Oil & Gas Glossary : Back to Resources
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from the following oil and gas and related investment terms for
Deductions - Tax items which may be subtracted
from gross income to arrive at taxable income in
Federal income tax computations. ^ top...
Deed - A written document by which the title to a property is transferred
from one party (the grantor) to another (the grantee). ^ top...
port - An offshore marine terminal designed to accommodate
large vessels such as VLCCs and tankers, connected to the shore
by submerged pipelines. ^ top...
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. ^ top...
Deliverability - A well's tested ability to produce. ^ top...
restoration of - In federal income taxation, the adding
back to income of depletion allowance taken on minerals not produced. ^ top...
Development well -
A well drilled in an already
discovered oil or gas field. ^ top...
oil - A petroleum fraction composed primarily of aliphatic
(linear of unbranched) hydrocarbons. Diesel oil is slightly heavier
than kerosene. ^ top...
sticking - A condition in which a section
of drillpipe becomes stuck in deposits on the wall of the borehole. ^ top...
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. ^ top...
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. ^ top...
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. ^ top...
Distributor - A wholesaler of gasoline and other petroleum products;
also know as a jobber. Distributors of natural gas are almost always
regulated utility companies. ^ top...
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). ^ top...
production - Oil and gas produced in the United States
as opposed to imported product. ^ top...
Downhole - Refers to equipment or operations that take place down
inside a borehole. ^ top...
Downstream - All operations taking place after crude oil is produced,
such as transportation, refining, and marketing. ^ top...
bit - The part of the drilling tool that cuts through rock
strata. ^ top...
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. ^ top...
Drilling - The act of boring a hole through which oil or gas may
be produced if encountered in commercial quantities. ^ top...
break - A sudden increase in the rate of drilling. ^ top...
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. ^ top...
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. ^ top...
platform - An offshore structure with legs anchored to
the sea bottom that supports the drilling of up to 35 wells from
one location. ^ top...
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. ^ top...
test - A test through the drill pipe prior to completion
to determine if oil or gas is present in a formation. ^ top...
hole - A well that either produces no oil or gas or yields
too little to make it economic to produce. ^ top...
natural gas - Natural gas containing few or no natural gas
liquids (liquid petroleum mixed with gas). ^ top...
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. ^ top...
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. ^ top...
interest - An interest in oil and gas in the ground. It entitles
the owner to a deduction
from gross income derived from
production of that oil and gas as specified in Federal income
tax regulations. ^ top...
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. ^ top...
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. ^ top...
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. ^ top...
(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. ^ top...
Exploration - The search for oil and gas. Exploration operations
include: aerial surveys, geophysical surveys, geological studies,
core testing and the drilling of test wells. ^ top...
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. ^ top...
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. ^ top...
plant - A plant for the extraction of the liquid constituents
in casinghead gas or wet gas. ^ top...
in - When one company drills wells or performs other activity
on another company's lease in
order to earn an interest in
or acquire that lease. ^ top...
out agreement - An arrangement in which the responsibility
of exploration and development is shifted (by assignment) from the
working interest owner to another party. ^ top...
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. ^ top...
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. ^ top...
trap - A geological formation in which oil or gas in a porous
section of rock is sealed off by a displaced, nonporous layer. ^ top...
lands - Privately owned, nonpublic lands. ^ top...
of pay - The thickness of the pay zone penetrated in a well. ^ top...
Field - A geographical area under which one or more oil or gas
reservoirs lie, all of them related to the same geological structure. ^ top...
cake - A plastic-like coating that builds up inside the
borehole. Such buildup can cause serious drilling problems, including
sticking of the drillpipe. ^ top...
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. ^ top...
tools - Special instruments equipped with the means for
recovering objects lost while drilling the well. ^ top...
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. ^ top...
up - To complete the drilling of a well. ^ top...
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. ^ top...
Flooding - One of the methods of enhanced oil recovery. Water flooding
or gas flooding might be considered secondary recovery methods. ^ top...
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). ^ top...
well - A well that produces through natural reservoir pressure
and does not require pumping. ^ top...
Formation - A geological term that describes a succession of strata
similar enough to form a distinctive geological unit useful for
mapping or description. ^ top...
fuels - Fuels that originate from the remains of living
things, such as coal, oil, natural gas, and peat. ^ top...
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. ^ top...
costs - Costs that are paid out of initial investment
in a venture, first, before the venture activities actually begin. ^ top...
oil - See Heating
oil. ^ top...
prices - Refers to the New York Mercantile Exchange (NYMEX)
which introduced futures contracts for crude oil in 1985 and natural
gas in 1990. ^ top...
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. ^ top...
cap - The gas that exists in a free state above the oil in
a reservoir. ^ top...
condensate - Liquid hydrocarbons present in casinghead gas
that condense when brought to the surface. ^ top...
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. ^ top...
mud - Drilling mud permeated with bubbles of gas from downhole.
The circulation of such mud can be severely impaired, seriously
affecting drilling operations. ^ top...
ratio - The number of cubic feet of natural gas produced
along with a barrel of oil. ^ top...
Gasoline - A volatile, inflammable, liquid hydrocarbon mixture. ^ top...
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. ^ top...
Geophones - The sound-detecting instruments used to measure sound
waves created by explosions set off during seismic exploration work. ^ top...
Geophysicist - A geophysicist applies the principles of physics
to the understanding of geology. ^ top...
energy - Energy produced from subterranean heat. ^ top...
A geophysical device that has been particularly useful in
finding salt domes. Actually, it is a weight on a spring.
spring gets longer in high-gravity
areas and shorter in areas of gravity-minus. Magnetism helps
the oil geologist understand its
measurements. ^ top...
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.). ^ top...
Groundwater - The water in underground rock strata that supplies
wells and springs. ^ top...
payments - Payments by a partnership to one or more
of its partners for services rendered. ^ top...
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. ^ top...
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. ^ top...