Oil & Gas Glossary

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Acidizing

The technique of pumping a form of hydrochloric acid down the well hole to enlarge the pore space in oil bearing rocks, thus increasing oil flow and recovery.

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AGA

American Gas Association. Major natural gas industry trade association, based in Alexandria, Virginia. AGA conducts technical research and helps create standards for equipment and products involved in every facet of the natural gas industry. It also compiles statistics which are considered industry standards.

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Anticline

A fold in layered rocks originating below the surface in the form of an elongated dome. Anticlines make excellent drilling prospects since any oil in the deposit will naturally rise to the highest point of the structure because oil has a lower specific gravity than water.

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API

American Petroleum Institute. The primary U.S. oil industry trade association, based in Washington, D.C. API conducts research and sets technical standards for industry equipment and products from wellhead to retail outlet. It also compiles statistics which are regarded as industry benchmarks.

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API Gravity

The American Petroleum Institute scale used to express the specific gravity of oils.

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Assay

To test a metal or an oil for purity or quality.

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B/D

Barrels per Day. Usually used to quantify a refiner's output capacity or an oilfield's rate of flow.

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Barge

A vessel, either motorized or towed, used to carry products in navigable waterways. Inland river barges that carry oil products generally hold 25,000 barrels. Ocean-going barges range in size up to 120,000 barrels.

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Barrel of Oil

Measurements which equal a barrel of oil include 159 litres, 0.159 cubic metres, 35 Imperial gallons, 42 U.S. gallons.

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Barrel of Oil Equivalent (BOE)

A term frequently used to measure oil and gas on a comparative basis. In Canada, 10 mcf of natural gas is equivalent to one barrel of oil.

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Barrel of Oil Per Day (BPD)

The number of barrels of oil produced from a well over a 24 hour period, normally an average figure from a longer period of time.

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Batch

A measured amount in which crude oil and refined product shipments are sent through a pipeline.

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Batching Sequence

The order in which shipments are sent through a pipeline.

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Battery

Facility that stores and/or processes crude oil.

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BCF

Billion cubic feet.

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Bitumen

Heavy oil or petroleum in semi-solid or solid forms. Bitumen generally has a density of less than 10 degrees API.

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Block

The subdivision of exploration and production acreage.

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Book Value Per Share

Calculated by dividing owners equity by the number of shares outstanding. This accounting calculation is typically considerably lower than the actual share price because accounting principles require the use of historical cost. Book value per share is an estimation of what the company is worth if it were to be liquidated.

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British Thermal Unit (BTU)

The amount of heat required to increase the temperature of a pound of water 1o Fahrenheit. A Btu is used as a common measure of heating value for different fuels. Prices of different fuels and their units of measure (dollars per barrel of crude, dollars per ton of coal, cents per gallon of gasoline, cents per thousand cubic feet of natural gas) can be easily compared when expressed as dollars and cents per million BTUs.

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Bunker C Fuel Oil (or bunkering fuel)

Fuel used for ships. Generally refers to a No. 6 grade of residual fuel oil with an API gravity about 10.5o.

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Casing

The process of lining a drilled hole with steel pipe which is cemented in place to prevent caving in of the hole.

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Casinghead Gas

Gas present in an oil well that is removed when it flows to the surface at the well's casing.

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Centrifugal Pump

A rotating pump, used for pushing large volumes of oil and gas through pipelines.

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CF/D

Cubic feet per day. Usually used to quantify the rate of flow of a gas well or pipeline.

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Christmas Tree

The arrangement of pipes and valves at the wellhead which controls the flow of oil and gas and prevents blowouts.

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Completion

The procedure by which a successful well is readied for production.

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Compressor Station

Stations located every 60-80 km along a gas pipeline which recompress gas to ensure an even flow.

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Concession

A defined license area granted to a company for the exploration of oil and/or gas under specific terms and conditions for a fixed period of time.

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Condensate

Any mixture of relatively light hydrocarbons which remain liquid at normal temperature and pressure. Condensate generally appears when gas is drawn from a well and its temperature and pressure change sufficiently for some of it to become liquid petroleum.

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Conventional Crude

Liquid petroleum that is capable of flowing naturally without any processing.

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Crown Lands

Government owned properties.

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Crude Oil

A mixture of hydrocarbons that exists as a liquid in natural underground reservoirs and remains liquid at atmospheric pressure after passing through surface separating facilities. Crude is the raw material which is refined into gasoline, heating oil, jet fuel, propane, petrochemicals, and other products.

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Cubic feet per day (cf/d)

The number of cubic feet of natural gas produced from a well over a 24 hour period, normally an average figure from a longer period of time. Generally expressed as mcf/d = thousand cubic feet per day, mmcf/d = million cubic feet per day, or bcf = billion cubic feet per day.

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Cubic Foot

The amount of gas required to fill a volume of one cubic foot.

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Cushion Gas

The amount of gas required in a storage pool to maintain sufficient pressure to keep the working gas recoverable.

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Daisy Chain

The process by which a cargo of oil or oil products is sold many times before being delivered to the customer.

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Density

The gravity of crude oil. Density is measured in kilograms of large, carbon-rich molecules per cubic metre or degrees on the American Petroleum Institute (API) gravity scale.

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Derrick

Steel structure mounted over the bore hole to support the drill pipe and other equipment which is lowered and raised during drilling operations.

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Diesel Fuel

Distillate fuel oil used in compression-ignition engines. It is similar to home heating oil, but must meet a certain number specification of 40 or more.

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Discovery Well

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

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Distillate Fuel Oil

Products of refinery distillation sometimes referred to as middle distillates; kerosene, diesel fuel, and home heating oil.

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Downstream Sector

Refines and markets petroleum including pipeline systems, refineries, gas distribution, and petrochemical companies.

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Drill String

Steel pipes roughly 10m long joined together to form a pipe from the drill bit to the drilling platform. It is rotated during drilling and is also the conduit for the drilling mud.

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Drilling Mud

A mixture of clays, water, and chemicals used in drilling operations to lubricate and cool the drill bit, carry drilling wastes to the surface, prevent the walls of the well from collapsing, and to keep the upward flow of oil or gas under control.

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Dry Gas

Gas containing no water vapor, same as lean gas.

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Dry Hole

An unsuccessful well, drilled without finding commercial quantities of oil or gas.

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Enhanced oil recovery (EOR)

The recovery of oil from a reservoir other than by the use of natural reservoir pressure. This can involve increasing the pressure (secondary recovery) or heating or increasing the pore size of the reservoir (tertiary recovery).

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Exploratory well

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

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Farm-in

An outside party paying a land owner all or a percentage of the drilling costs of a well in order to obtain a working interest in the land or well.

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Farm-out

The land owner gives a percentage of his land or a portion of his working interest in a well in order to allow an outside party to drill or explore on his property. This generally reduces risk as capital is provided by the company farming-in.

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Fault

A geological structure consisting of a fracture in the rock along which there has been an observable amount of displacement.

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Feedstock

The supply of crude oil, natural gas liquids, or natural gas to a refinery or petrochemical plant or the supply of some refined fraction of intermediate product to some other manufacturing process.

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Field

The surface area above a petroleum formation.

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Flaring

The controlled and safe burning of gas which cannot be used for commercial or technical reasons.

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Fractionation

The process whereby saturated hydrocarbons from natural gas are separated into distinct parts or "fractions" such as propane, butane, ethane, etc.

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Fuel Oil

Refined petroleum products used as a fuel for home heating and industrial and utility boilers. Fuel oil is divided into two broad categories, distillate fuel oil, also known as No. 2 fuel, gasoil, or diesel fuel; and residual fuel oil, also known as No. 6 fuel, or outside the United States, just as fuel oil. No. 2 fuel is a light oil used for home heating, in compression ignition engines, and in light industrial applications. No. 6 oil is a heavy fuel used in large commercial, industrial, and electric utility boilers.

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Gas Cap

In a field containing both gas and oil, some gas will often collect at the top of the reservoir in a single deposit known as a gas cap.

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Gas Field

A field or group of reservoirs of hydrocarbons containing natural gas but insignificant quantities of oil.

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Gasoline, Straight-Run

Also known as raw gasoline. Gasoline which is obtained directly from crude oil by fractional distillation. Straight-run gasoline generally must be upgraded to meet current motor fuel specifications.

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Gathering Lines

Pipelines that move petroleum from wells to processing or transmission facilities.

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Geophones

Sensors used in seismic surveys capable of detecting the velocity of energy waves.

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Heating Oil

No. 2 fuel oil, a distillate fuel oil used either for domestic heating or in moderate capacity commercial-industrial burners.

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Heavy Crude

Oil with a gravity below 28 degrees API. Recovery generally involves an application of heat and steam. Canadian pipelines generally require oil to have a gravity of at least 21:2 degrees API. Heavier crudes must be blended with condensate or NGLs to be shipped by pipeline.

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Hydrocarbon

Any compound or mix of compounds, solid, liquid or gas, comprised of carbon and hydrogen (e.g., coal, crude oil, and natural gas).

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Independent

Term generally applies to a non-integrated oil or natural gas company, usually active in only one or two sectors of the industry. An independent marketer buys petroleum products from major or independent refiners and resells them under his own brand name or buys natural gas from producers and resells it. There are also independents which are active exclusively either in oil or gas production or refining.

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Infill Drilling

Drilling more wells into the same pool so that oil does not have to travel as far through the rock.

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Injection Well

A well used for injecting fluids into a formation in an attempt to increase recovery efficiency.

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Jet Fuel

Kerosene-type; high-quality kerosene product used primarily as fuel for commercial turbojet and turboprop aircraft engines.

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Joint Venture

An investment undertaken by a consortium, usually with one member acting as the operator.

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Light Crude

Oil with a gravity of 28 degrees API or higher. High-quality light crude has a gravity of 40 degrees or higher.

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Liquefied Natural Gas (LNG)

Natural gas that has been liquefied for ease of transport by cooling the gas to -162C. Natural gas has 600 times the volume of LNG.

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Liquefied Petroleum Gas (LPG)

Propane, butane, or propane-butane mixtures derived from crude oil refining or natural gas fractionation. For convenience of transportation, these gases are liquefied through pressurization.

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Maintenance

Routine repairs needed throughout the life of a well, usually required more for oil than for gas wells.

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Major

A term broadly applied to those multinational oil companies which by virtue of size, age, or degree of integration are among the preeminent companies in the international petroleum industry.

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Market Capitalization

Calculated by multiplying the number of outstanding shares by the current stock price. This represents the market's valuation of the company at that specific time.

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Maximum Rate Limit (MRL)

The maximum rate at which a well is legally permitted to produce, imposed by the Alberta Energy and Utilities Board.

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MCF

Thousand cubic feet.

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Mercaptans

Strong smelling compounds of carbon, hydrogen, and sulphur found in gas and oil. Sometimes added to natural gas for safety reasons.

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Methane

The principal constituent of natural gas.

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Middle Distillate

Hydrocarbons that are in the so-called "middle boiling range" of refinery distillation. Examples are heating oil, diesel fuels, and kerosene.

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MMBtu

One million British thermal units, one dekatherm. Approximately equal to a thousand cubic feet (Mcf) of natural gas.

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Naphtha

A volatile, colorless product of petroleum distillation. Used primarily as a paint solvent, cleaning fluid, and blendstock in gasoline production.

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Naphthenes

One of the three basic hydrocarbon classifications found naturally in crude oil. Naphthenes are widely used as petrochemical feedstocks.

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Natural Gas

A naturally occurring mixture of hydrocarbon and non-hydrocarbon gases found in porous rock formations. Its principal component is methane.

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Natural Gas Liquids (NGL)

A general term for all liquid products separated from natural gas in a gas processing plant. NGLs include propane, butane, ethane, and natural gasoline.

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Net Asset Value per Share (NAVPS)

Is the estimated worth of the company based on the current market value of all its assets less liabilities. Calculated by taking the present value of the company's reserves, subtracting long-term debt, and adding working capital. Usually discounted by 10-15%.

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Net Debt

Long-term debt plus working capital.

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Netback

The amount of money received per barrel of oil equivalent produced after subtracting operating costs, royalties, and general and administrative costs.

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Non-Associated Gas

Natural gas in a reservoir which contains no crude oil.

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Oil in Place

The estimation of the real amount of oil in a reservoir.

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OPEC

Organization of Petroleum Exporting Countries.

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Operator

The party responsible for exploration, development, or production projects.

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Overriding Royalty Interest (ORRI)

Ownership in a percentage of production or production revenues, free of the cost of production, created by the lessee, company and/or working interest owner and paid by the lessee, company and/or working interest owner out of revenue from the well.

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Permeability

The capacity of a reservoir rock to transmit fluids.

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Petrochemical

An intermediate chemical derived from petroleum, hydrocarbon liquids, or natural gas, such as ethylene, propylene, benzene, toluene, and xylene.

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Petroleum

A natural mixture of hydrocarbons in gaseous, liquid, or solid form.

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Pinnacle Reef

A conical formation where hydrocarbons may be trapped.

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Pipeline

A pipe through which oil or natural gas is pumped between two points, either offshore or onshore.

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Pool

A natural underground reservoir that either contains or appears to contain petroleum.

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Porosity

The open space within a rock, similar to a sponge.

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Possible Reserves

An estimate of possible oil and/or gas reserves based on geological and engineering data from undrilled or untested areas.

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Probable Reserves

An estimate of oil and/or gas reserves based on penetrated structures, but needing more advanced confirmation to be classified as proven reserves.

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Processing

The separation of oil, gas, and natural gas liquids and the removal of impurities.

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Proven Reserves

The quantity of oil and gas estimated to be recoverable from known fields under existing economic and operating conditions. Determined on the basis of drilling results, production, and historical trends.

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Raw Natural Gas

Natural gas containing impurities and unwanted substances that have to be removed.

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Recoverable Reserves

The proportion of hydrocarbons that can be recovered from a reservoir using existing techniques.

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Refinery

A complex of facilities where crude oil is separated into light or heavy fractions which are then converted into useable products.

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Reserve Life Index

The number of years it would take to deplete proven reserves at the current production rate.

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Reserve Replacement Ration

The quantity of added reserves for every barrel of oil equivalent produced.

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Reservoir

Porous permeable rock containing petroleum.

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Rich Gas

Gas which is predominately methane but with a relatively high proportion of other hydrocarbons.

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Royalty Holiday

The Alberta Energy Commission grants royalty free wells in certain situations. For instance, the first 70,000 boe produced from a horizontal well are generally royalty fee.

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Seismic

Either two-dimensional or three-dimensional, computer assisted processing of sedimentary structures, assist in planning drilling programs.

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Solution Gas

Natural gas which is dissolved in the crude oil within the reservoir.

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Sour gas

Contain large amounts of hydrogen sulphide or sulphur. In order to become sweet gas, the sulphur must be removed.

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Sour or Sweet Crude

Industry terms which denote the relative degree of a given crude oil's sulfur content. Sour crude refers to those crudes with a comparatively high sulfur content, 0.5% by weight and above; sweet refers to those crudes with sulfur content of less than 0.5%.

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Spot Market

An international market in which oil or oil products are traded for immediate delivery at the current price.

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Spud

The commencement of drilling operations.

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Sweet Oil/Gas

Petroleum which contains little or no hydrogen sulphate and as a result requires little processing.

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Syncline

A fold in layered rock in the form of a dip or bowl.

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Tar Sands

Mixture of sand, water, and heavy hydrocarbons.

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Terminal

An onshore transit facility that receives and stores crude oil and products from offshore production facilities via pipeline and/or tankers.

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Transmission Pipeline

A network of pipelines distributing natural gas from an onshore station, via compressor stations, to storage centers or distribution points.

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Underbalanced drilling

Occurs when the operator of the site uses specialized mud or gas while drilling to allow for formation fluids to rise to the surface and thus prevent damage to the prospective formation.

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Unitization

Owners of adjoining properties pool reserves together to form a single producing unit in which each has an interest.

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Upstream Industry

Produces petroleum, also referred to as upstream sector; namely, exploration and development companies, seismic ,and drilling contractors, service rig operators, engineering firms, etc.

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Viscosity

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

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Wellhead

The control equipment fitted to the top of the well consisting of outlets, valves, blowout preventers, etc.

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Wet Barrel

A physical barrel of crude oil or refined product as opposed to a "paper barrel."

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Wet Gas

Natural gas containing condensable hydrocarbons.

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Wildcat

A well drilled in an unexplored area.

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Working Capital

Current assets minus current liabilities, shows a company's ability to meet its short-term obligations.

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Workovers

Major repairs or modifications which restore or enhance production from a well.

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