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Glossary of Terms
| ABANDONMENT COST | The costs associated with abandoning a well. Such costs typically include the plugging of wells; removal of well equipment, production tanks and associated installations; as well as any surface remediation. |
| ACIDIZING | Pumping acid into a reservoir. As the acid dissolves calcite, the naturally occurring holes in the rock are opened and enlarged, allowing an increased flow from the reservoir. |
| ACRE | The most common unit of land measure in the United States. 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. |
| 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 for their approval before the well is commenced. |
| API | American Petroleum Institute- a top petroleum industry association that sets standards for oil field equipment and operations. |
| AQUIFER | A below ground water reservoir contained between layers of rock, sand or gravel. |
| BARREL STANDARD | Unit of measurement in the petroleum industry. One barrel of oil equals 42 U.S. gallons. |
| BASIN | A depression in the crust of the Earth, caused by plate tectonic activity and subsidence, in which sediments accumulate. Sedimentary basins vary from bowl-shaped to elongated troughs. Basins can be bounded by faults. |
| BED | A layer of sediment or sedimentary rock, or stratum. To be labeled a bed, the stratum must be distinguishable from adjacent beds. |
| BED THICKNESS | The thickness of a layer or stratum of sedimentary rock measured perpendicular to its lateral extent, presuming it has been deposited on a horizontal surface. Because sediment deposition can occur on inclined surfaces, apparent or measured bed thickness might differ from true bed thickness. The thickness of a given bed often varies. |
| BENCHMARK | A permanently fixed marker cited in surveying, such as a concrete block or steel plate, with an inscription of location and elevation. |
| BLOWOUT PREVENTERS | Heavy-duty equipment installed at the well head during drilling and completion operations, to prevent the possibility of a blowout, by sealing the annular space between the drill pipe and the casing. |
| BOREHOLE | The hole created by drilling of a well. |
| BOTTOM-HOLE PRESSURE | The pressure in a well, measured by an instrument that is lowered into the borehole on a wire line. It may be measured under flowing or shut-in conditions. |
| BTU | British Thermal Unit - A standard measure of heat content in a fuel. One Btu equals the amount of energy required to raise the temperature of one pound of water one degree Fahrenheit at or near 39.2 degrees Fahrenheit. |
| CASH DISTRIBUTIONS | Moneys paid by an oil and gas partnership to its partners according to the financial terms of the partnership agreement. |
| CASING | Large diameter steel pipe placed in a borehole to support the side or walls of the hole and to prevent them from caving in along with preventing the loss of drilling fluids from the borehole into rocks penetrated by the borehole and preventing rock fluids from flowing into the borehole. |
| CASING HEAD | The portion of the casing that protrudes above the surface. This area is where control valves and flow pipes are attached. |
| CEMENT | 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 the cement solidifies, it holds the casing in place, and provides support. |
| 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 pipelines. |
| CO2 INJECTION | A secondary recovery technique in which carbon dioxide (CO2) is injected into wells as part of a recovery program. This technique is being used primarily in old fields in order to recover additional oil. |
| 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. |
| COMPRESSOR STATION | Stations located along natural gas pipelines which compress gas to ensure an even flow. |
| CONVENTIONAL ENERGY SOURCES | Oil, gas, coal, and sometimes nuclear energy, in contrast to alternative energy sources such a solar, hydroelectric and geothermal power, synfuels, and biomass. |
| CNG | Compressed Natural Gas |
| CRUDE OIL | Liquid petroleum as it comes out of the ground. Crude oils range from very light (high in gasoline) to very heavy (high in residual oils). Sour crude is high in sulfur content whereas sweet crude is low in sulfur and therefore often more valuable. |
| CUBIC FOOT | The amount of natural gas required at room temperature at sea level to fill a volume of one cubic foot. |
| CUTTINGS | Chips and small rock fragments brought to the surface by the flow of drilling mud as it is circulated. Cuttings are often examined by geologists for oil content. |
| DOE - Department of Energy | A cabinet-level federal agency created in 1977 to replace the Federal Energy Administration. The DOE manages national energy policy, nuclear power and nuclear weapons programs, and the national energy research labs. |
| DOMESTIC PRODUCTION | Oil and gas produced in the United States as opposed to imported product from outside the U.S. |
| DOWNHOLE | Refers to equipment or mechanical operations that take place, down inside a borehole. |
| DRILL BIT | A tool with very tough steel or diamond teeth that grind rock into small chips during drilling. The bit drills a circular hole. |
| DRILL PIPE | A special grade of extra strong steel pipe threaded on both ends that comes in lengths of 30 feet to 40 feet and diameters of approximately 2 to 6 inches. |
| DRILLING PERMIT | Authorization from a regulatory agency to drill a well. |
| 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. |
| DRY HOLE | A well that either produces no oil or gas or yields too little to make it economically viable. |
| DUE DILIGENCE | In an offering of securities, certain parties who are responsible for the accuracy of the offering document, have an obligation to perform a "due diligence" examination of the issuer; issuer's counsel, underwriter of the security, brokerage firm handling the sale of the security. |
| EIA | Energy Information Administration - An agency within the U.S. Department of Energy that is a great source for energy related information. EIA provides energy data, forecasts and analyses. |
| ETHANOL | The two-carbon-atom alcohol present in grain and other renewable resources such as potatoes, sugar, or timber. Also called grain alcohol. |
| EXPLORATION | The search for oil and gas. Exploration operations include drilling of test wells, aerial surveys, geophysical surveys, geological studies, and core testing. |
| 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 an already developed field. |
| FAULT | A break in the continuity of stratified rocks. Faults are significant because they can form traps for oil and gas when the rock fractures. |
| FIELD | A geographical area under which one or more oil or gas reservoirs lie, all of them related to the same geological structure. |
| 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. |
| FLOODING | One of the methods of enhanced oil recovery commonly performed with water. |
| FORMATION | A layer of rock having characteristics that is recognizable and distinct. The rock layer is thus able to be mapped. The thickness can range from a few feet to hundreds of feet. |
| FOSSIL FUELS | Fuels that originate from the remains of living things. |
| FRACTURING | 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. Usually the frac-fluid carries small pellets or beads mixed in with it; the idea is for them to get caught in the fractures and prop them open. |
| FUTURE PRICES | Refers to the New York Mercantile Exchange (NYMEX) which introduced futures contracts for crude oil in 1985 and natural gas in 1990. |
| GATHERING | The process of collecting natural gas flowing from numerous wells and bringing it together into pooling areas where it is received into transmission pipelines. |
| GATHERING LINES | Pipelines that move natural gas or petroleum from wells to processing or transmission facilities. |
| GUN PERFORATION | A method of creating holes in a well casing downhole by exploding charges to propel steel projectiles through the casing wall. Such holes allow oil from the formation to enter the well. |
| HELD BY PRODUCTION | Refers to an oil and gas property under lease, in which the lease continues to be in force, as a result of production from the property. |
| HORIZONTAL DRILLING | The newer and developing technology that makes it possible to drill a well from the surface, vertically down to a certain level, and then to turn at a right angle, and continue drilling horizontally within a specified reservoir, or an interval of a reservoir. This method allows the well to access a much larger area of a formation than a vertical well. |
| HYDROCARBONS | A large class of organic compounds composed of hydrogen and carbon. Crude oil, natural gas, and natural gas condensate are all mixtures of various hydrocarbons. |
| INFILL DRILLING | Wells drilled to fill in between established producing wells to increase production. |
| INJECTION WELL | A well employed for the introduction into an underground stratum of water, gas or other fluid under pressure. Injection well are employed for the disposal of salt water produced with oil or other waste or to stimulate existing wells. |
| INTANGIBLE DRILLING COSTS | 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. |
| LANDMAN | The individual in an oil and gas company or agent who negotiates oil and gas leases with mineral owners. |
| 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. The common landowner's royalty is one-eighth of gross production. |
| LEASE (Oil and Gas) | A contract by which the owner of the mineral rights to a property conveys to another party, the exclusive right to explore for and develop various minerals on the property, during a specified period of time. |
| LOGS | Records made from data-gathering devices lowered into the wellbore. The devices transmit signals to the surface which are then recorded on film and used to make the record describing the formation's porosity, fluid saturation, and lithology. |
| 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. |
| NATURAL GAS | A naturally occurring mixture of hydrocarbon compounds and small amounts of various nonhydrocarbons existing in the gaseous phase or in solution with crude oil in natural underground reservoirs. |
| OPEC | Organization of Petroleum Exporting Countries- An international oil cartel originally formed in 1960 which includes Saudi Arabia, Kuwait, Iran, Iraq, Venezuela, Quatar, Libya, Indonesia, United Arab Emirates, Algeria, Nigeria, Ecuador, and Gabon. |
| OPERATOR | The entity responsible for the exploration, development, and production of an oil or gas well or lease. |
| OVERRIDING ROYALTY | 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 property. Responsibilities of the operator and other working-interest owners are listed in the joint operating agreement. |
| PAY ZONES | The term to describe the reservoir or reservoirs that are producing oil and gas within a given wellbore. |
| PERFORATING GUN | An instrument lowered at the end of a wireline into a cased well. It contains explosive charges that can be electronically detonated from the surface. The resulting explosion perforates the casing. |
| PERMEABILITY | A measure of the ease with which a fluid such as water or oil moves through a rock when the pores are connected. Along with porosity, it is one of the two most critical properties of the reservoir rock. To be commercially producible, oil or gas must be able to flow from the reservoir rock into the well. |
| PETROLEUM | Crude oil. Naturally occurring liquid hydrocarbons from which gasoline, kerosene, and countless other petrochemicals are produced. |
| PIPELINE | A tube or system of tubes used 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 leases to trunk lines; and trunk lines, extending from a producing area to refineries or terminals. |
| PLUG | A permanent plug, usually cement, set in a borehole to block the flow of fluids, to isolate sections of the well or to permanently plug a dry hole or depleted well. |
| POROSITY | The open space within a rock, similar to pores in a sponge. The higher the porosity, the more oil or gas that can be contained in the pore spaces, the better the quality of the reservoir rock. |
| PROBABLE RESERVES | Areas which are unproven but presumed capable of production because of favorable geological conditions, for instance, proximity to proven reserves in the same reservoir. |
| PROVED RESERVES | The quantity of oil and natural gas estimated to be recoverable from known fields under existing economic and operating conditions. |
| PROVED DEVELOPED RESERVES | Estimates of what is recoverable from existing wells with existing facilities from open, producing pay zones. |
| PROVED UNDEVELOPED RESERVES | Estimates of what is recoverable through new wells on undrilled acreage, deepening existing wells, or by secondary recovery methods. |
| RESERVOIR | Any rock having enough porosity and permeability to contain appreciable hydrocarbons. |
| ROYALTY | A payment to a landowner or mineral rights owner by a leaseholder on each unit of resources produced. |
| SEISMIC / 3-D | Seismic data that is acquired and processed to yield a three-dimensional picture of the subsurface. |
| SHUT IN WELL | A well which is producing or capable of producing but is not produced. Reasons for wells being shut in may be lack of pipeline access to market or economically unfavorable market prices. |
| SPACING | The distance between wells allowed by a regulatory body. Spacing is based on what is deemed to be the amount of acreage that can be efficiently and economically drained by a well. |
| SPOT MARKET | A short-term contract (typically 30 days) for the sale or purchase of a specified quantity of oil or gas at a specified price. |
| SPUD | The commencement of drilling operations. |
| STRUCTURE | Subsurface folds or fractures of strata that form a reservoir capable of holding oil or gas. |
| SURFACE RIGHTS | Surface ownership of a tract of land from which the mineral rights have been severed. |
| TERTIARY RECOVERY | Enhanced recovery methods for the production of oil or gas. |
| TOTAL DEPTH (TD) | The maximum depth of a borehole. |
| 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. |
| TUBING | Small diameter pipe, threaded at both ends, that is lowered into a completed well. Oil and gas are produced through a string of tubing. |
| WELLHEAD | The control equipment fitted to the top of the well, consisting of outlets, valves, blowout-prevention equipment, etc. |
| WORKING INTEREST | The right granted to the lessee of a property to explore for and to produce and own oil, gas or other minerals. The working interest owners bear the exploration, development and operating costs. |
| WORKOVER | To clean out or work on a well to restore or increase production. |
| WORKOVER RIG | The rig used to restore or increase a well's production. |