Oil & Gas Measurement – How Oil and Gas is Measured *Your information will not be shared with others. Oil & Gas Measurement You’ve got to measure oil and gas in order to get paid for it. Both the Operator and the royalty owner have a vested interest in accurate oil and gas measurement from the lease. Accurate Oil and Gas Measurement Benefits Everyone On a typical day $500 million of oil and gas is produced from America’s oil and gas wells. Assuming an average royalty percentage of 17%, that’s $85 million paid daily to royalty owners. Remember the pictures of the old wooden oil derricks gushing black gold into the sky? Or, gas flares burning in the night? Well, things have changed. Regardless of the price fluctuations, every MCF of gas or BBL of oil is valuable and worth measuring and accounting for. Today’s technology, some very simple, is capable of measuring hydrocarbon production quite accurately. We’ll look here at how crude oil and natural gas are measured. More detailed articles titled Natural Gas Measurement and Crude Oil Measurement are coming soon.

Oil and Gas Measurement in the Field Produced crude oil and natural gas (hydrocarbons) are measured prior to leaving the well site , as required by law. The gross volume from which your royalty share is calculated is based on this oil and gas measurement. Customary industry standard is that the Operator verifies the measurements of the First Purchaser through a check meter for gas, or by re-checking the levels in oil storage tanks for oil. Crude Oil Measurement The modifier “crude” is used to denote oil that comes from the earth in its raw form, which generally means it contains some saltwater and possibly a few other impurities – thus the term crude oil. The unit of measurement for crude oil as reported on your royalty statement is the BBL. A BBL is 42 U.S. gallons. The first step toward accurate crude oil measurement is to remove any free water and sediment. This is done in one of several types of surface equipment such as a Free Water Knockout , a Gun Barrel Separator , or a Three Phase Separator. Following this step the oil is now isolated and can be measured. Crude oil is measured in one of two ways, depending on the aggregate volume available for measurement.

For smaller volumes in the range of 1-100 BOPD let’s say, the oil generally flows into an atmospheric storage tank and is held there until sufficient quantity is accumulated to make a “run”. A run is simply the act of removing the oil from the lease location, and taking it offsite for further treatment. When a run is ready to be made, the first step is to do a shake-out test. A sample of the oil is taken, and placed in a portable centrifuge which forces entrained impurities to separate from the oil. The results will be used to adjust the final volume on which all owners are paid. To measure the volume of a run, a measuring strap with a weight on the end is lowered into the oil tank, and an initial reading is taken. Next, a valve is opened which allows the oil to flow by gravity into a pipeline or truck, whichever the case may be. When the tank is nearly emptied, the valve is shut and a second strap reading is taken. The difference between the two tank levels (readings) is now used to calculate the exact volume of oil that has been removed.

The person making the run now completes a field run ticket which is made a part of the accounting records for this transaction. For larger volumes in the range of 100-1000 BOPD let’s say, the oil generally flows through an automated system called a LACT unit, which stands for Lease Automatic Custody Transfer. This system provides for the automatic measurement, sampling, and transfer of oil from the lease location into a pipeline. As you can imagine, a system of this type is applicable where larger volumes are being produced, and must have a pipeline available in which to connect. Again, the receipts from a LACT unit become a part of the accounting paper trail. Natural Gas Measurement The unit of measurement for volume of natural gas is the MCF, or thousand cubic feet. A related unit of natural gas measurement, based on the heating (or energy) value of natural gas is called the MMBTU, or British Thermal Unit. In this article, we’ll use the MCF, since this is what is usually seen on a royalty owner’s monthly statement. The majority of producing wells measure natural gas production with an orifice style meter. Orifice meters have no moving parts and are easily serviced in the field.

Differential pressure is measured and recorded as gas passes across an orifice plate, creating a pressure drop allowing for a calculation of the volume of gas passing through the pipe. Typically, there will be two meters on the well, one owned by the well Operator , and one owned by the First Purchaser . These serve as a “check” for each other – a benefit from the royalty owner’s perspective. Calculation of total gas flow is done on a monthly basis, usually by a third party gas measurement contractor. These calculations are passed along to the Operator who enters the natural gas measurements into their revenue accounting system, the software through which royalty owners are paid. Additional Reading Royalty Statements – Learn how to read and understand your oil and gas royalty statement. Explains terms like decimal interest, deductions, MCF, and BTU factor. Volume Verification – Short article explaining how oil and gas royalty owners can verify their oil and gas production. Includes links to free state verification Tuesday, January 3rd, 2017 Oil and Gas Industry Overview Finish Measurement Units and Conversion Factors Depending on the purpose of the measurement-and on regional or national preferences - oil, gas, gas liquids and their products may be measured in terms of volume, weight or thermal energy.

For example: Petroleum engineers, particularly those working in the Western Hemisphere, measure oil and gas volumes to answer questions like, "How much oil or gas do I have in my reservoir? How much can be produced during the life of the field? What is the daily production rate?" In contrast, ship owners would want oil shipments to be measured in weight to avoid overloading their tankers. Marketers, on the other hand, are interested in the value of the products to their customers. When they sell oil and gas products for fuel, they charge on the basis of thermal energy units rather than volume or weight. Crude Oil Measurement Crude oil, as shown in Figure 15, is measured in units of volume, weight and thermal energy. The standard volume unit for crude oil measurement, the 42-gallon barrel ("bbl"), dates back to the 1860s, when Pennsylvania producers actually stored and transported petroleum in wooden barrels.

To this day you may hear a petroleum engineer say, "This field has reserves of 1 billion barrels and we expect to produce it for 20 years at a design rate of 150,000 bbl/day." In countries that use the SI or "metric" system, oil volumes may be measured in metric tonnes. In Europe and especially the former Soviet Union, crude oil is measured in terms of weight and expressed in metric tonnes ("mt"), where one mt equals 2,204 lb. Although crude oils vary in density, a good "average" volume-to-weight conversion is 7.33 bbls/mt. Based on this conversion factor, a Russian engineer would refer to production not as 150,000 bbl/day but as 20,464 mt/day. The thermal energy content or heating value of crude oil depends on its composition, but generally averages about 6 million BTU per barrel, where a BTU (British Thermal Unit) is the amount of energy required to increase the temperature of one pound of water by 1°F.

Thus, a barrel of oil that sells for $48 would provide energy at an equivalent cost of: ($48/bbl) ÷ (6 million BTU) = $8/million BTU (per barrel of oil). (For those familiar with the SI unit of energy, the Kilojoule (kJ),1 BTU = 1.055 kJ.) Figure 15: A barrel of crude oil and its measurement units in volume, weight and thermal energy units. Oil Quality: API Gravity A crude oil's density is an important measure of its overall quality. This is because lighter oils are generally easier to produce and refine than heavy oils, and therefore tend to have higher value. Oil density is sometimes expressed in terms of its specific gravity, but more often is given as API gravity. The specific gravity (S.G.) of a liquid is defined as the density of that liquid divided by the density of fresh water. Fresh water has a density of 62.4 pounds per cubic foot. An oil with a density of 53 pounds per cubic foot, therefore, would have a specific gravity of (53/62.4), or 0.85.

Fresh water, by definition, has a specific gravity of 1.0. The American Petroleum Institute (API) has developed a special measure that expresses oil density in terms of API gravity, or ºAPI. It is related to the specific gravity as follows: S.G. = 141.5/(131.5+ºAPI) or ºAPI = (141.5/S.G.) - 131.5 From these relationships, we can determine that fresh water, with a specific gravity of 1.0, has an API gravity of 10 degrees, while our 0.85 S.G. oil above has an API gravity of 35 degrees; almost all crude oils are lighter than water and so they will have higher API gravities. Figure 16 shows the correlation between specific gravity and API gravity for various crude oil and condensate samples. Figure 16: Correlation between specific gravity and°API gravity.

Note the the API gravities of crude oils from different fields, including Lagunillas (Venezuela), Prudhoe Bay, (Alaska), Ghawar (Saudi Arabia), Ninian (offshore UK), and the very light condensate produced from the Arun Field (Indonesia). Natural Gas Measurement Natural gas is typically measured in terms of its volume at surface conditions and in thermal energy units. It is measured by weight only when it is in the liquid state (LNG). Because gas is compressible, its volume varies significantly with changes in temperature and pressure. In order for gas volume measurements to have any meaning, they have to have some standard frame of reference. For this reason, the industry has established standard conditions for referring to all gas volumes (Table 2). Unit of Gas Volume Measurement Standard Conditions Conversions: 1 m3 = 35.315 ft3; 1 ft3 = 0.0283 m3 Table 2: Standard units and conditions for measuring gas volumes. The standard cubic foot and the standard cubic meter are the most widely used (1 m3=35.31 SCF).

Some European countries use conditions called "Normal" which are for pressure 760 mmHg (14.696 psia or 1 atmosphere) and temperature 0 °C. It is important that these conditions are clearly defined at the time of signing any gas contract. Figure 17 demonstrates the compressibility of natural gas. The gas has a volume of 1 unit (ft3 or m3) in the reservoir at 4,000 psia pressure. When it is produced to surface conditions of temperature and pressure it expands to 238 units, and when it is compressed into a high-pressure pipeline at 1,000 psia pressure it becomes 3 units. In all three conditions the engineer will refer to the gas volume as 238 standard units (ft3 or m3 ). Figure 17: Compressibility of natural gas. This Figure shows the effect of pressure and temperature on natural gas volumes in the reservoir, pipeline and at surface conditions. Because the cubic foot and cubic meter are too small for practical use, the industry uses larger standard quantities with appropriate symbols (Table 3).

Thus, rather than saying that a gas well produces at a rate of 10,000,000 SCF/day, we say that the well produces at 10 MMCF/day. Units tm3 Field reserves If gas volume is measured in m3, simply replace CF with m3 within the above symbols. Some companies use K, M°, Giga ("G") and Tera ("T") in place of thousand, million, billion and trillion. Table 3: Common practical units of gas measurement. The heating value of natural gas depends upon its composition. Pure methane has a heating value of 1,010 BTU/SCF [35,663 BTU/m3], while propane has a heating value of 2,516 BTU/SCF. A gas that contains 50% methane and 50% propane will have a heating value that is midway between 1,010 and 2,516 BTU/SCF. Gas Liquids and Petroleum Product Measurement LNG (liquefied natural gas) is typically measured in metric tonnes or cubic meters.

The normal conversion to volume units in the liquid state is that 1 mt equals 2.12 m3 or 79.5 ft3. When 1 tonne of LNG is vaporized to become natural gas it expands about 625 times to equal 1380 m3 or 48,700 ft3 at atmospheric conditions. LPG and petroleum products are generally measured in gallons in the United States and certain other Western Hemisphere countries, and kiloliters or metric tonnes in Canada, and in Europe and other Eastern Hemisphere countries. Their conversion from volume to weight will depend on the density of the product. Thus, one metric tonne of propane is equal to 521 gallons or 1.97 kiloliters, while one metric tonne of fuel oil is equal to 281 gallons or 1.064 kiloliters. LPG must be stored at an elevated pressure or be refrigerated in order to remain in the liquid state, and so it is measured at these high-pressure and/or low-temperature conditions rather than at "atmospheric" conditions (Figure 18).

As is true for oil and natural gas, the heating value of a petroleum product depends upon its composition. For example, the heating value of propane is 91,500 BTU/gal, while that of heavy fuel oil is 150,000 BTU/gal. However, because each product has a standard, relatively narrow industrial specification, their individual heating values will not vary significantly and so they are usually traded on the basis of weight (e.g., $/mt) or volume (e.g., $/gallon). Figure 18: Propane must be stored at a pressure of 200 psi or be cooled to -44°F (-42°C) in order to remain in the liquid state. This photo shows an outdoor grill with a storage tank in which liquid propane is maintained at 200 psia pressure and may be exposed to a temperature up to 100°F (38°C) and still remain a liquid. Energy Content and Equivalency From the standpoint of meeting heating requirements, is it better to have a tonne of crude oil or a tonne of coal or a tonne of LNG?

To answer this question, we can look at the heating values of crude, gas and products as shown in Table 4: Fuel 65.6 million tonnes x (24 million BTU/tonne) / (6 million BTU/bbl) = 262.3 million barrels of oil equivalent BOE = 201.1 + 37.7 + 262.3 = 501.1 million Solution: In terms of Tonnes of Oil Equivalent We use the relationship that 1 tonne = 7.33 bbls. Tonnes of oil equivalent = (501.1)/7.33 = 68.4 million TOE Hydrocarbon Price Equivalency: We can also relate the price of the various hydrocarbons on the basis of their thermal energy equivalency. Example: If the price of oil is $48/bbl what are the equivalent unit volume prices of natural gas and coal?

Solution Oil price = ($48/barrel) / (6 million BTU / bbl) = $8/million BTUs Natural Gas thermal sales unit = 1 MCF = 1000 ft3 x 1000 BTU/ft3 = 1 million BTUs /MCF Natural Gas price equivalent to the oil price= 1 million BTUs/MCF x $8/million BTUs = $8/MCF Coal thermal sales unit = 1 metric tonne = 24 million BTUs Coal equivalent price = (24 million BTU/tonne) x ($8/million BTUs) = $192/tonne In reality, as shown in Figure 19a and Figure 19b, each of these hydrocarbons has its own regional or international market prices. In the major consuming countries, gas approaches oil equivalent prices, but in countries like Qatar, which have large isolated gas reserves, gas prices are much lower relative to oil. Because of a large oversupply, coal prices have been much lower than the oil equivalency price shown above-on the order of $35/tonne for many years-but has increased in recent years, especially on the spot markets.

Industrial companies can easily switch the burner tips of their boilers back and forth to burn natural gas or fuel oil to take advantage of regional price differences. The residential, commercial and power generating customers do not normally have that flexibility. You need to upgrade your Flash Player Figure 19a: This figure shows historical data of daily crude oil consumption rate and average annual crude wholesale price for the two major marker crudes: Brent and West Texas Intermediate.(Source: BP Statistical Review of World Energy, June 2014. Current prices and annual consumption (2014) are estimated based on EIA and IEA publications) Interactive Chart: Mouse over the graphic to see individual values. Turn lines On or Off by clicking on the labels below the graphic. Click and drag to zoom in the chart. You need to upgrade your Flash Player Figure 19b. This figure shows the average annual natural gas prices in three regions (LNG delivered into Japan, UK Heren Index, and Henry Hub price in the USA) and BTU equivalent price for crude oil (Brent crude price divided by 6).(Source: BP Statistical Review of World Energy, June 2014.

Current prices (2014) are estimated based on EIA and IEA publications) Interactive Chart: Mouse over the graphic to see individual values. Turn lines On or Off by clicking on the labels below the graphic. Click and drag to zoom in the chart. Conversion Table and Electronic Calculator Table 5 below lists some of the more widely used factors for converting crude oil, petroleum products and natural gas into their various equivalents. To do your own quick unit conversions, you may use the IHRDC Oil & Gas Unit converter . Table 5: Conversion Table for crude oil, natural gas and gas liquids. (Source: BP Conversion Factors). Oil & Gas Unit Converter: Conversion Table for crude oil, natural gas and gas liquids. (Source: BP Conversion Factors). Interactive App: Click on the categories on the left, type in the value you want to convert, and last click on the From and To labels to change your conversion units. Oil Industry - Facts & Summary - HISTORY.com Google Many of the early explorers of America encountered petroleum deposits in some form. They noted oil slicks off the coast of California in the sixteenth century. Louis Evans located deposits along the eastern seaboard on a 1775 map of the English Middle Colonies.

Did You Know? In 1933, Standard Oil secured the first contract to drill for oil in Saudia Arabia. Settlers used oil as an illuminant for medicine, and as grease for wagons and tools. Rock oil distilled from shale became available as kerosene even before the Industrial Revolution began. While traveling in Austria, John Austin, a New York merchant, observed an effective, cheap oil lamp and made a model that upgraded kerosene lamps. Soon the U.S. rock oil industry boomed as whale oil increased in price owing to the growing scarcity of that mammal. Samuel Downer, Jr., an early entrepreneur, patented “Kerosene” as a trade name in 1859 and licensed its usage. As oil production and refining increased, prices collapsed, which became characteristic of the industry. The first oil corporation, which was created to develop oil found floating on water near Titusville, Pennsylvania , was the Pennsylvania Rock Oil Company of Connecticut (later the Seneca Oil Company). George H. Bissell, a New York lawyer, and James Townsend, a New Haven businessman, became interested when Dr.

Benjamin Silliman of Yale University analyzed a bottle of the oil and said it would make an excellent light. Bissell and several friends purchased land near Titusville and engaged Edwin L. Drake to locate the oil there. Drake employed William Smith, an expert salt driller, to supervise drilling operations and on August 27, 1859, they struck oil at a depth of sixty-nine feet. So far as is known, this was the first time that oil was tapped at its source, using a drill. Titusville and other towns in the area boomed. One of those who heard about the discovery was John D. Rockefeller . Because of his entrepreneurial instincts and his genius for organizing companies, Rockefeller became a leading figure in the U.S. oil industry. In 1859, he and a partner operated a commission firm in Cleveland. They soon sold it and built a small oil refinery. Rockefeller bought out his partner and in 1866 opened an export office in New York City . The next year he, his brother William, S. V. Harkness, and Henry M. Flagler created what was to become the Standard Oil Company.

Flagler is considered by many to have been nearly as important a figure in the oil business as John D. himself. Additional discoveries near the Drake well had led to the creation of numerous firms and the Rockefeller company quickly began to buy out or combine with its competitors. As John D. phrased it, their purpose was “to unite our skill and capital.” By 1870 Standard had become the dominant oil refining firm in Pennsylvania. Pipelines early became a major consideration in Standard’s drive to gain business and profits. Samuel Van Syckel had built a four-mile pipeline from Pithole, Pennsylvania, to the nearest railroad. When Rockefeller observed this, he began to acquire pipelines for Standard. Soon the company owned a majority of the lines, which provided cheap, efficient transportation for oil. Cleveland became a center of the refining industry principally because of its transportation systems. When product prices declined, the ensuing panic led to the beginning of a Standard Oil alliance in 1871. Within eleven years the company became partially integrated horizontally and vertically and ranked as one of the world’s great corporations. The alliance employed an industrial chemist, Hermann Frasch II, to remove sulfur from oil found at Lima, Ohio .

Sulfur made distilling kerosene very difficult, and even then it possessed a vile odor—another problem Frasch solved. Thereafter, Standard employed scientists both to improve its product and for pure research. Soon kerosene replaced other illuminants; it was more reliable, efficient, and economical than other fuels. Eastern cities linked to the oil fields by rail and boat boomed also. The export trade from Philadelphia, New York, and Baltimore became so important that Standard and other companies located refineries in those cities. As early as 1866 the value of petroleum products exported to Europe provided a trade balance sufficient to pay the interest on U.S. bonds held abroad. When the Civil War interrupted the regular flow of kerosene and other petroleum products to western states, pressure increased to find a better method of utilizing oil found in such states as California. But Standard exhibited little interest in the oil industry on the West Coast before 1900. In that year it purchased the Pacific Coast Oil Company and in 1906 incorporated all its western operations into Pacific Oil, now Chevron. Edward L.

Doheny located Los Angeles’s first well in 1892, and five years later there were twenty-five hundred wells and two hundred oil companies in the area. When Standard entered California in 1900, seven integrated oil companies already flourished there. The Union Oil Company was the most important of these. Operating difficulties plus the threat of taxation on its out-of-state properties led to the creation of the Standard Oil Trust in 1882. In 1899 the trust created Standard Oil Company ( New Jersey ), which became the parent company. The trust controlled member corporations principally through stock ownership, an arrangement not unlike that of the modern-day holding company. The tremendous growth of Standard did not occur without competition. Pennsylvania producers engineered the creation of an important competitor, the Pure Oil Company, Ltd., in 1895. This concern endured for more than a half century. In 1901 one of the largest and most significant oil strikes in history occurred near Beaumont, Texas , on a mound called Spindletop . Drillers brought in the greatest gusher ever seen within the United States. This strike ended any possible monopoly by Standard Oil.

One year after the Spindletop discovery more than fifteen hundred oil companies had been chartered. Of these, fewer than a dozen survived, principally the Gulf Oil Corporation, the Magnolia Petroleum Company, and the Texas Company. The Sun Oil Company, an Ohio- Indiana concern, also moved to the Beaumont area as did other firms. Other oil strikes followed in Oklahoma , Louisiana , Arkansas , Colorado , and Kansas. Oil production in the United States by 1909 more than equaled that of the rest of the world combined. Many smaller companies developed outside the Northeast and the Midwest where Rockefeller and his associates operated. Oil found at Corsicana, Texas, in the 1890s attracted a remarkable Pennsylvanian, Joseph S. (“Buckskin Joe”) Cullinan, who organized several small companies. He later moved to Spindletop where he became instrumental in the organization of the Texas Company, soon a major competitor of Standard. Henri Deterding, creator of the Royal Dutch-Shell Group in Holland and Great Britain, moved into California in 1912 with his American Gasoline Company (Shell Company of California after 1914).

As Standard Oil grew in wealth and power, it encountered great hostility not only from its competitors but from a vast segment of the public. Standard fought competition by securing preferential railroad rates and rebates on its shipments. It also influenced legislatures and Congress through tactics that, though common in that era, were unethical. Nor was the company’s handling of labor any better. In 1911 the Supreme Court declared that the Standard Trust had operated to monopolize and restrain trade, and it ordered the trust dissolved into thirty-four companies. That the trust’s share of the industry had declined from 33 to 13 percent the Court held to be of little consequence. The splitting-off of the Standard affiliates proved difficult. Some marketed, some produced, some refined, and these concerns quickly moved toward vertical integration of their businesses. But the 1911 decision ensured that though the industry might have giants, they at least competed with one another. Increasing sales of gasoline first for automobiles and then for airplanes in the early 1900s came as oil discoveries across the United States mounted. The oil industry had a vast new market for what had been for many years a useless by-product of the distilling process.

As soon as the internal combustion engines created demand, refiners sought better methods to produce and improve gasolines. Before its entry into World War I , the United States contributed oil to the Allies, and in 1917 the oil companies cooperated with the Fuel Administration. At war’s end executives who had served with that agency created the American Petroleum Institute (1919), which in time became a major force in the economy and the business. Although the U.S. oil industry had marketed abroad extensively before the war, it owned few foreign properties. Judging from government surveys, many producers believed that a major oil shortage would soon occur. Both Secretary of Commerce Herbert Hoover and Secretary of State Charles Evans Hughes began to pressure American companies to seek oil abroad. These firms invested in the Middle East, Southeast Asia, and South America and searched for oil everywhere while they continued to export quantities of oil from the United States. The individual who focused attention back on the United States was Columbus Marion (“Dad”) Joiner. Joiner became convinced that some flatlands in an East Texas basinlike structure contained oil.

He obtained a lease near Tyler, Texas, and on October 5, 1930, after having drilled two dry holes, struck perhaps the largest oil pool ever found in America. It lay beneath 140,000 acres and contained 5 billion barrels. H. L. Hunt, an oil entrepreneur, bought Joiner’s leases and later sold them to oil companies at a profit of $100 million, thereby adding to his already substantial fortune. In a sense the Joiner strike came at an inopportune time; it was the onset of the Great Depression. The price of oil plummeted to ten cents a barrel in 1931, creating chaos in the industry. But some New Deal measures restored a modicum of prosperity, and then World War II stimulated the oil business enormously. The various oil strikes focused attention on a legal situation unique to the United States. Land ownership carried with it rights to all subsoil minerals, termed the common law “right of capture.” Oil companies, like other mineral companies, negotiated with each landowner for drilling rights. This right of capture continued for years despite the efforts of such industry giants as conservation-minded Henry L.

Doherty of Cities Service Oil Company, who sought to institute oil field unitization. The right of capture ensured early exhaustion of oil fields and tragic waste of a valuable energy source. Wallace E. Pratt, a geologist and longtime Jersey Standard leader, has estimated that by releasing the natural gas that often underlies petroleum pools and by using poor production techniques, oil producers have wasted at least 75 percent of the oil and natural gas found to date in the United States. World War II made the oil industry a key American resource. Oil company research and executive leadership played major roles in the conflict. Research increased the number of products made from petroleum and natural gas, including the explosive tnt and artificial rubber. The Jersey-Dupont jointly owned product, tetraethyl lead, upgraded gasoline to improve airplane speed. Oil tankers supplied gasoline for the Allies at great risk from submarine attacks. The government rationed gasoline and controlled prices during the war. In the last analysis the war ended the delusion that American supplies of crude were unlimited, so that the industry and the securing of oil became a top priority for both foreign and domestic policy. When the war ended, the United States faced the problem of stabilizing the peace.

Over the next forty-five years numerous major crises occurred, in many of which oil played a key role. Europe underwent a coal shortage, the first energy crisis, immediately after the war. The Marshall Plan , created to solve that and other problems, was hampered by the first Iranian crisis of 1950-1954. From the 1956 Suez crisis to the Iraqi invasion of Kuwait in 1990, oil proved to be the most important consideration in America’s Middle Eastern policy. The United States sought to balance support for the new state of Israel against the pressures of the oil producers, mostly Arab, united in 1960 as the Organization of Petroleum Exporting Countries (opec). This proved increasingly difficult as the United States became steadily more dependent on imported oil. In the United States the standard of living based on cheap oil continuously rose and the public, accustomed to this way of life, resisted all conservation measures. The United States continues to consume about two-thirds of the world’s oil production. Oil should be considered the keystone of the standard of living in the United States and to a large degree its rank as a world power.

Part of the energy problem after 1940 resulted from the depletion of domestic oil reserves during World War II—around 6 billion barrels. In the Vietnam struggle experts contend the United States supplied about 5 billion barrels of oil, although great quantities of that came from Middle Eastern properties owned by American companies. Certainly the total for both wars represents a quantity larger than either that of the great East Texas oil field or possibly that discovered on Alaska’s North Slope in 1967. After the 1960s, as domestic production declined and demand soared, the oil industry had to import vast quantities from the Middle East and Venezuela. The nation’s key energy source increasingly hinged on balancing diplomatic relations with Arab oil-producing nations while continuing its aid to Israel. While the United States was blessed with plentiful supplies of oil its growth to the rank of a great power accelerated. In today’s world as an oil-dependent power it must find alternate sources of energy or accommodate drastic changes in its way of life and position in the world. Paul H. Giddens, The Birth of the Oil Industry (1938); Ralph W. and Muriel E.

Hidy, Pioneering in Big Business, 1882-1911 (1955); Bennett H. Wall et al., Growth in a Changing Environment: A History of Standard Oil Company (New Jersey), 1950-1972, and Exxon Corporation, 1972-1975 (1988); Daniel Yergin, The Prize: The Epic Quest for Oil, Money, and Power (1990). Bennett H. Wall Glossary | Oil & Gas UK Natural gas produced with crude oil from the same reservoir. Annex B Operator’s development plan for an offshore installation. It requires government approval before it can be implemented. Appraisal Well A well drilled as part of an appraisal drilling programme which is carried out to determine the physical extent, reserves and likely production rate of a field. Associated Gas Natural gas associated with oil accumulations, which may be dissolved in the oil at reservoir conditions or may form a cap of free gas above the oil. Barrel A unit of volume measurement used for petroleum and its products (7.3 barrels = 1 ton: 6.29 barrels = 1 cubic metre).

bbl One barrel of oil; 1 barrel = 35 Imperial gallons (approx.), or 159 litres (approx.); 7.5 barrels = 1 tonne (approx.); 6.29 barrels = 1 cubic metre. bcf Billion cubic feet; 1 bcf = 0.83 million tonnes of oil equivalent. bcm Billion cubic metres (1 cubic metre = 35.31 cubic feet). Block A North Sea acreage sub-division measuring approximately 10 x 20 kms, forming part of a quadrant. e.g. Block 9/13 is the 13th block in Quadrant 9. Blow-down Condensate and gas is produced simultaneously from the outset of production. Blow-out preventers (BOPs) are high pressure wellhead valves, designed to shut off the uncontrolled flow of hydrocarbons. Blow-out When well pressure exceeds the ability of the wellhead valves to control it. Oil and gas “blow wild” at the surface. Borehole The hole as drilled by the drill bit. British thermal unit (BTU) A measure of the heating value of a fuel. Capex Capital expenditure.

Casing Metal pipe inserted into a wellbore and cemented in place to protect both subsurface formations (such as groundwater) and the wellbore. A surface casing is set first to protect groundwater. The production casing is the last one set. The production tubing (through which hydrocarbons flow to the surface) will be suspended inside the production casing. Casing string The steel tubing that lines a well after it has been drilled. It is formed from sections of steel tube screwed together. CDA Common Data Access is a not-for-profit subsidiary of Oil & Gas UK, set up in 1994 to provide data management services to its members and to the UK oil industry in general. Christmas tree The assembly of fittings and valves on the top of the casing which control the production rate of oil. CNS Central North Sea. Commercial field An oil and/or gas field judged to be capable of producing enough net income to make it worth developing. Completion The installation of permanent wellhead equipment for the production of oil and gas. Condensate Hydrocarbons which are in the gaseous state under reservoir conditions and which become liquid when temperature or pressure is reduced. A mixture of pentanes and higher hydrocarbons.

Coring Taking rock samples from a well by means of a special tool — a “core barrel”. Crane barge A large barge, capable of lifting heavy equipment onto offshore platforms. Also known as a “derrick barge”. Creaming Theory A statistical technique which recognises that in any exploration province after an initial period in which the largest fields are found, success rates and average field sizes decline as more exploration wells are drilled and knowledge of the area matures. Cuttings Rock chippings cut from the formation by the drill bit, and brought to the surface with the mud. Used by geologists to obtain formation data. Compressor An engine used to increase the pressure of natural gas so that it will flow more easily through a pipeline. DEAL Managed by CDA, a unique index of the source of released and proprietary well, seismic and other data. Derrick The tower-like structure that houses most of the drilling controls. 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.

Downhole A term used to describe tools, equipment, and instruments used in the wellbore, or conditions or techniques applying to the wellbore. Downstream When referring to the oil and gas industry, this term indicates the refining and marketing sectors of the industry. More generically, the term can be used to refer to any step further along in the process. Drill cuttings The small pieces of rock created as a drill bit moves through underground formations while drilling. Drilling rig A drilling unit that is not permanently fixed to the seabed, e.g. a drillship, a semi-submersible or a jack-up unit. Also means the derrick and its associated machinery. Dry gas Natural gas composed mainly of methane with only minor amounts of ethane, propane and butane and little or no heavier hydrocarbons in the gasoline range. Dry hole Any exploratory or development well that does not find commercial quantities of hydrocarbons. E&A Abbreviation for exploration and appraisal. E&P Abbreviation for exploration and production. The ‘upstream’ sector of the oil and gas industry. Enhanced oil recovery (EOR) A process whereby oil is recovered other than by the natural pressure in a reservoir.

Refers to a variety of processes to increase the amount of oil removed from a reservoir, typically by injecting a liquid (e.g., water, surfactant) or gas (e.g., nitrogen, carbon dioxide). Exploration well Drilling carried out to determine whether hydrocarbons are present in a particular area or structure. Also known as a ‘wildcat well’. Farm in When a company acquires an interest in a block by taking over all or part of the financial commitment for drilling an exploration well. Field A geographical area under which an oil or gas reservoir lies. Fishing Retrieving objects from the borehole, such as a broken drillstring, or tools. FLTC Fisheries Legacy Trust Company; formed in 2007 by Oil & Gas UK, Scottish Fishermen’s Federation (SFF) and National Federation of Fishermen’s Organisations (NFFO) to enhance the safety of fishermen by ensuring the provision in perpetuity of information relating to oil and gas seabed structures and equipment in UK waters. Formation damage The reduction in permeability in reservoir rock due to the infiltration of drilling or treating fluids into the area adjacent to the wellbore.

Formation pressure The pressure at the bottom of a well when it is shut in at the wellhead. Formation water Salt water underlying gas and oil in the formation. Fracturing A method of breaking down a formation by pumping fluid at very high pressure. The objective is to increase production rates from a reservoir. Gas field A field containing natural gas but no oil. Gas injection The process whereby separated associated gas is pumped back into a reservoir for conservation purposes or to maintain the reservoir pressure. Gas-to-Liquids (GTL) The conversion of natural gas to a liquid form so that it can be transported easily. Typically, the liquid is converted back to natural gas prior to consumption. Hydrocarbon A compound containing only the elements hydrogen and carbon. May exist as a solid, a liquid or a gas. The term is mainly used in a catch-all sense for oil, gas and condensate. IMMH The Industry Mutual Hold Harmless indemnity regime is a scheme run by LOGIC to address the contractual gap which traditionally exists between contractors working on the UKCS. Integrated company Indicates a firm that operates in both the upstream and downstream sectors (from exploration through refining and marketing).

Injection well A well used for pumping water or gas into the reservoir ITF Industry Technology Facilitator; an internationally recognized champion for technology innovation within the oil and gas industry acting as a conduit between technology innovators and the industry. IS The lower section, or ‘legs’, of an offshore platform. Lease A legal document conveying the right to drill for oil and gas, or the tract of land on which a lease has been obtained where the producing wells and production equipment are located. Lifting costs The cost of producing oil from a well or lease. Liquefied natural gas (LNG) Oilfield or naturally occurring gas, chiefly methane, liquefied for transportation. Liquefied petroleum gas (LPG) Light hydrocarbon material, gaseous at atmospheric temperature and pressure, held in the liquid state by pressure to facilitate storage, transport and handling. Commercial liquefied gas consists essentially of either propane or butane, or mixtures thereof. LOGIC A not-for-profit, wholly owned subsidiary of Oil & Gas UK, set up in 1999 by PILOT to stimulate supply chain collaboration and improve the competitiveness of the UKCS.

Master Deed Run by LOGIC, the Master Deed greatly expedites the transfer of UKCS offshore licence interests and other agreements relating to associated assets and infrastructure. It also introduces a standard pre-emption regime to give confidence to incoming companies. Mmboe Equivalent to 1000 kilos, 2204.61 lbs; 7.5 barrels. mmcfd Millions of cubic feet per day (of gas). Mud A mixture of base substance and additives used to lubricate the drill bit and to counteract the natural pressure of the formation. Midstream A term sometimes used to refer to those industry activities that fall between exploration and production (upstream) and refining and marketing (downstream). The term is most often applied to pipeline transportation of crude oil and natural gas. Natural Gas Gas, occurring naturally, and often found in association with crude petroleum. Natural gas liquids (NGLs) The portions of gas from a reservoir that are liquified at the surface in separators, field facilities, or gas processing plants. NGL from gas processing plants is also called liquified petroleum gas (LPG). NNS Natural gas produced from a reservoir that does not contain significant quantities of crude oil.

Oil A mixture of liquid hydrocarbons of different molecular weights. Oil field A geographic area under which an oil reservoir lies. Oil in place An estimated measure of the total amount of oil contained in a reservoir, and, as such, a higher figure than the estimated recoverable reserves of oil. Operator The company that has legal authority to drill wells and undertake production of hydrocarbons. The operator is often part of a consortium and acts on behalf of this consortium. Opex Operating expenditure. OPITO – The Oil & Gas Academy As the skills organisation for oil and gas, OPITO supports the industry to build a sustainable, competent and safe workforce Payzone Rock in which oil and gas are found in exploitable quantities. Permeability The property of a formation which quantifies the flow of a fluid through the pore spaces and into the wellbore. Petroleum A generic name for hydrocarbons, including crude oil, natural gas liquids, natural gas and their products. P&A (plugged and abandoned) A depleted well or dry hole that has been (typically) filled with cement and marked, with all surface equipment removed. Permeability A measure of the ability of a rock to transmit fluid through pore spaces.

PILOT A joint programme involving the Government and the UK oil and gas industry: operators, contractors, suppliers, trade unions and SMEs, aiming to secure the long-term future of the industry in the UK. Platform An offshore structure that is permanently fixed to the seabed. Porosity A ratio between the volume of the pore space in reservoir rock and the total bulk volume of the rock. The pore space determines the amount of space available for storage of fluids. Possible reserves Those reserves which at present cannot be regarded as ‘probable’ but are estimated to have a significant but less than 50% chance of being technically and economically producible. Primary recovery Recovery of oil or gas from a reservoir purely by using the natural pressure in the reservoir to force the oil or gas out. Probable reserves Those reserves which are not yet proven but which are estimated to have a better than 50% chance of being technically and economically producible. Produced water The water extracted from the subsurface with oil and gas. It may include water from the reservoir, water that has been injected into the formation, and any chemicals added during the production/treatment process.

Produced water is also called ‘brine’ (and may contain high mineral or salt content) or ‘formation water’. Some produced water is quite fresh and may be used for livestock watering or irrigation (where allowed by law). Proven field An oil and/or gas field whose physical extent and estimated reserves have been determined. Proven reserves Those reserves which on the available evidence are virtually certain to be technically and economically producible (i.e. having a better than 90% chance of being produced). Recoverable reserves That proportion of the oil and/gas in a reservoir that can be removed using currently available techniques. Recovery factor The ratio of recoverable oil and/or gas reserves to the estimated oil and/or gas in place in the reservoir. Reservoir The underground formation where oil and gas has accumulated. It consists of a porous rock to hold the oil or gas, and a cap rock that prevents its escape. Riser (drilling) A pipe between a seabed BOP and a floating drilling rig. Riser (production) The section of pipework that joins a seabed wellhead to the Christmas tree.

Roughneck Drill crew members who work on the derrick floor, screwing together the sections of drillpipe when running or pulling a drillstring. Roustabout Drill crew members who handle the loading and unloading of equipment and assist in general operations around the rig. Royalty A percentage interest in the value of production from a lease that is retained and paid to the mineral rights owner. Secondary recovery Recovery of oil or gas from a reservoir by artificially maintaining or enhancing the reservoir pressure by injecting gas, water or other substances into the reservoir rock. Separation The process of separating liquid and gas hydrocarbons and water. This is typically accomplished in a pressure vessel at the surface, but newer technologies allow separation to occur in the wellbore under certain conditions. Shutdown A production hiatus during which the platform ceases to produce while essential maintenance work is undertaken. SNS The operation of drilling the first part of a new well. Standard contracts Known formerly as CRINE contracts, standard contracts have been developed by the Standard Contracts Committee and are issued by LOGIC for use within the industry between clients and their contractors, simplifying procedures and saving costs. Standard agreements State-of-the-art solutions for oil and gas industry agreements and recommended for use by all UKCS licensees.

They are user-friendly and easy to implement. In helping simplify operational and transactional procedures, they focus resources and save costs. Step Change in Safety The UK based partnership with the remit to make the UK the safest oil and gas exploration and production province in the world. It was founded in 1997 by the oil and gas industry trade associations with the aim of reducing the UK offshore oil and gas industry injury rate by 50%. Suspended well A well that has been capped off temporarily. tcf Trillion Cubic Feet (of gas). Toolpusher Second-in-command of a drilling crew under the drilling superintendent. Responsible for the day-to-day running of the rig and for ensuring that all the necessary equipment is available. Topside The superstructure of a platform. Upstream The exploration and production portions of the oil and gas industry. UKCS United Kingdom Continental Shelf. UK Flightshare Initiative developed by LOGIC to permit the sharing of excess seat capacity on North Sea helicopter flights. Interested parties sign up via Deeds of Adherence enabling shares to take place between signed up parties on an ‘as arranged’ basis. Vantage POB LOGIC’s shared service to oil and gas operators for personnel and certification tracking at onshore and offshore installations.

Waterflooding The injection of water into an oil reservoir to ‘push’ additional oil out of the reservoir rock and into the wellbores of producing wells. Well DataStore Run by CDA, one of the largest shared online stores of digital well report and log data in the world. Wellhead The 1equipment at the surface of a well used to control the pressure; the point at which the hydrocarbons and water exit the ground. Well log A record of geological formation penetrated during drilling, including technical details of the operation. Wet gas Natural gas containing significant amounts of liquifiable hydrocarbons. Wildcat well A well drilled in an area where no current oil or gas production exists. WoS West of Shetland Isles. Workover Operations on a producing well to restore or increase production. A workover may be performed to stimulate the well, remove sand or wax from the wellbore, to mechanically repair the well, or for other reasons. WTI West Texas Intermediate, a type of crude oil commonly used as a price benchmark. Oil & Gas Terminology – Oil & Gas 101 – Resources – Louisiana Mid-Continent Oil and Gas Association Oil & Gas Terminology Barrel – The basic unit for measuring oil.

A barrel is equal to 42 U.S. gallons. Bit – A drilling tool that cuts the hole. Bits are designed on two basic and different principles. The cable tool bit moves up and down to pulverize. The rotary bit revolves to grind. Blow-Out Preventer – A heavy casinghead control, filled with special gates or rams, which can be closed around the drill pipe, or which completely closes the top of the casing. Boyle's Law – A law of physics stating that when gas is subject to compression and kept at a constant temperature, the product of the pressure and volume is a constant quantity, i.e., the volume is inversely proportional to the pressure. BTU – British Thermal Unit, a generalized measure of heating value, also used to compare energy potential in different types of fuels. Casing – Heavy steel pipe used to seal off fluids from the hole or to keep the hole from caving in. Casinghead Gas – Gas produced with oil in oil wells. The gas is taken from the well through the casinghead at the top of the well. Catalytic Cracking – A refining process for breaking down large, complex hydrocarbon molecules into smaller ones.

A catalyst is used to accelerate the chemical reactions in the cracking process. Christmas Tree – The assembly of valves, pipes and fittings used to control the flow of oil and gas from the casinghead. Condensate – Liquid hydrocarbons recovered by surface separators from natural gas. It is also referred to as natural gasoline and distillate. Correlative Rights Theory – The theory adopted by the courts in several states that all landowners whose tracts overlay a producing formation have correlative rights in the formation. This theory is termed the "qualified ownership" theory. Crude Oil – Liquid petroleum as it comes out of the ground. Crude oil varies radically in its properties, such as specific gravity and viscosity. Derrick – A tapering tower, usually of open steel framework, used in the drilling of oil and gas wells as support for the equipment lowered into the well. Distillate Fuel Oils – Fuel oils which are products of distillation. They include fuels used for diesel fuel and space heating. Directional Drilling – The drilling of a well that departs materially from the vertical direction. Downstream – Those activities in the oil and gas industry which take place away from the source of the supply. Downstream operations commonly include refining and marketing endeavors.

Drilling Fluids – Special chemical fluids, usually called mud, introduced into the hole to lubricate the action of a rotary bit, to remove the cuttings and to prevent blowouts. Dry Gas – Natural gas which does not contain dissolved liquid hydrocarbons. Dry Hole – A completed well which is not productive of oil and/or gas or which is not productive of oil or gas in paying quantities. Enhanced Recovery – The increased recovery from an oil pool achieved by artificial means or by the application of outside energy sources to the pool. Equivalent Barrels – Quantities of natural gas and natural gas liquids translated into barrels of oil based on equal energy content. The energy content of six thousand cubic feet of gas (6 MCF) is the rough equivalent of one barrel of oil. Exploration – The search for oil and gas. Exploration operations include aerial surveys, geophysical surveys, geological studies, core testing and the drilling of test (wildcat) wells. Fault Trap – A structural trap in the earth, favorable for the retention of petroleum, formed by the cracking and breaking of a rock plane. Gusher – An oil well that comes in with such great pressure that oil flows out of the well head into the air.

Such wells used to be commonplace, but with improved drilling methods, notably the use of drilling mud, gushers are a rarity today. Horizontal Drilling – A method of drilling where the drill bit is turned in a horizontal direction in an effort to produce hydrocarbons from a number of areas located at the same approximate depth. Independent – A company involved only in the exploration and production of oil and gas and possibly in the transportation. An independent will not be involved in the refining of oil. Injection well – A well employed for the introduction into an underground stratum of water or gas under pressure. Injection wells are employed for the disposal of produced water from oil and gas wells. Integrated Company – A company involved in virtually all aspects of the oil and gas industry including exploration, production, transportation, refining and marketing. These companies are also referred to as major oil companies. Lease – The instrument by which a leaseholder or working interest is created in minerals. LNG – Liquefied natural gas. Natural gas becomes a liquid at a temperature of minus 258 degrees F and may be stored and transported in the liquid state. MCF – Thousand Cubic Feet. The standard unit for measuring the volume of natural gas.

Natural Gas – Hydrocarbons, which at atmospheric conditions of temperatures and pressure, are in a gaseous phase. Natural Gas Liquids – Hydrocarbons found in natural gas which may be extracted or isolated as liquefied petroleum gas and natural gasoline. OCS – The Outer Continental Shelf. Generally the area outside the territorial boundaries of the coastal state over which the federal government exercises control. Oil Field – An area which is underlain by one or more reservoirs containing oil. Oil Pool – An underground reservoir or trap containing oil. Overboard Water – Another name for produced water or brine produced from oil and gas wells. Platform – Structure used in offshore drilling on which the drilling rig, crew quarters and other related items are located. Plugging of Well – The sealing off of the fluids in the stratum penetrated by a well so that the fluid from one stratum will not escape into another or to the surface. Probable Reserves – An estimate of reserves taking into consideration known geology, previous experience with similar types of reservoirs and seismic data, if available. Processing Plant – A plant to remove liquefiable hydrocarbons from wet gas or casinghead gas. This process yields the propanes, butanes and other products taken from natural gas.

Produced Water – Water that comes up a well with the oil and gas. Produced water is usually high in salinity. It is often the force that drives the oil and gas to the surface. After leaving the well, the produced water is separated from the oil and gas. Also referred to as overboard water, formation water, saltwater and oilfield brine. Proration – The restriction of production by a state regulatory commission, usually on the basis of market demand. In Louisiana the proration of natural gas is allowed to prevent physical and economic waste and to protect correlative rights. Proven Reserves – Oil which is still in the ground, but which has been located and determined to be recoverable. Quad – A quadrillion of BTU's. This unit of measurement is used in connection with energy consumption. A barrel of crude oil contains 5.8 million BTU's. Natural gas contains about one million BTU's per MCF. Recomplete - To move the primary completion from one zone to another. May involve reperforating, running other tubulars or setting a new packer.

Redrill footage - Occasionally, a hole is lost or junked and a second hole may be drilled from the surface in close proximity to the first. Footage drilled for the second hole is defined as "redrill footage." Under these circumstances, the first hole is reported as a dry hole (explanatory or developmental) and the total footage is reported as dry hole footage. The second hole is reported as an oil well, gas well, or dry hole according to the result. The redrill footage is included in the appropriate classification of total footage, but is not reported as a separate classification. Refinery – The facility where the characteristics of petroleum or petroleum products are changed. Reservoir – A porous and permeable sedimentary rock containing commercial quantities of oil and gas. Three types of reservoirs are encountered including structural traps, stratigraphic traps and combination traps. Rig – The structures and equipment used in drilling an oil and gas well including the derrick, engine, engine house and other equipment. Roughneck – A driller's helper and general worker on a drilling rig. Roustabout – A common laborer around a drilling or a producing well. Royalty – The landowner's share of production, before the expenses of production.

Severance Tax – A tax on the removal of minerals from the ground. The tax can be levied either as a tax on volume or a tax on value. In Louisiana oil is taxed at 12.5 percent of value. Natural gas is taxed at 7 cents per MCF with the rate adjusted annually to reflect the changes in the spot market price of gas sold in Louisiana. Shut In – To close down a producing well temporarily for repairs, cleaning out, building up reservoir pressure, lack of market, etc. Sour Gas – Natural gas contaminated with chemical impurities, notably hydrogen sulfide or other sulfur compounds, which cause a foul odor. Specific Gravity – In the case of liquids, the ratio between the weight of equal volumes of water and another substance, measured at standard temperature and where the weight of the water is assigned a value of 1. However, the specific gravity of oil is normally expressed in the industry in degrees of API gravity. Spudding In – The first boring of the hole in the drilling of an oil well. Stripper Production – The final stage of production in the life of an oil well or oil field.

This stage is characterized by low rates of production, sometimes no more than a barrel of oil per day. Tension Leg Platform – A type of platform generally used in deep waters. Instead of a stationary platform attached to the ocean floor, the surface platform is tethered to a templet on the ocean floor by flexible steel tendons. Upstream – Activities in the oil and gas industry which take place close to the supply. This normally includes exploration and production activities. Well – A hole drilled in the earth for the purpose of finding or producing crude oil or natural gas or providing services related to the production of crude oil or natural gas. Wellhead – A term usually defined as being at the Christmas Tree but, which under exceptional circumstances, may be defined as located at some other place. Wellhead Revenues – The total dollar value of crude oil and natural gas at the wellhead. Wellhead revenues are calculated, based on the production volumes of crude oil and natural gas, multiplied by their respective average wellhead price. Wet Gas – Natural gas containing liquid hydrocarbons in solution, which may be removed by a reduction of temperature and pressure or by a relatively simple extraction process.

Wildcat Well – An exploratory well being drilled in unproven territory, that is, in a horizon from which there is no production in the general area. Work Overs – Operations on a producing well to restore or increase production. A typical work over is cleaning out a well that has sanded up. 730 North Blvd., Baton Rouge, LA 70802 P: 225-387-3205 F: 225-344-5502

Question: What is the standard measure of quantity used in the oil production industry?
Answer: Barrel