Industry Terminology

Artificial Lift

Any method used to raise oil to the surface after a well ceases to flow.

Assignment

The legal instrument whereby Oil and Gas Leases are assigned/conveyed

Assignee

The person to whom Oil and Gas Leases are assigned.

Assignor

Person who conveys the Oil and Gas Leases in an Assignment.

Authorization For Expenditure (AFE)

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.

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 pipe.

Blowout

An uncontrolled flow of gas, oil, or other well fluids from the well.

Borehole

The hole created by the drilling of a well.

Bottomhole

The lowest or deepest part of a well.

Brine

Water that has a quantity of salt, especially sodium chloride, dissolved in it; salt water.

BTU

British Thermal Unit. A unit of heat energy, used to describe the amount of heat that can be generated by burning oil or gas.

Casing

Steel pipe placed in an oil or gas well to prevent the wall of the hole from caving in, to prevent movement of fluids from one formation to another and to aid in well control.

Cementing

The application of a liquid slurry of cement and water to various points inside or outside the casing.

Completion

After the drilling of a successful well, the “completion” includes all the work required to make the well ready for commercial production.

Conventional crude oil

Petroleum found in liquid form, flowing naturally or capable of being pumped without further processing or dilution. A naturally occurring mixture of liquid hydrocarbons as it comes out of the ground (before or after any dissolved gas has been separated from it, but prior to any process of distilling or refining). Greenish crude is usually high in paraffin (wax) content; blackish oil is more likely to be asphaltic. Different types of source rock generate different types of crude oils.

Conveyance

Legal term for transferring the title of a property from one party to another, typically by deed (or bill of sale, etc.).

Deed

A written legal document by which the title to a property is transferred from one party to another.

Depletion

The value of a naturally occurring mineral deposit is a function of (1) the market value of the mineral, and (2) the concentration of the mineral in the mineral deposit.

Development well

A well drilled within the proved area of an oil or gas reservoir to the depth of a stratigraphic horizon known to be productive; a well drilled in a proven field for the purpose of completing the desired spacing pattern of production.

Discovery well

An exploratory well that encounters a previously untapped oil or gas deposit.

Division Order

A schedule of owners and their decimal share in revenues of the well derived from the sale of oil or gas.

Dry hole

Any exploratory or development well that does not find commercial quantities of hydrocarbons.

Established reserves

The portion of the discovered resource base that is estimated to be recoverable using known technology under present and anticipated economic conditions. Includes proved plus a portion of probable (usually 50%).

EUR

Expected Ultimate Reserves. An estimate of the cumulative volume of reserves that will ultimately be recovered over the life of a well, field, or property.

Exploratory well

A well into an area where petroleum has not been previously found or one targeted for formations above or below known reservoirs.

Farmout Agreement (FOA)

An arrangement (technically, a tax partnership) in which the responsibility for exploration and development for a specific work program is shifted (by assignment) from the working interest owner to another party.

Field

The surface area above one or more underground petroleum pools sharing the same or related infrastructure.

Flow line

Pipe, usually buried, through which oil or gas travels from the well to a processing facility.

Flaring/Venting

The controlled burning (flare) or release (vent) of natural gas that can't be processed for sale or use because of technical or economic reasons.

Fracturing

A procedure undertaken to attempt to increase the flow of oil or gas from a well. A fluid (usually crude oil, diesel oil, or water) is pumped into the reservoir, with such great force that the reservoir rock is physically broken and split open.

Futures Prices

Refers to the New York Mercantile Exchange (NYMEX) which introduced futures contracts for crude oil in 1985 and natural gas in 1990. A futures contract is an obligation to buy or sell a specified quantity at a specified price in some future month within the next 18 months.

Grantor

A person who grants or conveys lands, minerals, etc.

Grantee

The person receiving the grant of lands, minerals, etc.

Heavy crude oil

Oil with a gravity below 28 degrees API.

Horizontal Drilling

The newer and developing technology 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.

Infill Drilling

Wells drilled between established producing wells on a lease in order to increase production from the reservoir.

Injection well

It Is well-used for injecting fluids (air, steam, water, natural gas, gas liquids, surfactants, alkalizes, polymers, etc.) into an underground formation for the purpose of increasing recovery efficiency.

Intangible Drilling Costs (IDC)

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.

Joint Interest Billing (JIB)

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.

Joint Operating Agreement (JOA)

An agreement among working interest owners describing how a well is to be operated.

Kelly (Kelly Bushing)

The heavy square or hexagonal steel member suspended from the swivel through the rotary table and connected to the topmost joint of drill pipe to turn the drill stem as the rotary table turns.

Landman

The person who secures leases, handles damages for oil and gas companies who are drilling new wells or laying pipelines and negotiates and prepares related agreements, e.g., JOA's FOA's, assignments, conveyances, etc.

Lease (Oil & Gas)

Legal document giving an operator the right to drill for or produce oil or gas; also, the land on which a lease has been obtained. 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 minerals on the property, during a specified period of time. The agreement outlining the basic terms of developing lands or minerals such as royalty to be paid, length of time, and description of lands.

Lessee

The person who purchases an Oil, Gas, and Mineral Lease.

Lessor

The party who grants an Oil, Gas, and Mineral Lease.

Light crude oil

Liquid petroleum which has a low density and flows freely at room temperature.

Medium Crude Oil

Liquid petroleum with a density between that of light and heavy crude oil.

Methane

The principal constituent of natural gas; the simplest hydrocarbon molecule, containing one carbon atom and four hydrogen atoms, CH4. It is a colorless, odorless gas which generates about 1,012 Btu of heat energy per 1,000 cubic feet of gas (MCF), when burned.

Mineral Owner

Generally, the Lessor, an individual that grants an Oil, Gas, and Mineral Lease.

Natural Gas

A mixture of hydrocarbon compounds and small amounts of various non-hydrocarbons (such as carbon dioxide, helium, hydrogen sulfide, and nitrogen) existing in the gaseous phase or in solution with crude oil in natural underground reservoirs.

Natural gas liquids

Liquids obtained during natural gas production, including ethane, propane, butanes, and condensate.

Natural Gas Reserves

Gas deposits that are estimated by scientists to be economically recoverable given current drilling technology and gas prices.

Net Revenue Interest (NRI)

An owner's interest in the revenues of a well.

Oil Sands

A deposit of sand saturated with bitumen.

Operator

The company or individual responsible for managing an exploration, development or production operation.

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 oilmen use the millidarcy because most of the rocks they come in contact with are not very permeable.

Petroleum

A naturally occurring mixture composed predominantly of hydrocarbons in the gaseous, liquid or solid phase.

Pool

A natural underground reservoir containing an accumulation of petroleum.

Porosity

The volume of spaces within rock that might contain oil and gas (like the amount of water a sponge can hold); the open or void space within rock -- usually expressed as a percentage of the total rock volume. Thus, porosity measures the capacity of the rock to hold natural gas, crude oil or water.

Primary Recovery

The production of oil and gas from reservoirs using the natural energy available in the reservoirs and pumping techniques.

Royalty

The owner's share of production or revenues retained by government or freehold mineral rights holders. In natural gas operations, the royalty is usually based on a percentage of the total production.

Salt Water Disposal Well (SWD)

A well into which oilfield salt water is disposed.

Sandstone

A compacted sedimentary rock composed mainly of quartz or feldspar; a common rock in which oil, natural gas and/or water accumulate.

Secondary Recovery

The extraction of additional crude oil, natural gas and related substances from reservoirs through pressure maintenance techniques such as water flooding and gas injection.

Sedimentary basin

A geographical area, such as the Western Canada Sedimentary Basin, in which much of the rock is sedimentary (as opposed to igneous or metamorphic) and therefore likely to contain hydrocarbons.

Seismic studies

Refers to studies done to gather and record patterns of induced shock wave reflections from underground layers of rock which are used to create detailed models of the underlying geological structure.

Shale

Rock formed from clay.

Solution Gas

Natural gas that is found with crude oil in underground reservoirs. When the oil comes to the surface, the gas expands and comes out of the solution.

Sour Gas

Natural gas at the wellhead may contain hydrogen sulfide (H2S), a toxic compound. Natural gas that contains more than 1 percent of H2S is called sour gas. About 30 percent of Canada's total natural gas production is sour, most of it found in Alberta and northeast British Columbia.

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.

Stakeholders

Industry activities often affect surrounding areas and populations. People with an interest in these activities are considered stakeholders. They may include nearby landowners, municipalities, Aboriginal communities, recreational land users, other industries, environmental groups, governments and regulators.

Steam Injection

An improved recovery technique in which steam is injected into a reservoir to reduce the viscosity of the crude oil.

Surface Rights

Surface ownership of a tract of land from which the mineral rights have been severed.

Sweet oil and gas

Petroleum containing little or no hydrogen sulfide.

Synthetic Crude Oil

A mixture of hydrocarbons, similar to crude oil, derived by upgrading bitumen from oil sands.

Tertiary Recovery

The third major phase of crude oil recovery involves using more sophisticated techniques, such as steam flooding or injection of chemicals, to increase recovery.

Tight Gas

Gas with very low flow rates. Found in sedimentary layers of rock that are cemented together so tight that it "greatly hinders" the extraction. Getting tight gas out usually requires enhanced technology like "hydraulic fracturing" where fluid is pumped into the ground to make it more permeable. The National Energy Board estimates Canada could have between 89 and 1500 trillion cubic feet (tcf) of tight gas, compared to total gas estimates (excluding tight gas) of 733 tcf.

Traps

A mass of porous, permeable rock - sealed on top and both sides by non-porous, impermeable rock - that halts the migration of oil and gas, causing them to accumulate.

Ultimate potential

An estimate of recoverable reserves that will have been produced by the time all exploration and development activity is completed; includes production-to-date, remaining reserves, development of existing pools and new discoveries.

Undiscovered recoverable resources

Those resources estimated to be recoverable from accumulations believed to exist based on geological and geophysical evidence but not yet verified by drilling, testing or production.

Upgrading

The process of converting heavy oil or bitumen into synthetic crude oil.

Viscosity

The resistance to flow, or "stickiness" or a fluid.

Wildcat

A well drilled in an area where no oil or gas production exists.