3-D siesmic - 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 redefine and identify known as well as unknown structures. Many times these structures contain traps that hold oil and gas yet to be discovered.
4-D Seismic - The newest advances in seismic technology which now takes into consideration a 4th dimension; which is time. With 4-D seismic geologists are now able to monitor the movement and the mobility of oil as it is extracted in the production process.
Abstract of title - A chronological history of the ownership of a tract of land.
Acidizing a well - Increasing the flow of oil from a well by pumping hydrochloric acid into the well under high pressure. This reopens and enlarges the pores in the oil-bearing limestone formation.
Acre - The most common 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.
Acre-foot - In the U.S., 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.
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.
Annular space - The space between a well's casing and the wall of the borehole.
Annulus of a well - The space between the surface casing and the inner, producing well-bore casing.
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.
API - American Petroleum Institute, a petroleum industry association that sets standards for oil field equipment and operations.
API gravity - The gravity (weight per unit of volume) of crude oil expressed in degrees according to an American Petroleum Institute recommended system. The higher the API gravity, the higher the crude. High-gravity crudes are generally considered more valuable.
Aquifer - An underground water reservoir contained between layers of rock, sand or gravel.
Arab oil embargo of 1973-74 - During the Arab-Israeli conflict in October 1973, Arab oil producers cut off shipments to the Unites States and the Netherlands in retaliation for their support of Israel. At the same time, they cut down production. The shortage was felt by all oil-importing nations, with world prices moving sharply higher. Price and allocation controls suppressed some of this increase in the United States, but gasoline lines were still prevalent.
Asphalt - A solid hydrocarbon which may be deposited within the reservoir rock, in well equipment, or in surface lines and tanks.
Associate gas - The gas that occurs with oil either as free gas or in solution. When occurring alone, it is referred to as unassociated gas.
Back-in - A type of interest in a well or property that becomes effective at a specified time in the future, or on the occurrence of a specified future event.
Barrel Standard - Unit of measurement in the petroleum industry. One barrel of oil equals 42 U.S. gallons.
Basement rock - Igneous or metamorphic rock lying below sedimentary formations in the earth's crust. Basement rock does not contain petroleum deposits.
Basin - A depression in the earth's crust in which sedimentary materials have accumulated. Such a basin may contain oil or gas fields.
BCF (billion cubic feet) - The cubic foot is a standard unit of measure for gas at atmospheric pressure.
Behind pipe - If a well drills through several pay zones and is completed in the deepest productive reservoir, casing is set all the way down to the producing zone. Viewed from (a perspective) inside the borehole, reserves in the shallower pay zones up the hole are behind the casing.
Biomass - Any organic material, such as wood, plants, and organic wastes, that can be turned into fuel.
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.
Blowout - A sudden escape of oil or gas from a well, caused by uncontrolled high pressure. It usually occurs during drilling.
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.
Blue Sky Law - State regulations governing an offering to sell securities within the state.
Bonus Money - paid to a landowner or other holder of mineral rights by the lessee for the execution of an oil and gas lease in addition to any rental or royalty obligations specified in the lease.
BOP (blowout preventer) - An assembly of heavy-duty valves attached to the top of a well casing to control pressure.
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.
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 rod on a pumping unit.
BS&W - (basic sediment and water) Material pumped up with oil and gas which must be separated out.
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.
Butane - A hydrocarbon associated with petroleum. It is gaseous at ordinary atmospheric conditions.
Cable drilling - A method of well-drilling that employs a reciprocating, rather than a rotary, motion to penetrate rock. In the nineteenth century, until Drake's time, power was supplied by men. Drake used a steam-powered cable rig. Today, cable rigs are powered by gasoline or diesel engines.
CAOF (calculated absolute open flow) - A figure representing a gas well's theoretical producing capability per day.
Capital Funds - Monies invested in a business for use in conducting the operations of the business.
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.
Carried Interest - A fractional working interest in an oil and gas lease that comes about through an arrangement between co-owners of a working interest.
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 - The portion of the casing that protrudes above the surface and to which control valves and flow pipes are attached.
Casinghead gas - Natural gas produced from an oil well, as opposed to gas produced from a gas well.
Casinghead gasoline - Highly volatile, water-white liquid hydrocarbons separated from casinghead gas.
Cavings Rock - Fagments that break off from the walls of a borehole and fall into the borehole during drilling operations.
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 (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.
Choke - An orifice installed in a pipeline at the well surface to control the rate of flow.
Christmas tree - An assembly of valves, gauges, and chokes mounted on a well casinghead to control production and the flow of oil to the pipelines.
Circulate - To pump drilling fluid into the borehole through the drillpipe and back up the annulus.
Clean oil - Crude oil containing less than 1 percent sediment and water; "pipeline oil", oil clean enough to send through a pipeline.
CO2 injection - A secondary recovery technique in which carbon dioxide (CO2) is injected into wells as part of a miscible recovery program.
Coal gasification - The chemical conversion of coal to synthetic gaseous fuel.
Coal liquefaction - The chemical conversion of coal to synthetic liquid fuel.
Cogeneration - The combined production of electrical or mechanical energy and usable heat energy.
Commissions - Payments to qualified agents of the sponsor of a limited partnership, for selling interests in it to investors. Commissions may take the form of a percent of partnership interests sold, an oil and gas interest, or stock in the sponsor's company.
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.
Condensate - Liquid hydrocarbons separated from natural gas, usually by cooling.
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.
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.
Conveyance - Legal term for transferring the title of a property from one party to another, typically by deed.
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.
Cracking - The process of breaking down the larger, heavier and more complex hydrocarbon molecules into simpler and lighter molecules, thus increasing the gasoline yield from crude oil. Cracking is done by application of heat and pressure, and in modern time the use of a catalytic agent.
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. Sweet crude is low in sulfur and therefore often more valuable.
Crude oil equivalent - A measure of energy content that converts units of different kinds of energy into the energy equivalent of barrels of oil.
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 content.
Deed - A written document by which the title to a property is transferred from one party (the grantor) to another (the grantee).
Deepwater port - An offshore marine terminal designed to accommodate large vessels such as VLCCs and tankers, connected to the shore by submerged pipelines.
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.
Deliverability - A well's tested ability to produce.
Depletion, restoration of - In federal income taxation, the adding back to income of depletion allowance taken on minerals not produced.
Development - well A well drilled in an already discovered oil or gas field.
Diesel oil - A petroleum fraction composed primarily of aliphatic (linear of unbranched) hydrocarbons. Diesel oil is slightly heavier than kerosene.
Differential-pressure sticking - A condition in which a section of drillpipe becomes stuck in deposits on the wall of the borehole.
Directional drilling - Drilling at an angle, instead of on the perpendicular, by using a whipstock 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.
Distillate - Liquid hydrocarbons, usually colorless and of high API gravity, recovered from wet gas by a separator that condenses the liquid out of the gas. The present term is natural gas.
Distillate fuel oil - A term subject to a variety of definitions. Sometimes the definition is based on the method of production, but other definitions are based on boiling range, viscosity, or use.
Distributor - A wholesaler of gasoline and other petroleum products; also know as a jobber. Distributors of natural gas are almost always regulated utility companies.
Division Order - 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).
Domestic production - Oil and gas produced in the United States as opposed to imported product.
Downhole - Refers to equipment or operations that take place down inside a borehole.
Downstream - All operations taking place after crude oil is produced, such as transportation, refining, and marketing.
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 sting is rotated to drill the hole and also serves as a conduit for drilling mud.
Drilling - The act of boring a hole through which oil or gas may be produced if encountered in commercial quantities.
Drilling break - A sudden increase in the rate of drilling.
Drilling fund - The generic term employed to describe a variety of organizations established to attract venture capital to oil and gas exploration and development. Typically the fund is established as a joint venture or limited partnership.
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 well bore.
Drilling platform - An offshore structure with legs anchored to the sea bottom that supports the drilling of up to 35 wells from one location.
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.
Drillstem test - A test through the drill pipe prior to completion to determine if oil or gas is present in a formation.
Dry hole - A well that either produces no oil or gas or yields too little to make it economic to produce.
Dry natural gas - Natural gas containing few or no natural gas liquids (liquid petroleum mixed with gas).
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.
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. Due diligence refers to the degree of prudence that might properly be expected from a reasonable man, on the basis of the significant facts which relate to a specific case.
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 every level, and geophysicists use them to assay whether petroleum is present in a formation.
Enhanced oil recovery - Injection of water, steam, gases or chemicals into underground reservoirs to cause oil to flow toward producing wells, permitting more recovery than would have been possible from natural pressure or pumping alone.
Ethanol - The two-carbon-atom alcohol present in the greatest proportion upon fermentation of grain and other renewable resources such as potatoes, sugar, or timber. Also called grain alcohol.
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: aerial surveys, geophysical surveys, geological 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 outside of the well casing to seal off formations or 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.
Extraction plant - A plant for the extraction of the liquid constituents in casinghead gas or wet gas.
Farm out agreement - An arrangement in which the responsibility of exploration and development is shifted (by assignment) from the working interest owner to another party.
Farmer's oil - An expression that refers to the landowner's share of oil from a well drilled on his property. This royalty is traditionally one-eighth of the produced oil free of any expense to the landowner.
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 noncommunicating sections, they help produce oil accumulations, and they form traps on their own.
Fault trap - A geological formation in which oil or gas in a porous section of rock is sealed off by a displaced, nonporous layer.
Fee lands - Privately owned, nonpublic lands.
Feet of pay - The thickness of the pay zone penetrated in a well.
Field - A geographical area under which one or more oil or gas reservoirs lie, all of them related to the same geological structure.
Filter cake - A plastic-like coating that builds up inside the borehole. Such buildup can cause serious drilling problems, including sticking of the drillpipe.
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.
Fishing tools - Special instruments equipped with the means for recovering objects lost while drilling the well.
Five-spot waterflood 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.
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.
Flooding - One of the methods of enhanced oil recovery. Water flooding or gas flooding might be considered secondary recovery methods.
Flow Through concept - In ventures structured as partnerships (or S corporations), certain items of 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.
Formation - A geological term that describes a succession of strata similar enough to form a distinctive geological unit useful for mapping or description.
Fossil fuels - Fuels that originate from the remains of living things, such as coal, oil, natural gas, and peat.
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. Proppants such as sand are injected with the liquid to hold the fractures open.
Front-end costs - Costs that are paid out of initial investment in a venture, first, before the venture activities actually begin.
Fuel oil - See Heating oil.
Future prices - Refers to the New York Mercantile Exchange (NYMEX) which introduced futures contracts for crude oil in 1985 and natural gas in 1990.
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 cap - The gas that exists in a free state above the oil in a reservoir.
Gas condensate - Liquid hydrocarbons present in casinghead gas that condense when brought to the surface.
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 reservoir mixes with fluid, expands it, and lifts it to the surface.
Gas-cut mud - Drilling mud permeated with bubbles of gas from downhole. The circulation of such mud can be severely impaired, seriously affecting drilling operations.
Gas-oil ratio - The number of cubic feet of natural gas produced along with a barrel of oil.
Gasoline - A volatile, inflammable, liquid hydrocarbon mixture.
General partner - In a limited partnership, the general partner is responsible for managing the partnership's activities (and is commonly the party that put the deal together). His liability to the partnership's creditors is limited.
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.
Geothermal energy - Energy produced from subterranean heat.
Gravimeter - A geophysical device that has been particularly useful in finding salt domes. Actually, it is a weight on a spring. The spring gets longer in high-gravity areas and shorter in areas of gravity-minus. Magnetism helps the oil geologist understand its measurements
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.).
Groundwater - The water in underground rock strata that supplies wells and springs.
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 downhole by exploding charges to propel steel projectiles through the casing wall. Such holes allow oil from the formation to enter the well.
Gusher - A well drilled into a formation in which the crude is under such high pressure that at first it spurts out of the wellhead like a geyser. Gushers are rare today owning to improved drilling technology, the use of drilling mud to control downhole pressure, and oilmen's recognition of their wastefulness.
