified

party. Bills of lading are one of three important documents used in

international trade to help guarantee that exporters receive payment

and importers receive merchandise.

BL (Base Load): The proportion of delivery (or demand) below which

send out (or demand) is not estimated to fall during a given period.


C

C&F (Cost and Freight) - Cost refers to the cost of goods and freight

refers to all other costs relating to all the means of transportation of the

goods.

C3MR process: The LNG refrigeration process using propane and

mixed refrigerants as the cooling media.

Cantilever Jack-ups: Jack-ups that have the derrick package mounted

on steel arms that can be extended out from the hull of the rig.

Extension allows for the positioning adjacent to a platform rig for

development drilling.

CAOF (Calculated Absolute Open Flow): A figure representing a gas

well's theoretical producing capability per day.

Capital Asset: An asset acquired as an investment, for the purpose of

creating a product or service intended to be used in the activities or

operations of a business.

Capital Costs (Oil & Gas Tax Usage): For Federal Income Tax purposes,

the costs of Capital Expenditures which may be recovered by deduction

against income (through depreciation and depletion).

Capital Expenditure: An expenditure intended to benefit the future

activities of a business, usually by adding to the assets of a business, or

by improving an existing asset.

Capitalize: To treat certain expenditures as Capital Expenditures for

Federal Income Tax computations. To periodically expense capital costs

through Depreciation, Depletion and Amortization (DD&A).

Carried Interest: A carried interest is an agreement under which one

party (the carrying party) agrees to pay for a portion or all of the

8

preproduction costs of another party (the carried party) on a license in

which both own a portion of the working interest.

Cased Hole: A wellbore in which casing has been installed and

cemented.

Casing Pipe: Used in oil wells to reinforce the borehole. Sometimes

several casings are used, one inside the other. The outer casing, called

the “surface pipe”, shuts out water and serves as a foundation for

subsequent drilling.

Casinghead Gas: Natural Gas produced from an oil well, as opposed to

gas produced from a gas well.

Casinghead: The portion of the casing that protrudes above the

surface and to which control valves and flow pipes are attached.

Cavings Rock: Fragments that break off from the walls of a borehole

and fall into the borehole during drilling operations.

CBM (Coal Bed Methane):Natural gas contained in coal deposits. The

gas, mostly methane, may be produced with variable amounts of inert

or even non-inert gases. (Also, termed Coal Seam Gas, CSG, or Natural

Gas from Coal, NGC.)

CCGT (Combined Cycle Gas Turbine): A Combined Cycle Gas Turbine

(CCGT) is a form of electricity generation plant in which the waste heat

produced from combustion of gases is partially captured in the turbine

exhaust and used to generate steam for production of additional electricity,

significantly increasing the efficiency of the electricity generation.

CEB (Clean Energy Building)

Cement (CMT): Fluid cement is mixed at the surface, pumped to the

bottom of a cased well, forced to flow around the lower end of the

casing and up into the space between the casing and the borehole.

When cement solidifies (sets), it holds the casing in place and provides

support.

Cement Squeeze: Forcing cement into the perforations, large cracks

and fissures in the wall of a borehole to seal them off.

Cementing: Filling the space between the casing and the wellbore

walls with cement to support the casing, and seal between zones.

CF (Carry Forward): A provision within a long term Take or Pay


Contract under which a Buyer which takes more than its Annual

Contract Quantity in any year is allowed, under conditions specified in

the contract, to balance this against under taking in following years.

Chance: Chance is 1-Risk. (See Risk.)

Choke: An orifice installed in a pipeline at the well surface to control

the rate of flow.

CHP (Combined Heat and Power): Combined Heat and Power (CHP)

is the use of a single combined system to supply both the heat and

power obligations of a project hence reducing the waste of heat.

CHPS (Casing-Head Petroleum Spirit): An ancillary name for

Condensates.

Christmas Tree: An assembly of valves, gauges and chokes mounted

on a well casinghead to control production and the flow of oil or gas to

the storage tanks or pipelines.

CIF (Cost, Insurance, and Freight) - means the shipper/trader must

pay the cost of shipment up to the ship, insurance cost for the cargo, and

freight cost up to destination port.

Circulate (CIRC): To pump drilling fluid into the borehole through the

drill pipe and back up the annulus.

Circulation, Lost: When the mud does not re-circulate to the surface

because it is disappearing into a thief zone, a highly porous cavity. Such

a zone must be immediately plugged with lost circulation materials

(nutshells, sawdust, newspapers, cellophane, etc.), slurry or a chemical

mix. Otherwise the well is at the mercy of any sudden high-pressure

surge.

Clean Oil: Crude Oil containing less than 1 percent sediment and

water; “pipeline oil”, oil clean enough to send through a pipeline.

CNG (Compressed Natural Gas):CNG is natural gas that is pressurized

and stored at pressures up to 3,600 psig (~250 bar). This process

allows 200 times more gas to be transported. CNG is a fuel which can be

used in place of gasoline (petrol), Diesel fuel and propane/LPG.

CO Injection: A secondary recovery technique in which carbon dioxide 2

(CO2) is injected into wells as part of a miscible recovery program.

COI (Confirmation of Intent).

CPEEL10

Commercial: When a project is commercial, this implies that the

essential social, environmental, and economic conditions are met,

including political, legal, regulatory, and contractual conditions. In

addition, a project is commercial if the degree of commitment is such that

the accumulation is expected to be developed and placed on production

within a reasonable time frame. While 5 years is recommended as a

benchmark, a longer time frame could be applied where, for example,

development of economic projects are deferred at the option of the

producer for, among other things, market-related reasons, or to meet

contractual or strategic objectives. In all cases, the justification for

classification as Reserves should be clearly documented.

Committed Project: Projects status where there is a demonstrated,

firm intention to develop and bring to production. Intention may be

demonstrated with funding/financial plans and declaration of

commerciality based on realistic expectations of regulatory approvals

and reasonable satisfaction of other conditions that would otherwise

prevent the project from being developed and brought to production.

Common Carrier: A person or company in the business of transporting

the public or goods for a fee. In the industry, a person or company

engaged in the movement of petroleum products, like a public utility.

Completed Well: A well made ready to produce Oil or Natural Gas.

Completion involves cleaning out the well, running steel casing and

tubing into the hole, adding permanent surface control equipment and

perforating the casing so oil or gas can flow into the well and be brought

to the surface.

Completion Interval: The specific reservoir interval(s) that is (are)

open to the borehole and connected to the surface facilities for

production or injection, or reservoir intervals open to the wellbore and

each other for injection purposes.

Completion: Completion of a well. The process by which a well is

brought to its final classification— basically dry hole, producer,

injector, or monitor well. A dry hole is normally plugged and

abandoned. A well deemed to be producible of petroleum, or used as an

injector, is completed by establishing a connection between the


reservoir(s) and the surface so that fluids can be produced from, or

injected into, the reservoir. Various methods are utilized to establish

this connection, but they commonly involve the installation of some

combination of borehole equipment, casing and tubing, and surface

injection or production facilities.

Compulsive Integration: After the Department of Environmental

Conservation (DEC) issues a well permit, you will be required to elect

an option for how your “unleased acreage” in the spacing unit will be

integrated with other properties in the unit. Your election will be

finalized by issuance of a compulsory integration order after a public

hearing. This process consolidates control and management of well

operations with the well operator who holds the permit from DEC. If

you have leased your oil and gas rights to someone else, then you are

not required to make an election; your lessee will make the decision if

necessary. You will be offered a choice from the following options:

Integration as a non-participating owner; Integration as a participating

owner; Integration as a royalty owner. Each option presents different

risks and potential rewards. The option you select may subject you to

certain costs and obligations, and there is no guarantee that a well will

make money. You should carefully consider all the implications of your

decision. If no permit is issued, then your acreage will not be affected.

Concession: A grant of access for a defined area and time period that

transfers certain entitlements to produced hydrocarbons from the host

country to an enterprise. The enterprise is generally responsible for

exploration, development, production, and sale of hydrocarbons that

may be discovered. Typically granted under a legislated fiscal system

where the host country collects taxes, fees, and sometimes royalty on

profits earned.

Condensate: A mixture of hydrocarbons (mainly pentanes and heavier)

that exist in the gaseous phase at original temperature and pressure of

the reservoir, but when produced, are in the liquid phase at surface

pressure and temperature conditions. Condensate differs from natural

gas liquids (NGL) in two respects: 1) NGL is extracted and recovered in

gas plants rather than lease separators or other lease facilities; and 2)

CPEEL12

NGL includes very light hydrocarbons (ethane, propane, butanes) as well

as the pentanes-plus that are the main constituents of condensate.

Conditions: The economic, marketing, legal, environmental, social,

and governmental factors forecast to exist and impact the project

during the time period being evaluated (also termed Contingencies).

Conductor Casing or Conductor Pipe: Wide-diameter casing installed

at the surface prior to rigging up to prevent caving.

Confirmation Well: A well drilled to “prove” the formation encountered

by an exploratory well.

Connate Water: The water present in a petroleum reservoir in the

same zone occupied by oil and gas considered by some to be the residue

of the primal sea. Connate Water occurs as a film of water around each

grain of sand in granular reservoir rock and is held in place by capillary

attraction.

Constant Case: Modifier applied to project resources estimates and

associated cash flows when such estimates are based on those

conditions (including costs and product prices) that are fixed at a

defined point in time (or period average) and are applied unchanged

throughout the project life, other than those permitted contractually. In

other words, no inflation or deflation adjustments are made to costs,

product prices, or revenues over the evaluation period.

Contingency: See Conditions.

Contingent Project: Development and production of recoverable

quantities has not been committed due to conditions that may or may not

be fulfilled.

Contingent Resources: Those quantities of petroleum estimated, as of a

given date, to be potentially recoverable from known accumulations by

application of development projects but which are not currently

considered to be commercially recoverable due to one or more

contingencies. Contingent Resources are a class of discovered recoverable

resources.

Continuous-Type Deposit: A petroleum accumulation that is pervasive

throughout a large area and which is not significantly affected by

hydrodynamic or buoyancy influences. Such accumulations are included


in Unconventional Resources. Examples of such deposits include "basin-

centered" gas, shale gas, gas hydrates, natural bitumen and oil shale

accumulations.

Conventional Crude Oil: Crude Oil flowing naturally or capable of

being pumped without further processing or dilution [see Crude Oil

and compare to Synthetic Crude Oil (SCO)].

Conventional Gas: Conventional Gas is a natural gas, trapped by

buoyancy, occurring in a normal porous and permeable reservoir rock,

either in the gaseous phase or dissolved in crude oil, and which

technically can be produced by normal production practices.

Conventional Resources: Conventional resources exist in discrete

petroleum accumulations related to localized geological structural

features and/or stratigraphic conditions, typically with each

accumulation bounded by a downdip contact with an aquifer, and

which is significantly affected by hydrodynamic influences such as

buoyancy of petroleum in water.

Conveyance: The legal process of transferring property from one

owner to another. A written contract between a grantor and grantee,

used to transfer title or rights to property. Typical conveyances include

real estate; oil, gas and mineral leases; assignments; deeds and rights of

way.

Core: Samples of subsurface rocks taken as a well is being drilled. The

core allows geologists to examine the strata in proper sequence and

thickness.

Correlative Rights: Means that each owner and producer in a common

pool or source of supply of oil and gas shall have an equal opportunity

to obtain and produce his just and equitable share of the oil and gas

underlying such pool or source of supply.

Cost and Freight (C&F)

Cost Recovery: Under a typical production-sharing agreement, the

contractor is responsible for the field development and all exploration

and development expenses. In return, the contractor recovers costs

(investments and operating expenses) out of the gross production

stream. The contractor normally receives payment in oil production

CPEEL14

and is exposed to both technical and market risks.

Crown Block: Stationary pulley system used to raise or lower drilling

equipment for the derrick. Supports the traveling block.

Crude Oil Equivalent: A measure of energy content that converts units

of different kinds of energy into the energy equivalent of barrels of oil.

Conversion of gas volumes to their oil equivalent, customarily done on

the basis of the nominal heating content or caloric value of the fuel.

Before aggregating, the gas volumes first must be converted to the

same temperature and pressure. Common industry gas conversion

factors usually range between 1 barrel of oil equivalent (BOE) =

5,600–6,000 standard cubic feet of gas. (Also termed Barrels of Oil

Equivalent.)

Crude Oil: Petroleum that exists in the liquid phase in natural

underground reservoirs and remains liquid at atmospheric conditions

of pressure and temperature. Crude Oil may include small amounts of

nonhydrocarbons produced with the liquids but does not include

liquids obtained from the processing of natural gas. Crude oils range

from very light (high in gasoline) to very heavy (high in residual oils).

Sour Crude is high in sulphur content. Sweet Crude is low in sulphur

and therefore often more valuable.

Cubic Foot (CF): The most common unit of measurement of gas

volume. It is the amount of gas required to fill a volume of one cubic foot

under stated conditions of temperature, pressure and water vapour.

Cumulative Production: The sum of production of oil and gas to date

(see also Production).

Current Economic Conditions: Establishment of current economic

conditions should include relevant historical petroleum prices and

associated costs and may involve a defined averaging period. The SPE

guidelines recommend that a one-year historical average of costs and

prices should be used as the default basis of “constant case” resources

estimates and associated project cash flows.

Cushion Gas Volume: With respect to underground natural gas storage,

the gas volume required in a storage field for reservoir management

purposes and to maintain adequate minimum storage pressure for


meeting working gas volume delivery with the required withdrawal

profile. In caverns, the cushion gas volume is also required for stability

reasons. The cushion gas volume may consist of recoverable and

nonrecoverable in-situ gas volumes and/or injected gas volumes.

Cuttings: Chips and small rock fragments brought to the surface by the

flow of drilling mud as it is circulated and examined by geologists for oil

or gas content.

CV (Calorific Value): Calorific Value is the quantity of heat produced

by the total combustion of a fuel.

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D

Dayrate: The daily rate paid by an operator to a drilling contractor

under a daywork contract. (See also Footage and Turnkey Contract).

Daywork Contract: A contract under which the drilling contractor is

paid by the day or portion thereof.

DCQ (Daily Contract Quantity): The quantity of gas which a Buyer

technically undertakes to purchase and a Seller undertakes to deliver

within a specified 24 hour period.

DDR (Daily Delivery Rate): The Daily Delivery Rate (DDR) is the rate

at which the Seller's facilities must be capable of delivering gas,

expressed as a volume of gas per day, or as a multiple of the Daily

Contract Quantity. Also known as the Maximum Daily Quantity.

DEC (Design Endorsement Certificate).

Deductions: Tax items which may be subtracted from Gross Income to

arrive at Taxable Income in Federal Income computations.

Deed: A written document by which the title to a property is

transferred from one party (the grantor) to another (the grantee).

Delay Rental: Cash payments to the Mineral Rights Owner (lessor) by

the Working Interest Owner (lessee), for the privilege of postponing the

commencement of drilling operations on the leased property.

Consideration paid to the lessor by a lessee to extend the terms of an oil

and gas lease in the absence of operations and/or production that is

contractually required to hold the lease. This consideration is usually

required to be paid on or before the anniversary date of the oil and gas

lease during its primary term, and typically extends the lease for an

17

additional year. Non-payment of the delay rental in the absence of

production or commencement of operations will generally result in

abandonment of the lease after its primary term has expired.

Deliverability: A well's tested ability to produce.

Depletion, Restoration of: In Federal Income Taxation, the adding

back to income of the Depletion Allowance taken on minerals not

produced.

Depletion: The act of emptying, reducing or exhausting as the

depletion of nature resources.

Deposit: Material that has accumulated due to a natural process. In

resource evaluations it identifies an accumulation of hydrocarbons in a

reservoir (see Accumulation).

Depreciation: Reduction in Capital Value of a tangible asset (such as

mechanical equipment, building, etc.) that results from wear, waste and

obsolescence.

Derrick: A steel mast used to support the drill string or drilling

equipment such as casing wire rope positioned to the side of the

derrick with wire traveling up the crown block.

DES (Delivery Ex Ship).

Deterministic Estimate: The method of estimation of Reserves or

Resources is called deterministic if a discrete estimate(s) is made based

on known geoscience, engineering, and economic data.

Developed Non-producing Reserves: Developed Non-Producing

Reserves include shut-in and behind-pipe Reserves. Shut-in Reserves

are expected to be recovered from (1) completion intervals that are

open at the time of the estimate but which have not yet started

producing, (2) wells that were shut in for market conditions or pipeline

connections, or (3) wells not capable of production for mechanical

reasons. Behind- pipe Reserves are also those expected to be recovered

from zones in existing wells that will require additional completion

work or future recompletion prior to start of production. In all cases,

production can be initiated or restored with relatively low expenditure

compared to the cost of drilling a new well.

Developed Producing Reserves: Developed Producing Reserves are

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expected to be recovered from completion intervals that are open and

producing at the time of the estimate. Improved recovery reserves are

considered producing only after the improved recovery project is in

operation.

Developed Reserves: Developed Reserves are expected to be

recovered from existing wells including reserves behind pipe.

Improved recovery reserves are considered "Developed" only after the

necessary equipment has been installed, or when the costs to do so are

relatively minor compared to the cost of a well. Developed Reserves

may be further subclassified as Producing or Non- Producing.

Development not Viable: A discovered accumulation for which there

are no current plans to develop or to acquire additional data at the time

due to limited production potential. A project maturity subclass that

reflects the actions required to move a project toward commercial

production.

Development Pending: A discovered accumulation where project

activities are ongoing to justify commercial development in the

foreseeable future. A project maturity subclass that reflects the actions

required to move a project toward commercial production.

Development Plan: The design specifications, timing, and cost

estimates of the development project that can include, but is not

limited to, well locations, completion techniques, drilling methods,

processing facilities, transportation and marketing. (See also Project.)

Development Unclarified or on Hold: A discovered accumulation

where project activities are on hold and/or where justification as a

commercial development may be subject to significant delay. A project

maturity subclass that reflects the actions required to move a project

toward commercial production.

Development Well: A well drilled in an already discovered oil or gas

field.

DFDE (Dual-Fuel Diesel Electric LNG vessel).

Differential-Pressure Sticking: A condition in which a section of drill

pipe becomes stuck in deposits on the wall of the borehole.

Directional Drilling: Drilling at an angle, instead of on the perpendicular,


by using a whip stock to bend the pipe until it is going in the desired

direction. Directional Drilling is used to develop offshore leases, where

it is very costly and sometimes impossible to prepare separate sites for

every well; to reach oil beneath a building or some other location which

cannot be drilled directly; or to control damage or as a last resort when

a well has cratered. It is much more expensive than conventional

drilling procedures.

Discovered Petroleum Initially-in-Place: Discovered Petroleum

Initially-in-Place is that quantity of petroleum that is estimated, as of a

given date, to be contained in known accumulations prior to production.

Discovered Petroleum Initially-In-Place may be subdivided into

Commercial, Sub- Commercial, and Unrecoverable, with the estimated

commercially, recoverable portion being classified as Reserves and the

estimated sub commercial recoverable portion being classified as

Contingent Resources.

Discovered: A discovery is one petroleum accumulation, or several

petroleum accumulations collectively, for which one or several

exploratory wells have established through testing, sampling, and/or

logging the existence of a significant quantity of potentially moveable

hydrocarbons. In this context, "significant" implies that there is

evidence of a sufficient quantity of petroleum to justify estimating the

in-place volume demonstrated by the well(s) and for evaluating the

potential for economic recovery. (See also Known Accumulations.)

Distillate: Liquid hydrocarbons, usually colorless and of high API

Gravity, recovered from wet gas by a separator that condenses that

liquid out of the gas. The present term is Natural Gas.

Distributor: A wholesaler of gasoline and other petroleum products;

also known as a jobber. Distributors of Natural Gas are almost always

regulated utility companies.

Division Order (DO): A contract for the sale of oil or gas, by the holder

of a revenue interest in a well or property, to the purchaser (often a

pipeline transmission company).

DOE (Department of Energy)

Downhole: Refers to equipment or operations that take place down

CPEEL20

inside a borehole.

Downstream: All operations taking place after Crude Oil is produced,

such as transportation, refining and marketing.

DQT (Downward Quantity Tolerance): The Downward Quantity

Tolerance (DQT) is the amount by which a buyer may fall short of its full

Annual Contract Quantity in a Take or Pay gas sales contract without

experiencing sanctions.

Drawworks: Power equipment used for the hoisting of the drilling

string via the derrick. Consists of a spool wrapped with.

Drill Bit: The part of the drilling tool that cuts through rock strata.

Drill String (Also called Drill Pipe or Drill Stem): Thirty-foot lengths of

steel tubing screwed together to form a pipe connecting the drill bit to

the drilling rig. The string is rotated to drill the hole and also serves as a

conduit for drilling mud.

Drilling Break: A sudden increase in the rate of drilling.

Drilling Mud: A mixture of clay, water, chemical additives and weighting

materials that flushes rock cuttings from a well, lubricates and cools the

drill bit, maintains the required pressure at the bottom of the well,

prevents the wall of the borehole from crumbing or collapsing and

prevents other fluids from entering the wellbore.

Drilling Rig: The surface equipment used to drill for oil or gas, consisting

chiefly of a derrick, a winch for lifting and lowering drill pipe, a rotary

table to turn the drill pipe and engines to drive the winch and rotary table.

Drilling: The act of boring a hole through which oil or gas may be

produced if encountered in commercial quantities.

Drill Stem Test (DST): A test through the drill pipe prior to completion

to determine if oil or gas is present in a formation.

Dry Gas: Natural gas remaining after hydrocarbons liquids have been

removed prior to the Reference Point (see definition). The dry gas and

removed hydrocarbon liquids are accounted for separately in resource

assessments. It should be recognized that this is a resource assessment

definition and not a phase behavior definition. (also called Lean Gas).

Dry Hole: A well found to be incapable of producing either oil or gas in

sufficient quantities to justify completion as an oil or gas well.


Dry Natural Gas: Natural Gas containing few or no natural gas liquids

(liquid petroleum mixed with gas).

DSCR (Debt Service Coverage Ratio)

DSO (Domestic Supply Obligation)

DST: Drill Stem Test.

Dual Completion: Completing a well that draws from two or more

separate producing formations at different depths. This is done by

inserting multiple strings of tubing into the well casing and inserting

packers to seal off all formations except the one to be produced by a

particular string.

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E

Economic Interest: An Economic Interest is possessed in every case in

which an investor has acquired any interest in oil and gas in place and

secures the revenue derived from the extraction of the oil and gas to

which the investor must look for a return of his capital.

Economic Limit: Economic limit is defined as the production rate

beyond which the net operating cash flows (after royalties or share of

production owing to others) from a project, which may be an individual

well, lease, or entire field, are negative.

Economic: In relation to petroleum Reserves and Resources, economic

refers to the situation where the income from an operation exceeds the

expenses involved in, or attributable to, that operation.

ECOWAS (Economic Community of West African States)

EIA (Environmental Impact Assessment)

EIB (European Investment Bank)

Electric Rig (SCR): A drilling rig that uses diesel generators to supply

power to separate electric motors to power each of the rig's components

(silicon-controlled rectifier).

Electrical Well Logging: A method of oil exploration that originated

with Conrad Schlumberger, who first tested it in 1927 on a 1,500-meter

well in France. As used today, the process is very simple. Current passes

into the ground, through the resistive medium and into the sonde. The

resulting charts show the varying resistance, the conductance and the

self-potential of the strata surrounding the well at entry level, and

geophysicists use them to assay whether petroleum is present in a

formation.

23

Enhanced Oil Recovery (EOR): Injection of water, steam, gas or

chemicals into underground reservoirs to cause oil to flow toward

producing wells, permitting more recovery that would have been

possible from natural pressure or pumping alone.

Entitlement: That portion of future production (and thus resources)

legally accruing to a lessee or contractor under the terms of the

development and production contract with a lessor.

Entity: A legal construct capable of bearing legal rights and obligations.

In resources evaluations this typically refers to the lessee or contractor

which is some form of legal corporation (or consortium of corporations).

In a broader sense, an entity can be an organization of any form and may

include governments or their agencies.

EOT: End of Tubing.

EPC (Engineering, Procurement, and Construction)

Estimated Ultimate Recovery (EUR): Those quantities of petroleum

that are estimated, on a given date, to be potentially recoverable from

an accumulation, plus those quantities already produced therefrom.

Evaluation: The geosciences, engineering, and associated studies,

including economic analyses, conducted on a petroleum exploration,

development, or producing project resulting in estimates of the

quantities that can be recovered and sold and the associated cash flow

under defined forward conditions. Projects are classified and estimates

of derived quantities are categorized according to applicable guidelines.

(Also termed Assessment.)

Evaluator: The person or group of persons responsible for performing

an evaluation of a project. These may be employees of the entities that

have an economic interest in the project or independent consultants

contracted for reviews and audits. In all cases, the entity accepting the

evaluation takes responsibility for the results, including Reserves and

Resources and attributed value estimates.

Expenses (Tax Usage): Expenditures for business items that have no

future life (such as rent, utilities or wages) and are incurred in conducting

normal business activities.

Exploration: The search for oil and gas. Exploration Operations include:

CPEEL24

aerial surveys, geophysical surveys, geophysical studies, core testing

and the drilling of test wells.

Exploratory Well: A well drilled to an unexplored depth or in

unproven territory, either in search of a new reservoir or to extend the

known limits of a field that is already partly developed.

External Casing Packer: A device used on the inside of the well casing

to seal off formations or to protect certain zones. The packer is run on

the casing and expanded against the wall of the borehole at the proper

depth by hydraulic pressure or fluid pressure from the well.


F

Farm In: When one company drills or performs other activity on

another company's lease in order to earn interest in or acquire that

lease.

Farm-out: An arrangement whereby the owner of a lease assigns the

lease, or some portion of it, to another party for drilling.

Fault Trap: A geological formation in which oil or gas, in a porous

section of rock, is sealed off by a displaced, non-porous layer.

Fault: A break in the continuity of stratified rocks or even basement

rocks. Faults are significant to oilmen, because they can form traps for

oil when the rock fractures, they can break oil reservoirs into non-

communicating sections, they help produce oil accumulations, and

they form traps on their own.

Favored Nations Clause: A clause which stipulates that if higher terms

are negotiated you will get the difference within a certain amount of

time or your lease is invalid. A Favored Nations clause may be

negotiated for both the bonus and the royalty or one or the other. A time

limit specifies the time that the clause is in effect, and a geographic

limitation is generally included to define the distance from the leased

land where the clause is to be honoured.

Fee Lands: Privately owned, non-public lands.

FEED (Front-End Engineering and Design)

Feet of Pay: The thickness of the pay zone penetrated in a well

FERC (Federal Energy Regulatory Commission)

FID (Final Investment Decision).

Field: An area consisting of a single reservoir or multiple reservoirs all

26

grouped on, or related to, the same individual geological structural

feature and/or stratigraphic condition. There may be two or more

reservoirs in a field that are separated vertically by intervening

impermeable rock, laterally by local geologic barriers, or both. The

term may be defined differently by individual regulatory authorities.

Filter Cake: A plastic-like coating that builds up inside the borehole.

Such buildup can cause serious drilling problems, including sticking of

the drill pipe.

Fishing Tools: Special instruments equipped with the means for

recovering objects lost while drilling the well.

Fishing: Recovering the tools or pipe that have been accidentally lost

down the borehole by using specially designed tools that screw into or

grab the missing equipment.

Five-Spot Water Flood Program: A secondary-recovery operation in

which four injection wells are drilled in a square pattern with the

production well in the center. Water from the injection wells moves

through the formation, forcing oil toward the production well.

Flange Up: To complete the drilling of a well.

Flare Gas: Total volume of gas vented or burned as part of production

and processing operations.

Flaring: The burning of gas vented through a pipe or stack at a refinery,

or a method of disposing of gas while a well is being drilled. Flaring is

regulated by state agencies. Venting (letting gas escape unburned) is

generally prohibited.

FLNG (Floating LNG): Floating LNG is the deployment of purpose built

or converted ships to enable liquefaction of LNG to be done offshore.

Flooding: One of the methods of enhanced oil recovery. Water Flooding

or Gas Flooding might be considered secondary recovery methods.

Flow Test: An operation on a well designed to demonstrate the

existence of moveable petroleum in a reservoir by establishing flow to

the surface and/or to provide an indication of the potential

productivity of that reservoir (such as a wireline formation test).

Flow Through Concept: In ventures structured as partnerships (or “S”

corporations), certain items or tax significance (profit, loss, etc.) are passed


on to the partners (or “S” corporation shareholders) in the venture. In a

venture structured as a “C” corporation, the responsible tax-paying party

would be the corporation itself (not its shareholders).

Flowing Well: A well that produces through natural reservoir pressure

and does not require pumping.

Fluid Contacts: The surface or interface in a reservoir separating two

regions characterized by predominant differences in fluid saturations.

Because of capillary and other phenomena, fluid saturation change is not

necessarily abrupt or complete, nor is the surface necessarily horizontal.

FM (Force Majeure): A contractual term used to define conditions in

which a party to a contract is not obliged to carry out its commitments

because of major events outside its control.

FOB (Free on Board)

Footage Contracts: A contract under which the operator and contract

driller agree to a fixed price per foot drilled. Contractor carries more of

the operating risk than in a Daywork Contract. (See also Daywork and

Turnkey Contract.)

Forecast Case: Modifier applied to project resources estimates and

associated cash flow when such estimates are based on those

conditions (including costs and product price schedules) forecast by

the evaluator to reasonably exist throughout the life of the project.

Inflation or deflation adjustments are made to costs and revenues over

the evaluation period.

Formation: A geological term that describes a succession of strata

similar enough to form a distinctive geological unit useful for mapping

or description.

Forward Market: The process of buying or selling a specific crude oil

for delivery at a future date. Not all forward market transactions result

in physical delivery of crude oil represented by the contract as the

agreement for actual delivery may be cancelled by subsequent selling

of the contract. There is no clearing house, or marginal payment

arrangement in the forward market as distinct from futures trading in

an organized commodities exchange.

Forward Sales: There are a variety of forms of transactions that

involve the advance of funds to the owner of an interest in an oil and gas

CPEEL28

property in exchange for the right to receive the cash proceeds of

production, or the production itself, arising from the future operation

of the property. In such transactions, the owner almost invariably has a

future performance obligation, the outcome of which is uncertain to

some degree. Determination as to whether the transaction represents a

sale or financing rests on the particular circumstances of each case.

Fossil Fuels: Fuels that originate from the remains of living things, such

as coal, oil, Natural Gas and peat.

Fracturing (FRAC): A well stimulation technique in which fluids are

pumped into a formation under extremely high pressure to create or

enlarge fractures for oil and gas to flow through. Proppants such as

sand are injected with the liquid to hold the fractures open.

Front-End Costs: Costs that are paid out of the initial investment in a

venture, first, before the venture activities actually begin.

FSRU (Floating Storage and Regasification Unit): FRSU is the

deployment of purpose built or converted ships to enable storage and

regasification of LNG to be done offshore.

FTA (Free-Trade Agreement)

FTP: Flowing Tubing Pressure

Fuel Gas: See Lease Fuel.

Future Prices: Refers to the New York Mercantile Exchange (NYMEX)

which introduced future contracts for Crude Oil in 1985 and Natural

Gas in 1990.

Futures Contract: An agreement reached in an organized futures

trading “pit”, to take or make delivery, at a future date, of a specified

quantity and quality of goods (e.g. crude oil, gasoline or heating oil) at a

predetermined delivery point and at a price determined by public

outcry.

Futures Market: A forward commodities exchange in which contracts

for delivery of a specific type of crude oil and/or products in future

methods are traded. Only a very small proportion of the contracts result

in actual delivery, and in some markets, there is only cash settlement.

All of the markets include clearinghouse and require daily margin

payments on all positions in order to ensure financial integrity of the

operation. The market is open to all participants.


G

Gamma-Ray Logging: A technique of exploration for oil in which a

well's borehole is irradiated with gamma rays. The varying emission of

these rays indicates to geologists the relative density of the rock

formation at different levels.

Gas Balance: In gas production operations involving multiple working

interest owners, an imbalance in gas deliveries can occur. These

imbalances must be monitored over time and eventually balanced in

accordance with accepted accounting procedures.

Gas Cap: The gas that exists in a free state above the oil in the reservoir.

Gas Condensate: Liquid hydrocarbons present in casinghead gas that

condense when brought to the surface.

Gas Field: A district or area from which natural gas is produced.

Gas Hydrates: Naturally occurring crystalline substances composed of

water and gas in which a solid water lattice accommodates gas molecules

in a cage like structure, or clathrate. At conditions of standard

temperature and pressure (STP), one volume of saturated methane

hydrate will contain as much as 164 volumes of methane gas. Because of

this large gas-storage capacity, gas hydrates are thought to represent an

important future source of natural gas. Gas hydrates are included in

unconventional resources, but the technology to support commercial

production has yet to be developed.

Gas Inventory: The sum of Working Gas Volume and Cushion Gas

Volume in underground gas storage.

Gas Lift: A recovery method that brings oil from the bottom of a well to

the surface by using compressed gas. Gas pumped to the bottom of the

30

reservoir mixes with fluid, expands it and lifts it to the surface.

Gas Plant Products: Gas Plant Products are natural gas liquids (or

components) recovered from natural gas in gas processing plants and,

in some situations, from field facilities. Gas Plant Products include

ethane, propane, butanes, butanes/propane mixtures, natural gasoline

and plant condensates, sulfur, carbon dioxide, nitrogen, and helium.

Gas/Oil Ratio (GOR): The number of cubic feet of natural gas produced

along with a barrel of oil. The GOR in an oil field is calculated using

measured natural gas and crude oil volumes at stated conditions. The GOR

may be the solution gas/oilratio (Rs); produced gas/oil ratio (Rp); or

another suitably defined ratio of gas production to oil production.

Gas-Cut Mud: Drilling mud permeated with bubbles of gas from down

hole. The circulation of such mud can be severely impaired, seriously

affecting drilling operations.

Gas-to-Liquids (GTL) Projects: Projects using specialized processing

(e.g., Fischer-Tropsch synthesis) to convert natural gas into liquid

petroleum products. Typically, these projects are applied to large gas

accumulations where lack of adequate infrastructure or local markets

would make conventional natural gas development projects uneconomic.

GCV (Gross Calorific Value): The heat produced by the complete

combustion of a unit volume of gas in oxygen, including the heat which

would be recovered by condensing the water vapor made. Also known

as Gross Heating Value, Higher Calorific Value (HCV) or Higher Heating

Value (HHV).

Geophones: The sound-detecting instruments used to measure sound

waves created by explosions set off during seismic exploration work.

Geophysicist: A geophysicist applies the principles of physics to the

understanding of geology.

Geostatistical Methods: A variety of mathematical techniques and

processes dealing with the collection, methods, analysis, interpretation,

and presentation of masses of geoscience and engineering data to

(mathematically) describe the variability and uncertainties within any

reservoir unit or pool; specifically related here to resources estimates,

including the definition of (all) well and reservoir parameters in 1, 2,


and 3 dimensions and the resultant modeling and potential prediction

of various aspects of performance.

Geothermal Energy: Energy produced from subterranean heat.

GMP (Gas Master Plan)

Gross Income: Total income from an activity, before deduction of (1)

items that may be treated as expenses(such as intangible drilling

costs), and (2) allowed tax items (such as depletion allowance,

depreciation allowance, etc.).

Guaranteed Payments: Payments by a partnership to one or more of

its partners for services rendered.

Gun Perforation: A method of creating holes in a well casing down

hole by exploding charges to propel steel projectiles through the casing

well. Such holes allow oil or gas from the formation to enter the well.

CPEEL32

H

Hang The Rods: To pull pump rods out of the well and hang them in the

derrick on rod hangers.

HAZID (Hazard Identification)

HAZOP (Hazard and Operability Study)

Heavy Oil: Crude oil with low API gravity (high specific gravity) and

high viscosity due to the presence of high proportion of heavy (high

molecular weight) hydrocarbons. It is usually difficult and costly to

produce by conventional techniques.

Held By Production (HBP): Refers to an oil and gas property under

lease, in which the lease continues to be enforced because of

production from the property.

HH (Henry Hub): Henry Hub is the biggest unified point for natural gas

spot and futures trading in the United States. The New York Mercantile

Exchange (NYMEX) uses Henry Hub as the notional point of delivery for

its natural gas futures contract. Henry Hub is based on the physical

interconnection of nine interstate and four intrastate pipelines in

Louisiana.

High Estimate (Resources): With respect to resource categorization,

this is considered to be an optimistic estimate of the quantity that will

actually be recovered from an accumulation by a project. If probabilistic

methods are used, there should be at least a 10% probability (P10) that

the quantities actually recovered will equal or exceed the high estimate.

Highest Known Hydrocarbons: The shallowest occurrence of a

producible hydrocarbon accumulation as interpreted from some

combination of well log, flow test, pressure measurement, and core

33

data. Hydrocarbons may or may not extend above this depth. Modifiers

are often added to specify the type of hydrocarbons (for instance,

“highest known gas”).

HOA (Heads of Agreement): A non-binding statement of the main

elements of a proposed agreement.

Hook load: The weight of the drill stem that is suspended from the hook.

Hook: A large, hook-shaped device from which the swivel is suspended.

It is designed to carry maximum loads ranging from 100 to 650 tons and

turns on bearings in its supporting housing.

Horizon: A specific sedimentary layer in a cross section of land,

especially one in which a petroleum reservoir is found.

Horizontal Drilling: The newer and developing technology that

makes it possible to drill a well from the surface, vertically down to a

certain level, then to turn at a right angle and continue drilling

horizontally within a specified reservoir or an interval of a reservoir,

which can result in both increased production rates and greater

ultimate recoveries of hydrocarbons.

Horsehead: The curved guide or head piece on the well end of a

pumping jack's walking beam. The guide holds the short loop of cable,

called the bridle, attached to the well's pump rods.

HSE (Health, Safety, and Environment)

HSSE (Health, Safety, Security, and Environment)

Hurdle Rate: The discount rate used in determining the net present

value (NPV). It must exceed the firm's cost of capital

Hydraulic Fracturing: A method of stimulating production from a

low-permeability formation by creating fractures and fissures by

applying very high fluid pressure.

Hydrocarbon: A large class of organic compound of hydrogen and

carbon. Crude Oil, Natural Gas and Condensate are all mixtures of

various hydrocarbons, among which methane is the simplest.

Hydrocarbons exist in a solid, liquid or gaseous states.

Hydrometer: An instrument that measures the specific gravity of liquids.

Hydrostatic Head: The height of a column of liquid. The difference in

height between two points in a body of liquid.

CPEEL34

I

IFC (International Finance Corporation)

Improved Recovery (IR): Improved Recovery is the extraction of

additional petroleum, beyond Primary Recovery, from naturally

occurring reservoirs by supplementing the natural forces in the

reservoir. It includes waterflooding and gas injection for pressure

maintenance, secondary processes, tertiary processes, and any other

means of supplementing natural reservoir recovery processes.

Improved recovery also includes thermal and chemical processes to

improve the in-situ mobility of viscous forms of petroleum. (Also called

Enhanced Recovery.)

In Situ: In its original place. Refers to methods of producing synfuels

underground, such as underground gasification of a coal seam or

heating oil shale underground, to release its oil.

Independent Producer: 1. A person or corporation that produces oil for

the market who has no pipeline system or refining. 2. An oil entrepreneur

who secures financial backing and drills his own wells.

Infill Drilling: Wells drilled to fill in between established producing

wells to increase production.

Initial Potential (IP): Flow rate measured during the initial completion

of a well in a specific reservoir (initial daily rate of production).

Injection Well: A well employed for the introduction into an underground

stratum of water, gas or other fluid under pressure. Injection Wells are

employed for the disposal of salt water produced with oil or other waste.

They are also used for a variety of other purposes: 1) Pressure

35

Maintenance-to introduce a fluid into a producing formation to maintain

underground pressures which would otherwise be reduced by virtue of

the production of oil or gas 2) Secondary Recovery Operations-to

introduce a fluid to decrease the viscosity of oil, reduce its surface

tension, lighten its specific gravity and drive oil into producing wells

resulting in greater production of oil.

Injection: The forcing, pumping, or free flow under vacuum of

substances into a porous and permeable subsurface rock formation.

Injected substances can include either gases or liquids.

Intangible Drilling Costs (IDC's): Expenditures, deductible for Federal

Income Tax purposes, incurred by an operator for labor, fuel, repairs,

hauling and supplies used in drilling and completing a well for

production.

Intermediate Casing: The middle string of casing where three strings

of casing are run in a well, sometimes called protection string.

Investment Tax Credit (ITC): A credit against income taxes, usually

computed as a percent of the cost of investment in certain types of

assets.

IOC(International Oil Company)

ISIP: Initial Shut-In Pressure.

Isopachous (Isopach) Map: A geological map showing the thickness

and shape of underground formations. A tool used to determine

underground oil and gas reservoirs.

CPEEL36

J

Jack or Unit: An oil-pumping unit. The pumping jack's walking beam

provides the up-and-down motion to the well's pump rods.

JCC-Japan Customs-cleared Crude (JCC) is the average price of

customs-cleared crude oil imports into Japan as reported in customs

statistics. The nicknamed the "Japanese Crude Cocktail".

Jetting: Injecting gas into a subsurface formation for the purpose of

maintaining reservoir pressure.

Japan Korea Marker (JKM) is the LNG (Liquefied Natural Gas)

benchmark price assessment for spot physical cargoes delivered ex-

ship into Japan and South Korea.

Joint (JT): A single section of drill pipe, casing or tubing usually about

30 feet long.

Joint Operating Agreement (JOA): A detailed written agreement

between the Working Interest Owners of a property which specifies the

terms according to which that property will be developed.

Joint Venture: A large-scale project in which two or more parties

(usually oil companies) cooperate. One supplies funds and the other

actually carries out the project. Each participant retains control over

his share, including liability and the right to sell.

Junk Basket: A magnet used to retrieve small tools lost in the well. A

fishing instrument.

Justified for Development: Implementation of the development

project is justified on the basis of reasonable forecast commercial

conditions at the time of reporting and that there are reasonable

expectations that all necessary approvals/contracts will be obtained. A

project maturity subclass that reflects the actions required to move a

project toward commercial production.

37

K

Kelly Bushing: Part of the drilling rig. The Kelly is a long hollow steel

bar that connects to the upper end of the drill string.

Kerogen: Naturally occurring, solid, insoluble organic material that

occurs in source rocks and can yield oil or gas upon subjection to heat

and pressure. Kerogen is also defined as the fraction of large chemical

aggregates in sedimentary organic matter that is insoluble in solvents

(in contrast, the fraction that is soluble in organic solvents is called

natural bitumen). (See also Oil Shales.)

Keyseating: A condition in which the drill collar of another part of the

drill string becomes wedged in a section of crooked hole.

Kick Occurs: When the pressure encountered in a formation exceeds

the pressure exerted by the column of drilling mud circulating through

the hole. If uncontrolled, a kick leads to a blowout.

Kill A Well: To overcome downhole pressure by adding weighting

elements to the drilling mud or wellbore.

Known Accumulation: An accumulation is an individual body of

petroleum-in-place. The key requirement to consider an accumulation

as “known,” and hence containing Reserves or Contingent Resources, is

that it must have been discovered, that is, penetrated by a well that has

established through testing, sampling, or logging the existence of a

significant quantity of recoverable hydrocarbons.

KOGAS (Korea Gas Corporation)

38

L

Lag Time: The time it takes for cuttings to be carried (circulate) from

the bottom of the borehole up to the surface by the mud system.

Landman: A self-employed individual or company employee who

secures oil and gas leases, check legal titles and attempts to cure title

defects so that drilling can begin.

Landowner Royalty: The share of the gross production of the oil and

gas on a property without deducting any of the cost of producing the oil

or gas.

Law of Capture: A legal concept on which the oil and gas law in some

states is based: since petroleum is liquid, and hence mobile, it is not

owned until it is produced.

LC (Local Content)

LCP (Local Content Policies)

LDC (Local Distribution Company): A company that distributes

natural gas primarily to small, residential and industrial end-users.

Lead Lines: The lines through which production from individual wells

is run to tanks.

Lead: A project associated with a potential accumulation that is

currently poorly defined and requires more data acquisition and/or

evaluation in order to be classified as a prospect. A project maturity

subclass that reflects the actions required to move a project toward

commercial production.

Lease (Oil and Gas): A contract by which the owner of the mineral

rights to a property (lessor or the host government), conveys to

another party (lessee or contractor), the exclusive right to explore for

39

and develop minerals on the property during a specified primary term

and as long thereafter as oil, gas or other minerals are being produced

in paying quantities.

Lease Acquisition Costs: Bonus payments to acquire a specific oil/gas

lease.

Lease Condensate: Lease Condensate is condensate recovered from

produced natural gas in gas/liquid separators or field facilities.

Lease Fuel: Oil and/or gas used for field and processing plant

operations. For consistency quantities consumed as lease fuel should

be treated as part of shrinkage. However, regulatory guidelines may

allow lease fuel to be included in Reserves estimates. Where claimed as

Reserves, such fuel quantities should be reported separately from sales

and their value must be included as an operating expense.

Lease Hound: Someone who goes out and aggressively acquires oil

and gas leases from the landowner and then turns around and sells or

trades them to an oil company planning to drill a well in that area.

Lease Offering (Lease Sale): An area of land offered for lease, for the

exploration for and production of specific natural resources such as oil

and gas. Such a lease conveys no title or occupancy rights apart from the

right to search for and produce petroleum or other natural resources

subject to the conditions stated in the lease.

Lease or Sublease: Any transaction in which the owner of operating

rights in a property assigns all or a portion of these rights to any other

party.

Lease Plant: A general term referring to processing facilities that are

dedicated to one or more development projects and the petroleum is

processed without prior custody transfer from the owners of the

extraction project (for gas projects, also termed “Local Gas Plant”).

LHV (Lower Heating Value): Alternative name for Net Calorific Value.

LCV (Lower Calorific Value) Alternative name for Net Calorific Value.

Lifting Costs: The costs of producing oil from a well or lease; the

operating expenses.

Light ends: The more volatile petroleum fractions including propane,

butanes and gasoline.

CPEEL40

Light Oil: Crude oil with high API gravity (low specific gravity) and low

viscosity due to a high proportion of lighter molecular weight)

hydrocarbons.

Limestone: Sedimentary rock largely consisting of calcite. On a world-

wide scale, limestone reservoirs probably contain more oil and gas

reserves than all other types of reservoir rock combined.

Liquefied Natural Gas (LNG) Project: Liquefied Natural Gas projects

use specialized cryogenic processing to convert natural gas into liquid

form for tanker transport. LNG is about 1/614 the volume of natural gas

at standard temperature and pressure.

LNG (Liquefied Natural Gas): LNG is Natural Gas which has been

cooled to a temperature, around the boiling point of methane (-162ºC),

at which it liquefies, thus reducing its volume by a factor of around 600.

LPG (Liquefied Petroleum Gas): Liquefied Petroleum Gas is propane,

butane, or propane-butane mixtures which have been liquefied through

pressure, mild refrigeration, or a combination of both.

Load Water: Fluid (water) pumped into a well, usually during a

fracture treatment of a producing formation.

Loan Agreement: A loan agreement is typically used by a bank, other

investor, or partner to finance all or part of an oil and gas project.

Compensation for funds advanced is limited to a specified interest rate.

Logs: Records made from data-gathering devices lowered into the

wellbore. The devices transmit signals to the surface which are then

recorded on film, paper or computer and used to make the record

describing the formation's porosity, fluid saturation and lithology. The

filing of a log is required by the Federal Government if the drill site is on

federal land.

LOI (Letter of Intent)

Lost Circulation: A serious condition that occurs when drilling mud

pumped into the well does not return to the surface but goes into the

porous formation, crevices or caverns instead.

Low Estimate: With respect to resource categorization, this is

considered to be a conservative estimate of the quantity that will actually

be recovered from the accumulation by a project. If probabilistic


methods are used, there should be at least a 90% probability (P90) that

the quantities actually recovered will equal or exceed the low estimate.

Low/Best/High Estimates: The range of uncertainty reflects a

reasonable range of estimated potentially recoverable volumes at varying

degrees of uncertainty (using the cumulative scenario approach) for an

individual accumulation or a project.

Lowest Known Hydrocarbons: The deepest occurrence of a

producible hydrocarbon accumulation as interpreted from well log,

flow test, pressure measurement, or core data.

CPEEL42

M

Marginal Contingent Resources: Known (discovered) accumulations

for which a development project(s) has been evaluated as economic or

reasonably expected to become economic but commitment is withheld

because of one or more contingencies (e.g., lack of market and/or

infrastructure).

MBbls: One thousand barrels of oil

MCF (Thousand Cubic Feet)

MCFPD: Thousand Cubic Feet Per Day

MDBs (Multilateral Development Banks)

MDQ (Maximum Daily Quantity): An alternative name for Daily

Delivery Rate.

MDR (Maximum Daily Rate): An alternative name for Daily Delivery Rate.

Measurement: The process of establishing quantity (volume or mass)

and quality of petroleum products delivered to a reference point under

conditions defined by delivery contract or regulatory authorities.

MGJ/a (Million Gigajoules per annum)

Mid-Continent Crude: Oil produced mainly in Kansas, Oklahoma and

North Texas.

Midstream or Middle Distillates: Refinery products in the middle of

the distillation range of Crude Oil, including kerosene, kerosene-based

jet fuel, home heating, range oil, stove oil and diesel fuel.

Migration: The movement of oil and gas through layers of rock deep in

the earth.

Milling: Cutting a “window” in a well's casing with a tool lowered into

the hole on the drill string.

43

Mineral Interest: Mineral Interests in properties including (1) a fee

ownership or lease, concession, or other interest representing the right

to extract oil or gas subject to such terms as may be imposed by the

conveyance of that interest; (2) royalty interests, production payments

payable in oil or gas, and other non- operating interests in properties

operated by others; and (3) those agreements with foreign governments

or authorities under which a reporting entity participates in the operation

of the related properties or otherwise serves as producer of the underlying

reserves (as opposed to being an independent purchaser, broker, dealer,

or importer).

Mineral Rights: The ownership of all rights to gas, oil or other minerals

as they naturally occur in place at or below the surface of a tract of land.

MJ (MegaJoule)

MLPs (Master Limited Partnerships)

MMBbls: Million barrels of oil

MMBOE: Million barrels of oil equivalent

MMBtu (Million British Thermal Units)

MMCF (Million Cubic Feet)

MMcfe: Million cubic feet of gas equivalent, determined using the ratio of

6 Mcf of natural gas to 1 Bbl of crude oil, condensate or natural gas liquids.

MMcm(Million cubic meters)

MMscf(Million standard cubic feet)

MMscm(Million standard cubic meters)

MOI (Memorandum of Intent): Also known as Confirmation of Intent

and Letter of Intent.

Monocline: A geologic formation in which all the strata are inclined in

the same direction.

Monte Carlo Simulation: A type of stochastic mathematical simulation that

randomly and repeatedly samples input distributions (e.g., reservoir properties)

to generate a resulting distribution (e.g., recoverable petroleum volumes).

MOU (Memorandum of Understanding): A non-binding statement of

intent to reach a proposed agreement.

MT (Million tonnes)

MTPA (Million tonnes per annum)

CPEEL44

Mud Engineer: A technician responsible for proper maintenance of

the mud system.

Mud Logger: A technician who uses chemical analysis, microscopic

examination of the cuttings and an assortment of electronic

instruments to monitor the mud system for possible indications of

hydrocarbons(shows).

Mud: A fluid mixture of clay, chemicals and weighting materials

suspended in fresh water, salt water or Diesel Oil.

Multiple Completion: Completion of a well in more than one

producing formation. The tubing of each production zone extends up to

the Christmas tree or wellhead to be piped to separate tankage or gas

sales lines.

MW(MegaWatt): One million Watts

MWh (MegaWatt hour)


N

Natural Bitumen: Natural Bitumen is the portion of petroleum that

exists in the semisolid or solid phase in natural deposits. In its natural

state, it usually contains sulfur, metals, and other nonhydrocarbons.

Natural Bitumen has a viscosity greater than 10,000 milliPascals per

second (mPa.s) (or centipoises) measured at original temperature in

the deposit and atmospheric pressure, on a gas- free basis. In its natural

viscous state, it is not normally recoverable at commercial rates

through a well and requires the implementation of improved recovery

methods such as steam injection. Natural Bitumen generally requires

upgrading prior to normal refining. (Also called Crude Bitumen.)

Natural Gas Inventory: With respect to underground natural gas

storage operations “inventory” is the total of working and cushion gas

volumes.

Natural Gas Liquids (NGL): A mixture of light hydrocarbons that exist

in the gaseous phase at reservoir conditions but are recovered as

liquids in gas processing plants. NGL differs from condensate in two

principal respects: (1) NGL is extracted and recovered in gas plants

rather than lease separators or other lease facilities; and (2) NGL

includes very light hydrocarbons (ethane, propane, butanes) as well as

the pentanes-plus (the main constituent of condensates).

Natural Gas: Natural Gas is the portion of petroleum that exists either

in the gaseous phase or is in solution in crude oil in natural

underground reservoirs, and which is gaseous at atmospheric

conditions of pressure and temperature. Natural Gas may include some

amount of nonhydrocarbons such as carbon dioxide, helium, hydrogen

sulfide and nitrogen.

46

NBP (National Balancing Point):The National Balancing Point is a

virtual trading location for the sale and purchase and exchange of UK

natural gas.

NCV (Net Calorific Value): The heat produced by the complete

combustion of a unit volume of gas in oxygen, without the heat which

would be recovered by condensing the water vapor formed.

Net Profits Interest: A share of Gross Production from a property that

is carved out of a Working Interest and is figured as a function of Net

Profits from operation of the property.

Net Profits Interest: An interest that receives a portion of the net

proceeds from a well, typically after all costs have been paid.

Net Revenue Interest (NRI): The percentage of revenues due an

interest holder in a property, net of royalties or other burdens of the

property. A Landowner leases his Mineral Rights to an oil man. The

Landowner retains a royalty of c (=12.5%); his Net Revenue Interest is

12.5%. The oil man's Set Revenue Interest would be 87.5% (=100% -

12.5%).

Net Working Interest: A company's working interest reduced by

royalties or share of production owing to others under applicable lease

and fiscal terms. (Also called Net Revenue Interest.)

Net-back: Linkage of input resource to the market price of the refined

products.

NGV (Natural Gas Vehicle): A motorized vehicle powered by natural

gas. See Compressed Natural Gas.

NHV (Net Heating Value): Same as NCV

NNPC (Nigeria National Petroleum Corporation)

NOC (National Oil Company)

NAG (Non-Associated Gas): Non-Associated Gas is gas found in a

reservoir which contains no crude oil, and can, therefore, be produced in

patterns best appropriate to its own operational and market

requirements.

Non-Hydrocarbon Gas: Natural occurring associated gases such as

nitrogen, carbon dioxide, hydrogen sulfide, and helium. If

nonhydrocarbon gases are present, the reported volumes should

reflect the condition of the gas at the point of sale. Correspondingly, the


accounts will reflect the value of the gas product at the point of sale.

Normal Production Practices: Production practices that involve flow

of fluids through wells to surface facilities that involve only physical

separation of fluids and, if necessary, solids. Wells can be stimulated,

using techniques including, but not limited to, hydraulic fracturing,

acidization, various other chemical treatments, and thermal methods,

and they can be artificially lifted (e.g., with pumps or gas lift).

Transportation methods can include mixing with diluents to

enable flow, as well as conventional methods of compression or

pumping. Practices that involve chemical reforming of molecules of the

produced fluids are considered manufacturing processes.

CPEEL48

O

Octane: A hydrocarbon of the paraffin series. It is liquid at ordinary

atmospheric conditions, although small amounts may be present in the

gas associated with petroleum.

Offset Well Location: Potential drill location adjacent to an existing

well. The offset distance may be governed by well spacing regulations.

In the absence of well spacing regulations, technical analysis of

drainage areas may be used to define the spacing. For Proved volumes

to be assigned to an offset well location, there must be conclusive,

unambiguous technical data that supports the reasonable certainty of

production of hydrocarbon volumes and sufficient legal acreage to

economically justify the development without going below the

shallower of the fluid contact or the lowest known hydrocarbon.

Offset Well: A well drilled near the discovery well. Also a well drilled to

prevent oil and gas from draining from one tract of land to another

where a well is being drilled or is already producing.

Oil Column: The vertical height (thickness) of an oil accumulation

above the oil-water contact.

Oil Gravity: The density of liquid hydrocarbons, generally measured in

degrees.

Oil In Place: The Crude Oil estimated to exist in a field or a reservoir. Oil

in the formation not yet produced.

Oil Pool: An underground reservoir containing oil. An oil field may

contain one or more pools, each of which has its own pressure system.

Oil Rig: A Drilling Rig that drills for oil and gas.

49

Oil Run: (1) The production of oil during a specified period of time. (2)

A tank of oil gauged, tested and put in a pipeline or trucked to a refinery

or pipeline.

Oil Sands: Sand deposits highly saturated with natural bitumen. Also

called “Tar Sands.” Note that in deposits such as the western Canada “oil

sands,” significant quantities of natural bitumen may be hosted in a

range of lithologies including siltstones and carbonates.

Oil Shale: A fine-grained sedimentary rock that contains kerogen

partially formed oil. Whether extracted by mining or in-situ processes,

the material must be extensively processed to yield a marketable

product (synthetic crude oil).

Oilfield Services: Described as service companies that do work in and

for the oilfield. These services may include: cementing, perforating,

trucking, logging, etc.

OML -Oil Mining Lease

Production: The development project is currently producing and

selling petroleum to market. A project status/maturity subclass that

reflects the actions required to move a project toward commercial

production.

On The Pump: A phrase used in reference to a well that no longer flows

from natural reservoir energy but is produced by means of a pump.

OPEC (Organization of Petroleum Exporting Countries): was

founded in 1960 to coordinate the petroleum policies of its members,

and to provide member countries with technical and economic aid.

Member countries include: Saudi Arabia, Kuwait, Iran, Iraq, Venezuela,

Qatar, Libya, Indonesia, United Arab Emirates, Algeria, Nigeria, Ecuador,

Gabon and Equatorial Guinea.

Open Hole: The uncased part of a well.

Operator: The individual or company responsible for the drilling,

completion and production operations of a well and the physical

maintenance of the leased property.

OPL-Oil Prospecting License

Organization Costs: Direct costs incurred in the creation of a new

business organization, such as an Oil and Gas Limited Partnership or

Joint Venture.

CPEEL50

Outcrop: A portion of bedrock or other stratum, protruding through

the soil level indicating a fault or some other oil-bearing formation.

Overlift / Underlift: Production overlift or underlift can occur in

annual records because of the necessity for companies to lift their

entitlement in parcel sizes to suit the available shipping schedules as

agreed among the parties. At any given financial year-end, a company

may be in overlift or underlift. Based on the production matching the

company's accounts, production should be reported in accord with and

equal to the liftings actually made by the company during the year, and

not on the production entitlement for the year.

Overriding Royalty (ORR): A Revenue Interest in oil and gas created

out of a Working Interest. Like the Lessor's Royalty, it entitles the

owner to a share of the proceeds from Gross Production free of any

operating or production costs.

Overthrust Belt: A geological system of faults and basins in which

geologic forces have thrust layers of older rock above strata of newer

rock that might contain oil or Natural Gas. The Eastern Overthrust Belt

runs from eastern Canada through Appalachia into Alabama. The

Western Overthrust Belt runs from Alaska through western Canada

and the Rocky Mountains into Central America.


P

Packer: A flexible rubber sleeve that is part of a special joint of pipe.

Paid Up Lease: An oil and gas lease in which delay rentals for the entire

primary term are paid in advance with the bonus consideration.

Pay Zones: The term to describe the reservoir that is producing oil and

gas within a given wellbore. Pay Zones (or oil reservoirs) can vary in

thickness from one foot to several hundred feet.

Payoff: The time when a well's production begins to bring in revenues.

Payout: The amount of time it takes to recover the Capital Investment

made on a well or drilling program.

Penetration: The intersection of a wellbore with a reservoir.

PEP (Project Execution Plan)

Perforating Gun: An instrument lowered at the end of a wire line into a

cased well. It contains explosive charges that can be electronically

detonated from the surface.

Perforation: A method of making holes through the casing opposite

the producing formation to allow the oil or gas to flow into the well. (See

the Gun Perforation)

Permeability: A measure of the ease with which a fluid such as water

or oil moves through a rock when the pores are connected. Geologists

express permeability in a unit named the Darcy, but oil men use the

Millidarcy because most of the rocks they come in contact with are not

very permeable. Permeability is the measure of how easily a fluid can

pass through a section of rock. If fluid can pass relatively easily through

a given layer, then the permeability is said to be high. However, if a layer

52

effectively blocks fluids or no fluids that can flow through the layer at

all, then the layer is said to be impermeable.

Petroleum Engineer: A term including three areas of specialization: (1)

Drilling Engineers specialize in the drilling, work over and completion

operations, (2) Production Engineers specialize in studying a well's

characteristics and using various chemical and mechanical procedures to

maximize the recovery from the well, (3) Reservoir Engineers design and

execute the planned development of a reservoir.

Petroleum Geologist: A geologist who specializes in exploration for

and production of petroleum.

Petroleum Initially-in-Place: Petroleum Initially-in-Place is the total

quantity of petroleum that is estimated to exist originally in naturally

occurring reservoirs. Crude Oil-in-place, Natural Gas- in-place and

Natural Bitumen-in-place are defined in the same manner (see

Resources). (Also referred as Total Resource Base or Hydrocarbon

Endowment.)

Petroleum: Petroleum is defined as a naturally occurring mixture

consisting of hydrocarbons in the gaseous, liquid, or solid phase.

Petroleum may also contain nonhydrocarbon compounds, common

examples of which are carbon dioxide, nitrogen, hydrogen sulfide, and

sulfur. In rare cases, nonhydrocarbon content could be greater than

50%.

Pilot Project: A small-scale test or trial operation that is used to assess

the suitability of a method for commercial application.

Pinch Out: The disappearance of porous, permeable formation

between two layers of impervious rock over a horizontal distance.

Pipeline Gas: Gas under enough pressure to enter the high-pressure gas

lines of a purchaser; gas in which enough liquid hydrocarbons have been

removed so that such liquids will not condense in the transmission lines.

Pipeline: A tube or system of tubes for the transportation of oil or gas.

Types of oil pipelines include: lead lines-form pumping well to a storage

tank; flow lines-from flowing well to a storage tank; lease lines-

extending from the wells to lease tanks; gathering lines-extending from

lease tanks to a central accumulation point; feeder lines-extending

from lease to trunk lines; and trunk lines extending from a producing


area to refineries or terminals.

Platform Rig: A drilling and production platform that is supported by a

truss of steel members (a jacket) secured to the ocean floor.

Play: A project associated with a prospective trend of potential

prospects, but which requires more data acquisition and/or evaluation

in order to define specific leads or prospects. A project maturity

subclass that reflects the actions required to move a project toward

commercial production.

Plug Back: To block off the lower section of the borehole by setting a

plug in order to perform operations in the upper part of the hole.

Plugged & Abandoned (P&A): This expression refers to setting

cement plugs in an unsuccessful well (a dry hole) or a depleted well.

Plugging A Well: Filling the borehole of an abandoned well with mud

and cement to prevent the flow of water or oil from one strata to

another or to the surface.

Pool: (1) (noun) An underground reservoir containing or appearing to

contain a common accumulation of oil and Natural Gas. A zone of a

structure which is completely separated from any other zone in the

same structure is a pool. (2) (verb) To combine two or more tracts of

land into one unit for drilling purposes. This may be accomplished

voluntarily or through compulsion (see Pooling).

Pooling: A term frequently used interchangeably with “Unitization”

but more properly used to denominate the bringing together of small

tracts sufficient for the granting of a well permit under applicable

spacing rules.

Porosity: A measure of the number and size of the spaces between each

particle in a rock. Porosity affects the amount of liquid and gases, such

as Natural Gas and Crude Oil, that a given reservoir can contain. Pores

are spaces between grains of sediment in sedimentary rock. A

sedimentary rock with larger grain size will generally be more porous

allowing more fluid or air to flow through it. Very porous rock acts

somewhat like a sponge; soaking up water, air and petroleum. Generally,

porosity or the degree to which a formation can hold fluid decreases with

depth because increased pressures press grains together, thus decreasing

the space between grains.

CPEEL54

Possible Reserves (P3): An incremental category of estimated

recoverable volumes associated with a defined degree of uncertainty.

Possible Reserves are those additional reserves that analysis of

geoscience and engineering data suggest are less likely to be recoverable

than Probable Reserves. The total quantities ultimately recovered from

the project have a low probability to exceed the sum of Proved plus

Probable plus Possible (3P), which is equivalent to the high estimate

scenario. When probabilistic methods are used, there should be at least

a 10% probability that the actual quantities recovered will equal or

exceed the 3P estimate.

PPA (Power Purchase Agreement): A contract between a power

station and the electricity purchasing organization for the sale of

electricity.

Pre-FEED (Pre-Front End Engineering Design

Present Value: The present value of the dollars (income or stream of

income) to be received at some specified time in the future discounted

back to the present at a specified interest rate.

Primary Recovery: Primary recovery is the extraction of petroleum

from reservoirs utilizing only the natural energy available in the

reservoirs to move fluids through the reservoir rock to other points of

recovery.

Primary Term: The period of time during which an oil and gas lease will

be in effect, in the absence of production, drilling or other operations

specified by the lease. The oil and gas lease can be perpetuated past the

primary term by production in paying quantities, drilling, operations

and/or the payment of shut-in royalties specified by the lease.

Probabilistic Estimate: The method of estimation of Resources is

called probabilistic when the known geoscience, engineering, and

economic data are used to generate a continuous range of estimates

and their associated probabilities.

Probability: The extent to which an event is likely to occur, measured

by the ratio of the favorable cases to the whole number of cases

possible. SPE convention is to quote cumulative probability of

exceeding or equaling a quantity where P90 is the small estimate and


P10 is the large estimate. (See also Uncertainty.)

Probable Reserves (P2): An incremental category of estimated

recoverable volumes associated with a defined degree of uncertainty.

Probable Reserves are those additional Reserves that are less likely to

be recovered than Proved Reserves but more certain to be recovered

than Possible Reserves. It is equally likely that actual remaining

quantities recovered will be greater than or less than the sum of the

estimated Proved plus Probable Reserves (2P). In this context, when

probabilistic methods are used, there should be at least a 50%

probability that the actual quantities recovered will equal or exceed the

2P estimate.

Producing Horizon: Where the well is actually produced since it may

be drilled to a greater depth.

Production Test: A test made to determine the daily rate of oil, gas and

water production from a potential pay zone.

Production: A term commonly used to describe taking natural

resources out of the ground. Production is the cumulative quantity of

petroleum that has been actually recovered over a defined time period.

While all recoverable resource estimates and production are reported

in terms of the sales product specifications, raw production quantities

(sales and non-sales, including nonhydrocarbons) are also measured

to support engineering analyses requiring reservoir voidage

calculations.

Production-Sharing Contract: In a production-sharing contract between

a contractor and a host government or state oil company, the contractor

typically bears all risk and costs for exploration, development, and

production. In return, if exploration is successful, the contractor is given

the opportunity to recover the incurred investment from production,

subject to specific limits and terms. The contractor normally receives

title to the prescribed share of the hydrocarbon volumes as they are

produced.

PSA (Production Sharing Agreement): An alternative name for a

Production Sharing Contract.

Profit Split: Under a typical production-sharing agreement, the

CPEEL56

contractor is responsible for the field development and all exploration

and development expenses. In return, the contractor is entitled to a

share of the remaining profit oil or gas. The contractor receives

payment in oil or gas production and is exposed to both technical and

market risks.

Project: Represents the link between the petroleum accumulation and

the decision-making process, including budget allocation. A project

may, for example, constitute the development of a single reservoir or

field, or an incremental development in a producing field, or the

integrated development of a group of several fields and associated

facilities with a common ownership. In general, an individual project

will represent a specific maturity level at which a decision is made on

whether or not to proceed (i.e., spend money), and there should be an

associated range of estimated recoverable resources for that project.

(See also Development Plan.)

Property: A volume of the Earth's crust wherein a corporate entity or

individual has contractual rights to extract, process, and market a

defined portion of specified in-place minerals (including petroleum).

Defined in general as an area but may have depth and/or stratigraphic

constraints. May also be termed a lease, concession, or license.

Proppants: Materials used in hydraulic fracturing for holding open the

cracks made in the formation by the fracturing process. Proppants may

consist of sand grains, beads or other small pellets suspended in

fracturing fluid.

Pro-rationing: The allocation of production among reservoirs and

wells or allocation of pipeline capacity among shippers, etc.

Prospect: A lease or group of leases on which an operator intends to

drill.

Prospect: A project associated with a potential accumulation that is

sufficiently well defined to represent a viable drilling target. A project

maturity sub-class that reflects the actions required to move a project

toward commercial production.

Prospective Resources: Those quantities of petroleum that are estimated,

as of a given date, to be potentially recoverable from undiscovered

accumulations.


Proved Behind-Pipe Reserves: Estimates of the amount of Crude Oil

or Natural Gas recoverable by recompleting existing wells.

Proved Developed Reserves (PDP's): Estimates of what is

recoverable from existing wells with existing facilities from open,

producing pay zones.

Proved Economic: In many cases, external regulatory reporting and/or

financing requires that, even if only the Proved Reserves estimate for the

project is actually recovered, the project will still meet minimum

economic criteria; the project is then termed as “Proved Economic.”

Proved Reserves (P1):Estimates of the amount of oil or Natural Gas

believed to be recoverable from known reservoirs under existing

economic and operating conditions. An incremental category of

estimated recoverable volumes associated with a defined degree of

uncertainty Proved Reserves are those quantities of petroleum which, by

analysis of geoscience and engineering data, can be estimated with

reasonable certainty to be commercially recoverable, from a given date

forward, from known reservoirs and underdefined economic conditions,

operating methods, and government regulations. If deterministic methods

are used, the term reasonable certainty is intended to express a high degree

of confidence that the quantities will be recovered. If probabilistic methods

are used, there should be at least a 90% probability that the quantities

actually recovered will equal or exceed the estimate. Often referred to as

1P, also as “Proven.”

Proved Undeveloped Reserves (PUD's): Estimates of what is

recoverable through new wells on un-drilled acreage, deepening existing

wells or secondary recovery methods.

PU: Picked Up.

Public Lands: Any land or land interest owned by the Federal

Government within the 50 states; not including offshore Federal lands

or lands held in trust for Native American groups.

Public Offering: A securities (investment) offering intended for sales

to the general public. It must be registered with (1) The Securities and

Exchange Commission of the Federal Government and (2) The

Securities-Regulating Agencies of the various states in which it will be

offered.

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Pugh Clause: A clause, which is calculated to prevent the holding of

non-pooled acreage in a lease while certain portions of the lease

acreage are being held under pooled arrangements. The main purpose

of a Pugh clause is to protect the landowner from having their entire

property held under a lease by production from a very small portion.

Pump Off: To pump a well so rapidly that the oil level falls below the

pump's standing valve rendering the well temporarily dry.

Pump: A device that is installed inside or on a production string

(tubing) that lifts liquids to the surface.

Pumper: A person who oversees daily operations of wells in the field.

Pumping Unit: Surface pumping equipment driven by a motor.

Pumping Well: A well that does not flow naturally and requires a pump

to bring product to the surface.

Purchase Contract: A contract to purchase oil and gas provides the

right to purchase a specified volume of production at an agreed price

for a defined term.

Pure-Service Contract: A pure-service contract is an agreement

between a contractor and a host government that typically covers a

defined technical service to be provided or completed during a specific

period of time. The service company investment is typically limited to

the value of equipment, tools, and expenses for personnel used to

perform the service. In most cases, the service contractor's

reimbursement is fixed by the terms of the contract with little exposure

to either project performance or market factors.


Q

Quitclaim Deed: A document by which one party (grantor) conveys

title to a property by giving up any claim which he may have to title

(although he does not profess that claim is necessarily valid).

60

R

R & D: Research and Development.

Ram: A closure mechanism on a blowout-preventor stack.

Range of Uncertainty: The range of uncertainty of the recoverable

and/or potentially recoverable volumes may be represented by either

deterministic scenarios or by a probability distribution. (See Resource

Uncertainty Categories.)

Raw Natural Gas: Raw Natural Gas is natural gas as it is produced from

the reservoir. It includes water vapor and varying amounts of the

heavier hydrocarbons that may liquefy in lease facilities or gas plants

and may also contain sulfur compounds such as hydrogen sulfide and

other nonhydrocarbon gases such as carbon dioxide, nitrogen, or

helium, but which, nevertheless, is exploitable for its hydrocarbon

content. Raw Natural Gas is often not suitable for direct utilization by

most types of consumers.

Reamer: A tool used to enlarge or straighten a borehole.

Reasonable Certainty: If deterministic methods for estimating

recoverable resource quantities are used, then reasonable certainty is

intended to express a high degree of confidence that the estimated

quantities will be recovered.

Reasonable Expectation: Indicates a high degree of confidence (low

risk of failure) that the project will proceed with commercial

development or the referenced event will occur.

Reasonable Forecast: Indicates a high degree of confidence in

predictions of future events and commercial conditions. The basis of

61

such forecasts includes, but is not limited to, analysis of historical

records and published global economic models.

Reclamation: The restoration of land to its original condition by

regarding contours and re-planting after the land has been mined,

drilled or otherwise has undergone alteration from its original state.

Recoverable Resources: Those quantities of hydrocarbons that are

estimated to be producible from discovered or undiscovered

accumulations under existing economic and operating conditions.

Recovery Efficiency: A numeric expression of that portion of in- place

quantities of petroleum estimated to be recoverable by specific

processes or projects, most often represented as a percentage.

Reef: A buildup of limestone formed by skeletal remains of marine

organisms. It often makes an excellent reservoir for petroleum.

Re-Entry: A well that was abandoned, but subsequent drilling and

production in the area, suggest that a potential pay zone in the well was

missed or passed over.

Reference Point: A defined location within a petroleum extraction and

processing operation where quantities of produced product are

measured under defined conditions prior to custody transfer (or

consumption). Also called Point of Sale or Custody Transfer Point.

Refiner: A person or company that has any part in the control or

management of any operation by which the physical or chemical

characteristics of petroleum or petroleum products are changed.

Refining: Manufacturing petroleum products by a series of processes

that separate Crude Oil into its major components and blend or convert

these components into a wide range of finished products, such as

gasoline or jet fuel.

Relief Well: A well drilled in a high-pressure formation to control a

blowout.

Reserves: Reserves are those quantities of petroleum anticipated to be

commercially recoverable by application of development projects to

known accumulations from a given date forward under defined

conditions. Reserves must further satisfy four criteria: They must be

discovered, recoverable, commercial, and remaining (as of a given

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date) based on the development project(s) applied.

Reservoir: A subsurface rock formation containing an individual and

separate natural accumulation of moveable petroleum that is confined

by impermeable rocks/formations and is characterized by a single-

pressure system.

Reservoir Pressure: The pressure at the face of the producing

formation when the well is shut-in. It equals the shut-in pressure at the

wellhead plus the weight of the column of oil in the hole.

Resources Categories: Subdivisions of estimates of resources to be

recovered by a project(s) to indicate the associated degrees of

uncertainty. Categories reflect uncertainties in the total petroleum

remaining within the accumulation (in-place resources), that portion

of the in- place petroleum that can be recovered by applying a defined

development project or projects, and variations in the conditions that

may impact commercial development (e.g., market availability,

contractual changes)

Resources Classes: Subdivisions of Resources that indicate the

relative maturity of the development projects being applied to yield the

recoverable quantity estimates. Project maturity may be indicated

qualitatively by allocation to classes and subclasses and/or

quantitatively by associating a project's estimated chance of reaching

producing status.

Resources: The term “resources” as used herein is intended to

encompass all quantities of petroleum (recoverable and unrecoverable)

naturally occurring on or within the Earth's crust, discovered and

undiscovered, plus those quantities already produced. Further, it

includes all types of petroleum whether currently considered

“conventional” or “unconventional” (see Total Petroleum Initially-in-

Place). (In basin potential studies, it may be referred to as Total

Resource Base or Hydrocarbon Endowment.)

Retained Interest: A fractional interest reserved by the owner of a

whole interest when the balance of the whole interest is transferred to

another party.

Revenue-Sharing Contract: Revenue-sharing contracts are very

similar to the production-sharing contracts described earlier, with the


exception of contractor payment. With these contracts, the contractor

usually receives a defined share of revenue rather than a share of the

production.

Reversionary Interest: The right of future possession of an interest in

a property when a specified condition has been met.

RFP (Request for Proposal)

Rig Year: A measure of the number of equivalent rigs operating during

a given period. It is calculated as the number of days rigs are operating

divided by the number of days in the period. For example, one rig

operating 182.5 days during a 365-day period represents .5 rig years,

and 100 rigs operating for 33,000 cumulative days, during a 365-day

period would equal 90.4 rig years (33,000 divided by 365).

Ring Fence: A term denoting a provision in a host country's tax and

accounting regulations which prevents charging the costs of

exploration and other expense from a project which was unsuccessful

against another similar project which was successful in finding oil and

gas in commercial quantities.

Risk and Reward: Risk and reward associated with oil and gas

production activities stems primarily from the variation in revenues

due to technical and economic risks. Technical risk affects a company's

ability to physically extract and recover hydrocarbons and is usually

dependent on a number of technical parameters. Economic risk is a

function of the success of a project and is critically dependent on cost,

price, and political or other economic factors.

Risk: The possibility of loss or injury. A level of uncertainty is

associated with the various possible outcomes of the undertaking. Risk

usually refers to a numerical estimate of the likelihood of the

occurrence to these various possible outcomes.

Risked-Service Contract: These agreements are very similar to the

production-sharing agreements with the exception of contractor

payment, but risk is borne by the contractor. With a risked- service

contract, the contractor usually receives a defined share of revenue

rather than a share of the production.

Roof Rock: A layer of impervious rock above a porous and permeable

formation that contains oil or gas.

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Rotary Drilling: A method of well-drilling that employs a rotating bit

and drilling mud to cut through rock formations.

Roughnecks: Members of the drilling crew.

Round Trip: Pulling the drill pipe from the hole to change the bit then

running the drill pipe and new bit back in the hole.

Roustabout: A semi-skilled hand who looks after, maintains or works

on producing wells and production facilities.

Royalty Funds: Generally speaking, a Royalty Fund is when Royalty

Interests are being bought, sold and held by the funds sponsors. In

nearly all leasing situations, once a lease has been developed, it

provides a revenue stream. A portion of the revenue stream is set aside

for royalty which generally amounts to 12.5% to20% and Overriding

Royalty and/or Carried Working Interest of 2-5%. In a Royalty Fund, the

objective of the fund is to generate its revenue from royalties that are

held from different producing fields throughout the country. The main

feature to owning a percentage of a Royalty Fund is that with an Oil

Royalty. The Royalty Owner (or Interest Owner) pays no percentage of

operating or developmental costs associated with the production of the

oil or gas. Royalty programs generally offer a low risk factor along with a

relatively low return. However, their main feature is that these types of

programs last for many, many years.

Royalty: Royalty refers to payments that are due to the host

government or mineral owner (lessor) in return for depletion of the

reservoirs and the producer (lessee/contractor) for having access to

the petroleum resources. Many agreements allow for the producer to

lift the royalty volumes, sell them on behalf of the royalty owner, and

pay the proceeds to the owner. Some agreements provide for the royalty

to be taken only in kind by the royalty owner.

RU: Rig Up.

Run Ticket: A record of the oil run from a lease tank into a connecting

pipeline. An invoice for oil delivered.

Running the Tools: Putting the drill pipe, with the bit attached, into the

hole in preparation for drilling.

Runs: The transfer and delivery of Crude Oil and/or gas sold from a


lease or leases; refers to either the measured volume sold and/or the

dollar amount of the sale.

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S

Sales: The quantity of petroleum product delivered at the custody

transfer (reference point) with specifications and measurement

conditions as defined in the sales contract and/or by regulatory

authorities. All recoverable resources are estimated in terms of the

product sales quantity measurements.

Salt Dome: A subsurface mound or dome of salt.

Salt-Bed Storage: Storage of petroleum products in underground

formations of salt whose cavities have been mined or leached out with

superheated water.

Sample Log: A record of rock cuttings made as a well is being drilled. A

record is then kept that shows the characteristics of the various strata

drilled through.

Sample: Cuttings of a rock formation broken up by the drill bit and

brought to the surface by the drilling mud. These are examined by

geologists to identify the formation and type of rock being drilled.

Sandstone: Rock composed mainly of sand-sized particles or

fragments of the mineral quartz.

Saturation: (1) The extent to which the pore space in a formation

contains hydrocarbons or connate water. (2) The extent to which gas is

dissolved in the liquid hydrocarbons in a formation.

Schlumberger: The founder of Electrical Well Logging; now the name

for any Electrical Well Log.

Scout: An individual who observes and reports on competitor's leasing

and drilling activities.

Secondary Recovery: The introduction of water or gas into a well to

67

supplement the natural reservoir drive and force additional oil to the

producing wells.

Section: A square tract of land having an area of one square mile (= 640

acres). There are 36 sections in a township.

Securities Act of 1933: Establishes requirements for the disclosure of

information for any interstate offering and sale of securities.

Securities Exchange Act of 1934: Established the Securities and

Exchange Commission which regulates the activities of securities

markets.

Securities: Securities are commonly thought of as stocks and bonds.

As defined by the Securities Act of1933, however, securities include

any certificate of interest or participation in any Profit Sharing

Agreement, investment contract or fractional undivided interest in oil,

gas or other mineral rights.

Sedimentary Basin: A large land area composed of un-metamorphized

sediments. Oil and gas commonly occur in such formations.

Sedimentary Rock: Rock formed by the deposition of sediment

usually in a marine environment.

Seismic 3-D: A relatively new exploration technique used in the search

for oil and gas underground structures. The basic premise behind

Seismic is the same as Ultra Sound Technology used in the medical

field. Sound from a shot hole is recorded from geophones and

interpreted to give a picture of the underlying structures within the

earth. 3-D has now become a common practice to re-define and identify

known as well unknown structures. Many times these structures

contain traps that hold oil and gas yet to be discovered.

Seismic 4-D: The newest advances in Seismic Technology which now

takes into consideration a 4thdimension, which is time. With 4-D

Seismic, geologists are now able to monitor the movement and

mobility of oil as it is extracted in the production process.

Seismic Exploration: A method of prospecting for oil or gas by

sending shock waves into the earth. Different rocks transmit, reflect or

refract sound waves at different speeds, so when vibrations at the

surfaces end sound waves into the earth in all directions, they reflect to

CPEEL68

the surface at a distance and angle from the sound source that indicates

the depth of the interface. These reflections are recorded and analyzed

to map underground formations.

Seismograph: A device that records natural or manmade vibrations

from the earth. Geologists read what it has recorded to evaluate the oil

potential of underground formations.

Selling Expenses: Expenses incurred in marketing interests in

securities and commonly paid out of the Investor's capital investment.

Separator: A pressure vessel used to separate well fluids into gases

and liquids.

Service Well: A well drilled in a known oil or Natural Gas field to inject

liquids that enhance recovery or dispose of salt water.

Set Casing: To cement casing in the well hole; usually in preparation for

producing a commercial well.

Severance Tax: Tax paid to the State Government by producers of oil or

gas in the state.

Severance: The owner of all rights to a tract of land can sever the rights

to his land (vertically or horizontally). In horizontal severance, for

example, if he chooses to sell all or part of the mineral rights, two

distinct estates are created: the surface rights to the tract of land and

the mineral rights to the same tract. The two estates may change hands

independently of each other.

SGX (Singapore Exchange)

Shale Oil: The substance produced from the treatment of kerogen, the

hydrocarbon found in some shale's, which is difficult and costly to

extract. About 34 gallons of Shale Oil can be extracted from one ton of

ore.

Shale Shaker: A vibrating screen or sieve that strains cuttings out of

the mud before the mud is pumped back down into the borehole.

Shale: A type of rock composed of common clay or mud.

Sharing Arrangement: An arrangement whereby a party contributes

to the acquisition or exploration and development, of an oil and gas

property and receives as compensation, a fractional interest in that

property.


Shoestring Sands: Narrow strands of saturated formation that have

retained the shape of the stream bed that formed them. In the United

States, such a formation is located in Kansas.

Shoot A Well: A technique that stimulates production of a tight

formation by setting off charges downhole that crack open the

formation. The early wells were shot with nitroglycerin then dynamite

was used. The nitro man has been replaced today by acidizers and frac

trucks.

Show: An indication of oil or gas while drilling.

Shut-Down Well/Shut-In Well (SI): A well is shut down when initial

drilling ceases for one reason or another. A well is shut in when the

wellhead valves are closed, shutting off production, often while waiting

for transportation or for the market to improve or for repairs.

Shut-In (SI): To stop a producing oil and gas well from producing.

Shut-In Pressure (SIP): The pressure at the wellhead when valves are

closed.

Shut-in Reserves: Shut-in Reserves are expected to be recovered from

(1) completion intervals which are open at the time of the estimate, but

which have not started producing; (2) wells which were shut-in for

market conditions or pipeline connections; or (3) wells not capable of

production for mechanical reasons.

Shut-In Royalty: A special type of royalty negotiated in the leasing of a

property.

SI: Shut-In.

Side Track: When fishing operations have been unable to recover an

object in the hole that prevents drilling ahead. The borehole can often

be drilled around the obstacle in the original hole.

SITP: Shut-In Tubing Pressure.

Skidding the Rig: Moving a derrick from one location to another on

skids and rollers.

SLiNG(SGX LNG Index Group)

Slot Jack-ups: Jack-ups that have the drilling derrick mounted over a

slot in the hull and cannot be used over adjacent structures.

SMEs (small-to -medium enterprises)

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SN: Seating Nipple.

Solution Gas:Solution Gas is a natural gas that is dissolved in crude oil

in the reservoir at the prevailing reservoir conditions of pressure and

temperature. It is a subset of Associated Gas.

Sour Natural Gas: Sour Natural Gas is a natural gas that contains

sulfur, sulfur compounds, and/or carbon dioxide in quantities that may

require removal for sales or effective use.

Source Rock: Sedimentary rock, usually shale containing organic

carbon in concentrations as high as 5-10% by weight.

SPA (Sales and Purchase Agreement)

Spacing Unit: The size (amount of surface area) of a parcel of land on

which only one producing well is permitted to be drilled to a specific

reservoir.

Spot Market: A public financial market in which financial instruments

or commodities are traded for immediate delivery. A short-term

contract for the sale or purchase of a specified quantity of oil or gas at a

specified price.

Spudding a Well: To spud a well means to start the initial drilling

operations.

Squeeze: The procedure of pumping a slurry of cement into a

particular space in the borehole (often the annulus between the

borehole and the casing), so that the cement will solidify to form a seal).

SSLNG (Small-scale LNG)

Stack a Rig: To store a drilling rig on completion of a job when the rig is

to be withdrawn from operation for a time.

Step-Out Well: A well drilled near a proven well but located in an

unproven area that determines the boundaries of the producing

formation.

Stipper Oil Well: An oil well capable of producing less than 10 barrels of

oil per day.

Stochastic Estimate: Adjective defining a process involving or containing

a random variable or variables or involving chance or probability such as a

stochastic stimulation.

Stocktank Barrel (STB): A barrel of oil at the earth's surface.


Stratigraphic Test: A hole drilled to gather information about rock

strata in an area.

Structure: Subsurface folds or fractures of strata that form a reservoir,

capable of holding oil or gas.

Structured Trap: A reservoir created by some cataclysmic geologic

event that creates a barrier and prevents further migration. The most

common structural traps are anticlines, in which at least 80% of the

world's oil and gas have been discovered.

Sub-commercial: A project is Subcommercial if the degree of

commitment is such that the accumulation is not expected to be

developed and placed on production within a reasonable time frame.

While 5 years is recommended as a benchmark, a longer time frame

could be applied where, for example, development of economic

projects are deferred at the option of the producer for, among other

things, market-related reasons, or to meet contractual or strategic

objectives. Discovered subcommercial projects are classified as

Contingent Resources.

Submarginal Contingent Resources: Known (discovered)

accumulations for which evaluation of development project(s)

indicated they would not meet economic criteria, even considering

reasonably expected improvements in conditions.

Submersible Pump: A bottom-hole group for use in an oil well when a

large volume of fluid is to be filled.

Subscription: The manner by which an Investor participates in a

drilling program through investment.

Substructure: A platform upon which a derrick is erected.

Supervisory Fee: Analogous to a management fee in an Oil and Gas

Limited Partnership. It is paid by the partnership to the general partner

for the direct supervision of mechanical operations at the well site.

Surface Rights: Surface ownership, of a tract of land, from which the

mineral rights have been severed.

Swab: A hollow rubber cylinder with a flap (check valve) on the bottom

surface. It is lowered below the fluid level in the well. This opens the

check valve allowing fluid into the cylinder. The check valve flap closes,

CPEEL72

as the swab is pulled back up, lifting oil to the surface.

Sweet Crude: Crude Oil with low sulfur content which is less corrosive,

burns cleaner and requires less processing to yield valuable product.

Sweet Natural Gas: Sweet Natural Gas is a natural gas that contains no

sulfur or sulfur compounds at all, or in such small quantities that no

processing is necessary for their removal in order that the gas may be

sold.

Swivel: A rotary tool that is hung from the rotary hook and the traveling

block to suspend the drill stem and to permit it to rotate freely. It also

provides a connection for the rotary hose and a passageway for the flow

of drilling fluid into the drill stem.

Syncline: A downfold in stratified rock that looks like an upright bowl.

Unfavorable to the accumulation of oil and gas.

Syndication Expenses: Expenditures incurred by a partnership in

connection with issuing and marketing its interest to Investors: legal

fees of the issuer for securities and tax advice, accounting fees for audits

and other representations included in the offering memorandum.

Synfuels: Fuels produced through chemical conversions of natural

hydrocarbon substances such as coal and oil shale.

Synthetic Crude Oil (SCO or Syncrude)): A mixture of hydrocarbons

derived by upgrading (i.e., chemically altering) natural bitumen from

oil sands, kerogen from oil shales, or processing of other substances

such as natural gas or coal. SCO may contain sulfur or other

nonhydrocarbon compounds and has many similarities to crude oil.

Synthetic Gas: Gas produced from solid hydrocarbons such as coal, oil

shale or tar sands.


T

TOP (Take or Pay): Take or Pay is a common provision in gas contracts

under which, if the Buyer's annual purchased volume is less than his

purchase obligation (the Annual Contract Quantity minus any shortfall

in the Seller's deliveries, minus any Downward Quantity Tolerance),

the Buyer pays for such a shortfall as if the gas had been received.

Tank Battery: Group of production tanks in the field that store Crude

Oil.

Tank Bottoms: A mixture of oil, water and other foreign matter that

collects in the bottoms of stock tanks and large crude storage tanks and

must be cleaned or pumped out on a regular basis.

Tax Preference Items: Certain items of income or special deductions

from Gross Income which are given favoured treatment under Federal

Tax Law.

Taxes: Obligatory contributions to the public funds, levied on persons,

property, or income by governmental authority.

TCF: Trillion Cubic Feet.

TCM (Trillion cubic meters)

TD (Total Depth): The maximum depth of a borehole.A well is not

always completed at its TD. The producing horizon may be up hole.

Technical Uncertainty: Indication of the varying degrees of

uncertainty in estimates of recoverable quantities influenced by range

of potential in-place hydrocarbon resources within the reservoir and

the range of the recovery efficiency of the recovery project being

applied.

74

Tenor (Time left for loan repayment or till bond maturity as used in the

finance industry).

Tertiary Recovery: The recovery of oil that involves complex and very

expensive methods such as the injection of steam, chemicals, gases or

heat as compared to primary recovery which involves depleting a

naturally flowing reservoir or secondary recovery, which usually

involves re-pressuring or water flooding.

Therm: A measure of heat content. One therm equals 100,000 btus.

Third for a Quarter: Sometimes also known as a “quarter for a third”. A

widely used arrangement for promoting an oil deal to another party.

Tight Formation: A sedimentary layer of rock cemented together in a

manner that greatly hinders the flow of any gas through the rock.

Tight Hole: A well about which the operator keeps all information

secret.

Tight Sand: A formation with permeability. Gas produced from a

formation so designated by the Federal Energy Regulatory Commission

qualifies for a higher market price.

TIH: Trip In Hole.

Time Value of Money: The concept that a dollar in hand today is worth

more than a dollar that will be received in some future year.

Title: The combination of factors that together constitute legal

ownership of a property.

TOH: Trip Out of Hole.

Tonnes: (A tonne, or metric ton, is a unit of mass equaling 1,000

kilograms. In American English, a ton is a unit of measurement equaling

2,000 pounds. In non-U.S. measurements, a ton (the imperial measure)

equals 2,240 pounds.)

Tool Joints: Heavy duty steel couplings used to connect lengths of drill

pipe.

Tool Pusher: The supervisor of drilling rig operations.

Top Drive: A powered swivel connected directly into the drill stem to

provide the necessary torque for the drill bit. Replaces the

conventional rotary table and hangs from the hook attached to the

traveling block. Allows three lengths of drill pipe to be tripped in and


out at a time, and provides makeup and breakup power for the

assembly of the drill pipe lengths as well. Generally considered to save

time over the rotary table assembly.

Top Lease: A (conditional) type of lease that may be granted by the

mineral rights owner of a property while a pre-existing recorded lease

of that property is nearing expiration but nonetheless, is still in effect.

The top lease would become effective only if and when the existing

lease expires (or is terminated).

Torque: A force that causes or attempts to cause a rotation or torsion.

Total Petroleum Initially-in- Place: Total Petroleum Initially-in-Place

is generally accepted to be all those estimated quantities of petroleum

contained in the subsurface, as well as those quantities already

produced. This was defined previously by the WPC as “Petroleum-in-

place” and has been termed “Resource Base” by others. Also termed

“Original-in-Place” or “Hydrocarbon Endowment.”

Township: A square tract of land six miles on a side. It consists of 36

sections of one square mile each.

TP: Tubing Pressure.

TPA (Third Party Access)

Transfer Rule: When an interest in an oil and gas property already

proven to be capable of commercial production, is transferred. The

transferee taxpayer is generally not entitled to percentage depletion,

although he may still be entitled to cost depletion in computing his

depletion allowance deduction from Gross Income.

Trap: A natural configuration of layers of rock where non-porous or

impermeable rocks act as a barrier blocking the natural upward flow of

hydrocarbons.

Traveling Block: Block hanging from the derrick supporting the drill

string as it “travels” up and down as it raises and lowers the drill string

into the wellbore.

Trip: Making a “trip” is the procedure of pulling the entire string of drill

pipe out of the borehole and then running the entire length of drill pipe

back in the hole.

TSO (Transmission System Operator)

CPEEL76

TTF (Title Transfer Facility)

Tubing (TBG): Small diameter pipe threaded at both ends that is

lowered into a completed well. Oil and gas are produced through a

string of tubing.

Turnkey: A drilling contract that calls for a drilling contractor to drill a

well for a fixed price to a specified depth. The purpose of drilling a well

by turnkey contract may be related to the timing of Federal Income Tax

Deductions. For Income Tax purposes, expenses are deductible from

Gross Income as they are incurred. When a turnkey contract is entered

toward the end of the current tax year, the drilling costs may be pre-

paid at the time. The idea is to give a Working Interest Owner (or

Investor) in the well, the opportunity to deduct the Intangible Drilling

Costs from his Gross Income in the current tax year.


U

Unassociated Gas: Natural Gas that occurs alone, not in solution or as

free gas, with oil or condensate. (See Non Associated Gas)

Uncertainty: The range of possible outcomes in a series of estimates.

For recoverable resource assessments, the range of uncertainty reflects

a reasonable range of estimated potentially recoverable quantities for

an individual accumulation or a project. (See also Probability.)

Unconventional Resources: Petroleum accumulations that are

pervasive throughout a large area and that are not significantly affected

by hydrodynamic influences (also referred to as “continuous- type

deposits”). Examples include coalbed methane (CBM), basin-centered

gas, shale gas, gas hydrate, natural bitumen (tar sands), and oil shale

deposits. Typically, such accumulations require specialized extraction

technology (e.g., dewatering of CBM, massive fracturing programs for

shale gas, steam and/or solvents to mobilize bitumen for in-situ

recovery, and in some cases, mining activities). Moreover, the extracted

petroleum may require significant processing prior to sale (e.g.,

bitumen upgraders).

Underwriter: One who guarantees the sale of securities to investors.

He is at risk to the extent he assumes the responsibility of paying the

Net Purchase Price to the seller at a pre-determined price. He charges a

fee for this service.

Undeveloped Reserves: Undeveloped Reserves are quantities

expected to be recovered through future investments: (1) from new

wells on undrilled acreage in known accumulations, (2) from

deepening existing wells to a different (but known) reservoir, (3) from

78

infill wells that will increase recovery, or (4) where a relatively large

expenditure (e.g., when compared to the cost of drilling a new well) is

required to (a) recomplete an existing well or (b) install production or

transportation facilities for primary or improved recovery projects.

Unitization: Process whereby owners group adjoining properties and

divide reserves, production, costs, and other factors according to their

respective entitlement to petroleum quantities to be recovered from

the shared reservoir(s).

Unproved Reserves: Unproved Reserves are based on geoscience

and/or engineering data similar to that used in estimates of Proved

Reserves, but technical or other uncertainties preclude such reserves

being classified as Proved. Unproved Reserves may be further

categorized as Probable Reserves and Possible Reserves.

Unrecoverable Resources: That portion of Discovered or

Undiscovered Petroleum Initially-in-Place quantities that are

estimated, as of a given date, not to be recoverable. A portion of these

quantities may become recoverable in the future as commercial

circumstances change, technological developments occur, or

additional data are acquired.

Updip Well: A well located high on structure where the oil-bearing

formation is found at a shallower depth.

Upgrader: A general term applied to processing plants that convert

extra-heavy crude oil and natural bitumen into lighter crude and less

viscous synthetic crude oil (SCO). While the detailed process varies, the

underlying concept is to remove carbon through coking or to increase

hydrogen by hydrogenation processes using catalysts.

Upstream: Activities concerned with finding petroleum and producing

it compared to downstream which are all the operations that take place

after production.

Utilization: A measure of the portion of the available rig or vessel fleet,

as applicable, in use during a given period. It is calculated as rig (or

vessel) years divided by total rigs (or vessels) available. For example, if

the equivalent rig (or vessel) years are 100 and the available fleet is

200, the utilization rate is 50%.


V

Vapour Pressure: The pressure exerted by a vapor held in equilibrium

with its solid or liquid state.

Vessel Year: A measure of the number of equivalent vessels operating

during a given period. It is calculated as the number of days vessels are

operating divided by the number of days in the period. For example,

one vessel operating 182.5 days during a 365-day period represents .5

vessel years.

Viscosity (VIS): A fluid's resistance to flowing.

80

W

Wall Sticking: A condition in which a section of the drill string

becomes stuck on deposits of filter cake on the wall of the borehole on a

well.

Water Drive: The most efficient driving mechanism to force oil and gas

out of the reservoir.

Water-Driven Reservoir: A reservoir in which the pressure that

forces the oil to the surface is exerted by edge or bottom water in the

field.

Waterflooding: A secondary recovery method in which water is

injected into a reservoir to force additional oil into the wells.

Well Abandonment: The permanent plugging of a dry hole, an

injection well, an exploration well or a well that no longer produces

petroleum or is no longer capable of producing petroleum profitably.

Several steps are involved in the abandonment of a well: permission for

abandonment and procedural requirements are secured from official

agencies; the casing is removed and salvaged if possible; and one or

more cement plugs and/or mud are placed in the borehole to prevent

migration of fluids between the different formations penetrated by the

borehole. In some cases, wells may be temporarily abandoned where

operations are suspended for extended periods pending future

conversions to other applications such as reservoir monitoring,

enhanced recovery, etc.

Well Program: The procedure for drilling, casing and completing a

well.

81

Wellbore: Physically a wellbore refers to a borehole. In other words, a

completed well.

Wellhead: A device on the surface used to hold the tubing in the well.

The wellhead is the originating point of the producing well at the top of

the ground.

West Texas Intermediate (WTI): Refers to a grade of Crude Oil

produced in the Permian and Midland Basin areas of West Texas. The

price paid for Crude Oil varies according to quality.

Wet (Rich) Gas: Wet gas is natural gas from which no liquids have been

removed prior to the reference point. The wet gas is accounted for in

resource assessments, and there is no separate accounting for

contained liquids. It should be recognized that this is a resource

assessment definition and not a phase behavior definition.

Wet: A reservoir rock is said to be “wet” when it contains water but

little or no hydrocarbons.

Whipstock: A steel blocking device placed in a borehole. As drilling is

resumed, the whipstock forces the drill bit to veer off at a slight angle.

Wildcat: An exploration well drilled to a reservoir from which no oil or

gas has previously been produced in the nearby surrounding areas.

Wildcatter: An operator who drills the first well in unproven territory.

WL: Wire Line.

WOB: Weight on Bit.

WOC: Waiting on Cement.

WOO: Waiting on Orders.

Working Gas Volume: With respect to underground natural gas

storage, Working Gas Volume (WGV) is the volume of gas in storage

above the designed level of cushion gas that can be withdrawn/injected

with the installed subsurface and surface facilities (wells, flow lines,

etc.) subject to legal and technical limitations (pressures, velocities,

etc.). Depending on local site conditions (injection/withdrawal rates,

utilization hours, etc.), the working gas volume may be cycled more

than once a year.

Working Interest (WI): A company's equity interest in a project

before reduction for royalties or production share owed to others

under the applicable fiscal terms.

CPEEL82

Workover: To clean out or work on a well to restore or increase

production. Essentially, it is refurbishment of a well to improve its flow

rate. Workover includes any of several operations on a well to restore or

increase production when a reservoir stops producing at the rate it

should. Many workover jobs involve treating the reservoir rock, rather

than the equipment in the well. Workover jobs typically take a few days

to several weeks to complete.

Workover-Rig: The rig used when oil men try to restore or increase a

well's production.

Write-Off: In common usage, a reduction in Taxable Income that

results when allowable deductions are subtracted from Gross Income.


Z

Zone: A specific interval of rock strata containing one or more

reservoirs. Used interchangeably with“formation”.

Zone Isolation: Sealing off a producing formation while a hole is being

deepened. A special sealant is injected into the formation where it

hardens long enough for the hole to be drilled. Afterward, the

substance again turns to liquid unblocking the formation.

84

Conversion FactorsTemperatureoC = 5/9 (oF -32)oK= oC + 273.15oR = oF + 460

VolumeUnit

Multiplied By Approximate Conversion Factor

Equals Unit

Barrels of oil (bbl)X 42 = US gallons (gal)

Barrels of oil (bbl) X

34.97

=

Imperial gallons (UK gal)

Barrels of oil (bbl) X

0.136

=

Tonnes of oil equivalent (toe)Barrels of oil (bbl) X

0.1589873

=

Cubic meters (m3)Barrels of oil equivalent (boe)

X

5,658.53

=

Cubic feet (f3) of natural gas

Tonnes of oil equivalent (toe)

X

7.33 [1]

=

Barrels of oil equivalent (boe)

Cubic yards (y3) X

0.764555

=

Cubic meters (m3)Cubic feet (f3) X 0.02831685 = Cubic meters (m3)Cubic feet (f3) of natural gas X 0.0001767 = Barrels of oil equivalent (boe)US gallons (gal) X

0.0238095

=

Barrels (bbl)

US gallons (gal) X

3.785412

=

Litres (l)

US gallons (gal) X

0.8326394

=

Imperial gallons

(UK gal)Imperial gallons (UK gal)

X

1.201

=

US gallons (gal)

Imperial gallons (UK gal)

X

4.545

=

Liters (l)

[1] This conversion can range from 6.5 to 7.9 depending on the type of crude oil. This factor is intended to provide an approximation that can be used when the exact factor is unknown.

Mass/WeightUnit Multiplied By

Approximate Conversion Factor

Equals

Unit

Short tons

X

2,000

=

Pounds (lb)

Short tons

X

0.9071847

=

Metric tonnes (t)

Long tons

X

1.016047

=

Metric tonnes (t)Long tons

X

2,240

=

Pounds (lb) Metric tonnes (t) X 1,000 = Kilograms (kg)Metric tonnes (t) X 0.9842 = Long tonsMetric tonnes (t) X 1.102 = Short tonsPounds (lb) X 0.45359237 = Kilograms (kg)Kilograms (kg) X 2.2046 = Pounds (lb)

Length Unit

Multiplied By

Approximate Conversion Factor

Equals

Unit

Miles (mi)

X

1.609344

=

Kilometer (km)

Yards (yd)

X

0.9144

=

Meters (m)

Feet (ft) X 0.3048 = Meters (m)Inches (in) X 2.54 = centimeters (cm)Kilometer (km) X 0.62137 = miles (mi)


AreaUnit

Multiplied By

Approximate

Conversion Factor

Equals

Unit

Acres

X

0.40469

=

Hectares (ha)

Square miles (mi2)

X

2.589988

=

Square kilometers (km2)

Square yards (yd2)

X

0.8361274

=

Square meters (m2)Square feet (ft2) X 0.09290304 = Square meters (m2)

Square inches (in2) X 6.4516 =Square centimeters (cm2)

EnergyEquals Unit

=

Joules (J)

=

Joules (J)

=

Megajoules (MJ)

= British thermal units (Btus)

= Kilocalories (kcal)=

Therms =

Gigajoules (GJ)

=

Kilowatt hours (kWh)

=British Thermal Units (Btus)

Unit Multiplied By Approximate Conversion Factor

British Thermal Units (Btus)

X

1,055.05585262

Calories (cal) X

4.1868

Kilowatt hours (kWh) X

3.6

Therms X 100,000

Tonnes of oil equivalent X 10,000,000 Tonnes of oil equivalent

X

396.83

Tonnes of oil equivalent

X

41.868

Tonnes of oil equivalent

X

11,630

Cubic feet (f3) of natural gas

X 1,025

Approximate Heat Content of Petroleum Products Million Btu (MMBtu) per BarrelEnergy Source MMBtu/bbl Energy Source MMBtu/bblCrude Oil 5.800 Natural Gasoline 4.620

Natural Gas Plant Liquids 3.735 Pentanes Plus 4.620

Asphalt 6.636 Petrochemical Feedstocks:Aviation Gasoline 5.048 Naphtha < 401° F 5.248Butane 4.326 Other oils >= 401° F 5.825Butane-Propane (60/40) Mixture 4.130 Still Gas 6.000Distillate Fuel Oil 5.825 Petroleum Coke 6.024Ethane 3.082 Plant Condensate 5.418 Ethane-Propane (70/30) Mixture 3.308 Propane 3.836Isobutane 3.974 Residual Fuel Oil 6.287Jet Fuel, Kerosene-type 5.670 Road Oil

6.636

Jet Fuel, Naphtha-type 5.355 Special Naphthas

5.248

Kerosene 5.670 Still Gas

6.000

Lubricants 6.065 Unfinished

Oils

5.825

Motor Gasoline - Conventional 5 5.253Unfractionated Stream

5.418

Motor Gasoline - Oxygenated or Reformulated

5.150 Waxes

5.537

Motor Gasoline - Fuel Ethanol 3.539 Miscellaneous

5.796

Source: U.S. Department of Energy, Energy Information Administration (2001)

CPEEL86

Natural Gas Conversion To

Convert

Billion

cubic

metrs

NG

Billion

cubic

feet

NG

Million

tonnes oil

equivalent

Million

tonnesLNG

TrillionBritishthermalunits

Millionbarrels oilequivalent

From

-------------------Multiply

by--------------------

1 billion

cubic

metrs NG

1

35.3

0.90

0.74 35.7 6.60

1 billion

cubic

feet NG

0.028

1

0.025

0.021 1.01 0.19

1million tonnes oil equivalent

1.11

39.2

1

0.82 39.7 7.33

1 million tonnesLNG

1.36 48.0 1.22 1 48.6 8.97

1 trillion Britishthermal units

0.028 0.99 0.025 0.021 1 0.18

1 million barrelsoil equivalent

0.15 5.35 0.14 0.11 5.41 1

LNG Units ConversionUnits 1 metric tonne

= 2204.62 lb.

= 1.1023 short tons

1 kiloliter

= 6.2898 barrels

1 kiloliter

= 1 cubic meter

1 kilocalorie (kcal)

= 4.187 kJ

= 3.968 Btu

1 kilojoule (kJ) = 0.239 kcal = 0.948 Btu

1 British thermal unit (Btu) = 0.252 kcal = 1.055 kJ

1 kilowatt-hour (kWh) = 860 kcal = 3600 kJ = 3412

Other Conversion Factors2acre = 4046.856 m

3acre-ft = 1233.482 matm = 1.01325 bar = 101.325 kPa = 0.101325 MPa= 760 mmHg or 14.696 psi

3 3bbl = 42 U.S gallon = 5.614583 ft = 0.158987 m3 3bbl/acre-ft = 0.128893 m / m

Btu= 10505.056 J =251.996 cal3Btu/ft = 37.259 kJ/ m3

Btu/hr = 0.293071WBtu/lb =2.326 kJ/kgm


-1 -1 -1 -1 -1Btu x lb x F= 1 kcal x kg x K = 4.186800kJ x kg x Km

cal = 4.186800 Jcp = 1m Pa.s

3Darcy = 0.986923 ìmdyn/cm = 1mN/mft = 0.304800 m

2 -2 2ft = 9.290304 X 10 m3 -3 3ft = 2.831685 X 10 m3 3 3ft /bbl = 0.178108 m /m

gallon = 239.65 ton3 -3 3gallon = 3.785412 dm or litre = 3.785412 x 10 m

in = 2.54cm =0.0254 mlb = 0.0005 short tonlb = 0.453592 kgm

3 3lb /ft = 16.018463 kg/mm

mtpa = 134.95 mmscfdmt = 1167.92 litremt = 1000kgpsi =6.894757 kPa = 6894.757 Pa =6.894757 kPascf = 0.028317 scmscm =35.314 scf

Full Meanings of Measurement Units' AbbreviationsoC degree Centigrade/ CelsiusoF degree FahrenheitoK degree KelvinoR degree Rankineatm atmospherebbl barrelboe barrel of oil equivalentbtu british thermal unitcal calorimetercp centipoiseD Darcydyn dyneft footg gramme

CPEEL88

in inchJ Joulelb poundltr litrem metreN NewtonPa Pascalscf standard cubic feetscfd standard cubic feetpeyr dascm standard cubic metret metric tonnev voltW Wattyd yard

Prefices-12p pico, 10

-9n nano, 10-6µ micro, 10

-3m milli 10-2d deci, 10

-1c centi, 103k kilo, 10

6M Mega, 109G Giga, 10

In Volume Measurements3M thousand, 10

6MM million, 109B billion, 10


References

1. U.S. Department of Energy, Energy Information Administration.2. Guidelines for Application of the Petroleum Resources

Management Systems (PRMS), Society of Petroleum Engineers (SPE) - 2011.

3. Understanding Natural Gas and LNG Options, USDOE Power Africa, https://energy.gov/ia/articles/understanding-natural-gas-and-lng-options, October 2016.

4. Nabors Industries Ltd, Glossary of Terms (n.d.) Retrieved from http://media.corporateir.net/media_files/irol/70/70888/pdf/Glossary_of_Drillings_Terms_041805.pdf (accessed on September, 2017).

CPEEL90

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