Oil and Gas Terms
American Petroleum Institute (API): The API is the trade organization for the oil and gas
industry, which establishes standards governing industry operations, safety and the
manufacturing of equipment among other things. Visit API at www.api.org.
Anticline: An arch of stratified rock layers that may form a trap for hydrocarbons.
Aquifer: An underground layer of water-bearing permeable rock or unconsolidated materials
(gravel, sand, silt or clay) from which groundwater can be extracted using a water well.
Barrel of oil equivalent (BOE): A measure used to aggregate oil and gas resources or
production. One BOE equals approximately 6,000 cubic feet of natural gas, and the unit is used
by oil and gas companies in their financial statements as a way of combining oil and natural gas
reserves and production into a single measure
Basin: A large depression in the Earth’s surface in which sediments accumulate usually by way
of some water course.
BBL: An oil barrel, abbreviated as BBL, is a volume unit used in reference to crude oil, bitumen,
condensate, or natural gas liquids. In the United States and Canada, one BBL equals 42 US
gallons.
BCF: One billion cubic feet of natural gas.
Bitumen: A highly viscous or semi-solid form of crude oil that must be heated or combined with
lighter hydrocarbons to be produced.
BOED: Barrels of oil equivalent per day.
Borehole: A hole drilled in the earth in furtherance of oil and gas exploration.
British thermal unit (BTU): The heat required to raise the temperature of a one-pound mass of
water by one degree Fahrenheit.
CAPEX: Capital expenditures.
Carbon capture and storage (CCS): A process by which carbon dioxide emissions are captured
and removed from the atmosphere and then stored, usually by way of an injection into a secure
underground geological formation.
Carbon intensity: The quantity of greenhouse gas emissions associated with producing a
substance. For purposes of oil and gas, carbon intensity is commonly expressed in units of
Tonnes CO2e per product volume (e.g., Tonnes CO2e/bbl or Tonnes CO2e/MCF).
Casing: A thick-walled steel pipe run in wells to isolate formation fluids (such as fresh water)
and to prevent borehole collapse.
Casinghead: An adapter (metal flange) installed onto the top of the first casing string and forms
part of the wellhead system for the well. This is the primary interface for the surface pressure
control equipment (e.g., blowout preventer) during drilling or the wellhead after completion.
Coal bed methane (CBM): A natural gas extracted from coal beds.
Completion: The process after drilling by which a well is prepared to produce natural gas or oil.
Among other things, completion involves installing a wellhead and often includes hydraulic
fracturing.
Compound annual growth rate (CAGR): The average year-over-year growth rate of a metric
over a specific period of time.
Condensate: A mixture of hydrocarbons that are in a gaseous state under reservoir conditions
and become a liquid as the temperature and pressure is reduced.
Conventional resources: Discrete accumulations of hydrocarbons contained in rocks with
relatively high matrix permeability, which normally have relatively high recovery factors.
Directional drilling: The practice of drilling non-vertical wells. Directional drilling can allow
access to otherwise inaccessible oil and gas fields (e.g., under a lake, under a town) or allow
multiple wellheads to be grouped together at one surface location.
Dry gas: Natural gas with no liquid; almost pure methane.
Dry hole: A well incapable of economically producing oil or gas.
E&P: Exploration and Production.
Exploratory well: A well drilled to find a new field or a new reservoir in a field previously
found to be productive of oil or gas in another reservoir
Fracking: See “Hydraulic fracturing.”
Fracking fluid: A mixture of water, sand, and chemicals used in hydraulic fracturing.
Horizontal drilling: The practice of drilling horizontal wells. A type of directional drilling.
Hydraulic fracturing: The fracturing of rock by a pressurized liquid. Typically, fracking fluid
is injected at high pressure into a wellbore to create small fractures, which allow fluids like
natural gas, petroleum, uranium-bearing solution, and brine water to migrate to the well. Grains
of proppant (sand or aluminium oxide) hold these fractures open.
Joint operating agreement: An agreement among working interest owners about how a well is
to be operated.
Landman: An individual who negotiates oil and gas leases with mineral owners.
MBD: One-thousand barrels per day.
MBOE: One-thousand barrels of oil equivalent.
MCF: One-thousand standard cubic feet of natural gas.
Methane hydrates: A solid compound in which a large amount of methane is trapped within a
crystal structure of water, forming a solid similar to ice. Methane hydrates are found in sea-floor
sediments and the arctic permafrost.
Mineral owner: The entity who owns the minerals under a tract of land (but not the surface) and
the right to extract those minerals.
MMBBL: One-million barrels of crude oil, bitumen, condensate, or natural gas liquids.
MMBOE: One-million million barrels of oil equivalent.
MMBTU: One-million British thermal units.
MMCF: One-million standard cubic feet of natural gas.
Natural gas: A hydrocarbon gas mixture consisting primarily of methane and found in porous
rock formations.
Natural gas liquids (NGLs): Hydrocarbons composed exclusively of carbon and hydrogen.
NGLs are separated from natural gas in a gas-processing plant, and include ethane, propane,
butane, isobutane, and pentane.
Non-operating interest: A working interest owner who is not the operator.
Oil sands: A geologic formation comprised of sand, clay, water, and bitumen, which is a highly
viscous form of crude oil. Large oil sands are found in Canada, Kazakhstan, and Russia.
Operating interest: A working interest owner who is also the operator.
Operator: The entity responsible for managing a drilling project.
Permeability: The measure of the ability of a material (such as rocks) to transmit fluids. High
permeability means fluid passes through the rock easily.
Play: A group of oil or gas fields or prospects that have the same geologic elements.
Porosity: The measure of the ability of a material (such as rocks) to store fluids.
Possible reserves: Reserves that are less certain to be recovered than probable reserves.
Probable reserves: Reserves that are less certain to be recovered than proved reserves.
Produced water: Water produced from oil or natural gas exploration or development activities.
Productive well: A well that is capable of producing oil or gas in sufficient quantities to justify
commercial exploitation.
Proppant: A solid material, typically sand or aluminium oxide, added to fracking fluid in order
to keep an induced hydraulic fracture open.
Proved developed reserves: Proved reserves that can be expected to be recovered using existing
wells, equipment, and operating methods.
Proved reserves: The amount of oil and gas estimated with reasonable certainty to be
economically producible.
Reserves: An estimate of the amount of technologically and economically recoverable oil or gas.
Reservoir: A porous and permeable underground formation that contains producible oil or gas,
is confined by impermeable rock or water barriers, and is separate from other reservoirs.
Shale gas: Natural gas trapped in shale formations, and accessible by hydraulic fracturing and
horizontal drilling.
Shut-in royalty: A payment to royalty owners in lieu of actual production, under the terms of an
oil and gas lease, when a well is shut-in due to lack of a market or a lack of facilities.
Sour gas: Natural gas that contains significant amounts of hydrogen sulfide.
Surface owner: A landowner who owns no minerals under his land.
Sweet gas: Natural gas that does not contain significant amounts of hydrogen sulfide.
TCF: One-trillion cubic feet of natural gas.
Tight gas: Natural gas produced from reservoir rocks with such low permeability that massive
hydraulic fracturing is necessary to produce the well at economic rates. Although shales have
low permeability and low effective porosity, shale gas is usually considered separate from tight
gas, which is contained most commonly in sandstone, but sometimes in limestone.
Unconventional reservoirs: Hydrocarbon reservoirs that have low permeability and porosity
and are difficult to produce. Examples include tight gas, coalbed methane (CBM), shale gas,
shale oil, heavy oil/tar sands, and methane hydrates.
Undeveloped acreage:
Unleased mineral interest: A mineral interest not subject to a lease.
Wellbore: A hole that is drilled to aid in the exploration and recovery of natural resources. A
wellbore is the actual hole that forms the well.
Wellhead: The component at the surface of an oil or gas well that provides the interface for the
drilling and production equipment.
Wet gas: Natural gas with a small amount of liquid, such as ethane and butane. See “Natural gas
liquids (NGLs).”
Working interest: The right to explore for, produce, and own oil, gas, or other minerals.