Glossary of Terms
Bitumen: A viscous, tar-like oil that requires non-conventional production methods such as mining or steam-assisted gravity drainage.
Block: Refers to a contiguous leasehold position. In federal offshore waters, a block is typically 5,000 acres.
British thermal unit (Btu): A measure of heat value. An Mcf of natural gas is roughly equal to one million Btu.
Coalbed Natural Gas: An unconventional gas resource that is present in certain coal deposits.
Deepwater: In offshore areas, water depths of greater than 600 feet.
Delineation well: A well drilled just outside the proved area of an oil or gas reservoir in an attempt to extend the known boundaries of the reservoir.
Development well: A well drilled within the area of an oil or gas reservoir known to be productive. Development wells are relatively low risk.
Dry hole: A well found to be incapable of producing oil or gas in sufficient quantities to justify completion.
Exploitation: Various methods of optimizing oil and gas production or establishing additional reserves from producing properties through additional drilling or the application of new technology.
Exploratory well: A well drilled in an unproved area, either to find a new oil or gas reservoir or to extend a known reservoir. Sometimes referred to as a wildcat.
Field: A geographical area under which one or more oil or gas reservoirs lie.
Floating production, storage and offloading unit (FPSO): A moored tanker-type vessel used to develop an offshore oil field. Oil is stored within the FPSO until offloaded to a tanker for transportation to a terminal or refinery.
Formation: An identifiable layer of rocks named after its geographical location and dominant rock type.
Fracture, refracture: The process of applying hydraulic pressure to an oil or gas bearing geological formation to crack the formation and stimulate the release of oil and gas.
Gross acres: The total number of acres in which one owns a working interest.
Hedge: A financial contract entered into to manage commodity price risk.
Increased density/infill well: A well drilled in addition to the number of wells permitted under initial spacing regulations, used to enhance or accelerate recovery, or prevent the loss of proved reserves.
Independent producer: A non-integrated oil and gas producer with no refining or retail marketing operations.
Lease: A legal contract that specifies the terms of the business relationship between an energy company and a landowner or mineral rights holder on a particular tract.
London Inter Bank Offering Rate (LIBOR): An average of the interest rate on dollar-denominated deposits, also known as Eurodollars, traded between banks in London.
Natural gas liquids (NGLs): Liquid hydrocarbons that are extracted and separated from the natural gas stream. NGL products include ethane, propane, butane and natural gasoline.
Net acres: Gross acres multiplied by one’s fractional working interest in the property.
New York Mercantile Exchange (NYMEX): The world's largest physical commodity futures exchange. The prices quoted for oil, gas and other commodity transactions on the exchange are the basis for prices paid throughout the world.
Oil sands: A complex mixture of sand, water and clay trapping very heavy oil known as bitumen.
Pilot program: A small-scale test project used to assess the viability of a concept prior to committing significant capital to a large-scale project.
Production: Natural resources, such as oil or gas, taken out of the ground.
- Gross production: Total production before deducting royalties.
- Net production: Gross production, minus royalties, multiplied by one’s fractional working interest.
Prospect: An area designated for the potential drilling of development or exploratory wells.
Proved reserves: Estimates of oil, gas and NGL quantities thought to be recoverable from known reservoirs under existing economic and operating conditions.
Recavitate: The process of applying pressure surges on the coal formation at the bottom of a well in order to increase fracturing, enlarge the bottomhole cavity and thereby increase gas production.
Recompletion: The modification of an existing well for the purpose of producing oil or gas from a different producing formation.
Reservoir: A rock formation or trap containing oil and/or natural gas.
Royalty: The owner's share of the value of minerals (oil and gas) produced on the property.
Seismic: A tool for identifying underground accumulations of oil or gas by sending energy waves or sound waves into the earth and recording the wave reflections. Results indicate the type, size, shape and depth of subsurface rock formations. 2-D seismic provides two-dimensional information while 3-D creates three-dimensional pictures. 4-C, or four-component, seismic is a developing technology that utilizes measurement and interpretation of shear wave data. 4-C seismic improves the resolution of seismic images below shallow gas deposits.
Steam-assisted gravity drainage (SAGD): A method of extracting bitumen from oil sands. Steam is injected under ground, softening the bitumen and allowing it to flow to the surface.
Undeveloped acreage: Lease acreage on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of oil or gas.
Unit: A contiguous parcel of land deemed to cover one or more common reservoirs, as determined by state or federal regulations. Unit interest owners generally share proportionately in costs and revenues.
Waterflood: A method of increasing oil recoveries from an existing reservoir. Water is injected through a special “water injection well” into an oil producing formation to force additional oil out of the reservoir rock and into nearby oil wells.
Working interest: The cost-bearing ownership share of an oil or gas lease.
Workover: The process of conducting remedial work, such as cleaning out a well bore, to increase or restore production.
Bbl: A standard oil measurement that equals one barrel (42 U.S. gallons)
- MBbl: One thousand barrels
- MMBbl: One million barrels
Bod: Barrels of oil per day
Mcf: A standard measurement unit for volumes of natural gas that equals one thousand cubic feet.
- MMcf: One million cubic feet
- Bcf: One billion cubic feet
MMcfd: Millions of cubic feet of gas per day
Boe: A method of equating oil, gas and natural gas liquids. Gas is converted to oil based on its relative energy content at the rate of six Mcf of gas to one barrel of oil. NGLs are converted based upon volume: one barrel of natural gas liquids equals one barrel of oil.
- MBoe: One thousand barrels of oil equivalent
- MMBoe: One million barrels of oil equivalent