Domestic Energy Development, Inc.
Oil and Gas Exploration & Production |
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GLOSSARY |
GLOSSARY OF OIL FIELD TERMINOLOGY
"A"
ABSOLUTE OPEN FLOW (A.O.F.) - These figures are tabulated for a
24 hour production test. These test figures should not be relied upon by
investors as a sustainable daily production rate for a well.
ACIDIZING
A WELL - A technique for increasing the flow of oil from a well by the use of
acid pumped down the hole and into the rock formation. The acid dissolves some
of the rock enlarging the cracks and fissures near the well bore allowing more
oil to flow.
ACRE-FOOT OF SAND - A unit of measurement applied to
petroleum reservoirs; an acre of producing sand one foot thick.
ANTICLINE - A subsurface geological structure in the form of an elongated dome.
Historically this type formation has been found favorable to the accumulation
of oil or gas.
AUTHORIZATION FOR EXPENDITURE (AFE) - A document used
to estimate the cost of drilling, completing a well or installing major
equipment facilities in an oil field. The AFE is submitted to management and/or
participants in the activity for their authorization and approval of the
expenditure. The AFE is a budgetary device; when the project is complete, the
operator collects invoices of actual work done and compares it to the AFE,
should the project come in under budget, he refunds the balance. If the project
has cost overruns, the operator submits additional invoices to the
participants.
"B"
BARREL (BBL) - 42 U.S. gallons of
crude oil.
BASEMENT ROCK - Igneous or metamorphic rock lying below the
sedimentary formations in the earth's crust. Basement rock does not contain
petroleum deposits.
BASIN - A synclinal structure in the subsurface,
once the bed of a prehistoric sea. Basins, composed of sedimentary rock, are
regarded as good prospects for oil exploration.
BCF - One billion
cubic feet of natural gas at atmospheric pressure.
BRIDGE PLUG - An
expandable plug used in a well's casing to isolate producing zones or to plug
back to produce from a shallower formation; also to isolate a section of the
bore hole to be filled with cement when a well is plugged.
BLOWOUT -
Out-of-control gas or oil pressure erupting from a well.
BLOWOUT
PREVENTER - A stack or an assembly of heavy-duty valves attached to the top of
the casing to control well pressure.
BOTTOM SEDIMENT WATER (BS&W)
- Water, being heavier than oil, will collect in the bottom of tanks if water
is being produced with the oil. This water will contain some sediment material
produced out of the well. Periodically Bottom Sediment Water is collected and
disposed of in an appropriate facility.
BUY-IN COST - The cost of
participation in a prospect to drill a well. These costs include lease costs,
any prospect fees paid to the geologist, seismic cost and sometimes a
promotional fee to cover sales and marketing expense.
"C"
CASING - Steel pipe used in oil wells to seal off fluids from the
bore hole and to prevent the walls of the hole from sloughing off or caving in.
CEMENT - To fix the casing firmly in the hole with cement, which is
pumped through the drill pipe to the bottom of the casing and up into the
annular space between the casing and the walls of the well bore. After the
cement sets (hardens) it is drilled out of the inside of the casing. The casing
is then perforated to allow oil and gas to enter the well.
CEMENT
SQUEEZE - A method whereby perforations, large cracks, and fissures in the wall
of the bore hole are forced full of cement and sealed off.
CHRISTMAS
TREE - An assembly of valves mounted on the casing through which the well is
produced. The valves also allow testing of the well.
CIRCULATE - To
pump drilling fluid into the bore hole through the drill pipe and back up the
annulus between the pipe and the wall of the hole.
COMPLETE A WELL -
To finish a well so that it is ready to produce oil or gas.
CONFIRMATION WELL - A well drilled to "prove" the formation or producing zone
encountered by an exploratory or wildcat well.
CONTOUR LINE - A line
(as on a map) connecting points on a land surface that have the same elevation
above or below sea level.
CONTOUR MAP - A map showing land surface
elevations by the use of contour lines. Structure contour maps are used by
geoscientists to depict subsurface conditions or formations.
"D"
DECLINE CURVE - Production from oil and gas wells decline over time.
Production can fluctuate for a number of reasons including reservoir pressures,
depletion or down time for maintenance.
DEPLETION ALLOWANCE - A
provision in the tax law that exempts a certain percent of mineral production
from income tax. This provision considers that oil and gas reserves are
depleted over time when produced.
DEVELOPMENT DRILLING - A development
well is generally a well drilled as an additional well to the same oil and gas
reservoir as other producing wells or not more than one location away from a
producing well.
DEVIATED HOLE - A well bore which is off the vertical
either by design or by accident.
DIRECTIONAL DRILLING - The technique
of drilling at an angle from the vertical by deflecting the drill bit.
DISCOVERY WELL - An exploratory well that encounters a new and previously
untapped petroleum deposit.
DISPOSAL WELL - A well used for the
disposal of salt water. The salt water is pumped into a subsurface formation
sealed off from other formations by impervious strata of rock.
DIVISION ORDER - A contract of sale to the buyer of crude oil or gas directing
the buyer to pay for the product in the proportions set forth in the contract.
Certain amounts of payment go to the operator of the producing property, the
royalty owners and others having an interest in the production.
DRILLING MUD - A special mixture of clay, water, and chemical additives pumped
down hole through the drill pipe and drill bit. The mud cools the rapidly
rotating drill bit; lubricates the drill pipe as it turns in the well bore;
carries rock cuttings to the surface; and serves as plaster to prevent the wall
of the bore hole from crumbling or collapsing. Drilling mud also provides the
weight or hydrostatic head to prevent extraneous fluids to entering the well
bore and to control down-hole pressures that might be encountered.
DRILL STEM - The drill pipe. In rotary drilling, the bit is attached to the
drill stem or drill column which rotates to "dig" the hole.
DRILL STEM
TEST - A method of obtaining a sample of fluid from a formation using a
"formation-tester tool" attached to the drill stem. The tool consists of a
packer to isolate the section to be tested and a chamber to collect a sample of
fluid. If the formation pressure is sufficient, fluid flows into the tester and
up the drill pipe to the surface.
DRY-HOLE COST - The cost of drilling
the well. Completion costs are in addition to dry-hole costs but only come due
if the well locates producible oil or gas.
"E"
ECONOMIC
DEPLETION - The reduction in value of a diminishing asset due to removal or
production of the asset (minerals).
ELEVATORS - A heavy, hinged clamp
in the derrick that is attached to the hook and traveling block by bail-like
arms. The elevators are used for lifting drill pipe, casing, and tubing and
lowering them into the hole. In hoisting a joint of drill pipe, the elevators
are latched on to the pipe just below the tool joint (coupling), which prevents
the pipe from slipping through the elevators.
ENHANCED RECOVERY -
Sophisticate recovery methods for crude oil which go beyond the conventional
secondary recovery methods of pressure maintenance and water
flooding.
"F"
FARM IN - An arrangement whereby one oil
operator "buys in" or acquires an interest in a lease or concession owned by
another operator on which oil or gas has been discovered or is being produced.
FARM OUT - The name applied to a leasehold held und a farm-out
agreement.
FARM OUT AGREEMENT - A form of agreement between oil
operators whereby the owner of a lease who is not interested in drilling at the
time agrees to assign the lease or a portion of it to another operator who
wishes to drill the acreage. The seller may or may not retain an interest
(Royalty or production payment) in the production.
FAULT - A fracture
in the earth's crust accompanied by a shifting of one side of the fracture with
respect to the other side.
FLANGE-UP - Oil-field slang meaning to
finish the job. Derived from work with pipe having flanges (rims) on the ends;
this pipe is bolted together at those flanges; the pipe can carry liquids once
it is "Flanged Up."
FLOWING CASING PRESSURE - The static pressure in
the casing when the well is flowing into delivery lines.
FLOWING
TUBING PRESSURE - The static pressure in the tubing when the well is flowing
into delivery lines.
FORMATION - A sedimentary bed or series of beds
sufficiently alike or distinctive to form an identifiable geologic unit.
FRAC JOB - see Hydraulic Fracturing
"G"
GAS-CUT
MUD - Drilling mud aerated or charged with gas from formations down hole. The
gas forms bubbles in the drilling fluid. Gas-cut mud may indicate commercial
quantities of gas present in the formation.
GAS KICK - Pressure from
down hole in excess of that exerted by the weight of the drilling mud, causing
loss of circulation. If the gas pressure is not controlled by increasing the
mud weight, a kick can violently expel the column of drilling mud resulting in
a blow-out.
GEOLOGICAL STRUCTURE - Layers of sedimentary rocks which
have been displaced from their normal horizontal position by the forces of
nature into folds, fractures and faults. Geological structures are the logical
places to find accumulations of oil and gas.
GEOLOGIST - A person
trained in the study of the earth's crust. A petroleum geologist, in contrast
to a hard-rock geologist, is primarily concerned with sedimentary rocks where
most of the world's oil and gas has been found.
GEOPHYSICIST - A
person trained in the study and application of certain physical principles -
magnetic, electrical, gravity and the progression and velocity of sound waves -
to the study of geology.
"H"
HYDRAULIC FRACTURING - A
method of stimulating production from a formation of low permeability by
inducing fractures and fissures in the formation by applying very high
fluid-pressure to the face of the formation, forcing the strata
apart.
"I"
INDEPENDENT PRODUCER - A person or
corporation that produces oil for the market, having no pipeline system or
refinery.
INFILL DRILLING - Wells drilled to fill in between
established producing wells on a lease to increase production from the lease.
INTANGIBLE DRILLING COSTS - Expenditures made by an operator for
labor, fuel, repairs, hauling and supplies used in drilling and completing a
well for production. Intangible drilling costs include the construction of
derricks, tanks, pipelines on the lease, the buildings and preparation of the
drill site but do not include the cost of materials or equipment. A rule of
thumb is: do the items for which expenditure were made have any salvage value?
If not, they qualify under the tax laws as intangible drilling costs.
INTERMEDIATE STRING - See Casing. There may be several strings of casing in a
well, one inside another. The first casing put in a well is called Surface Pipe
which is cemented into place and serves to shut out shallow water formations
and also as a foundation or anchor for all subsequent drilling activity.
Extremely deep wells will often have an "intermediate string" cemented in place
to protect and preserve the well bore as the remaining hole is drilled and
completed.
"J"
JACK-KNIFE RIG - A mast-type derrick
whose supporting legs are hinged at the base. When the rig is to be moved, it
is lowered or laid down intact and transported by truck.
JOINT - A
length of pipe, casing, or tubing usually from 20 to 30 feet long. On a
drilling rig, drill pipe and tubing are lowered into the whole the first time
one joint at a time. When pulled from the hole and stacked in the rig, they are
usually pulled two, three, or four at a time. These multiple-joint sections are
called Stands.
"K"
KELLY - The first and sturdiest joint
of the drill column; the thick-walled, hollow steel forging, with two flat
sides and two rounded sides, when if fit into the square hole in the rotary
table will rotate the kelly joint and thence the drill column and drill bit.
Attached to the top of the kelly is the swivel and mud hose.
KELLY
HOSE or MUD HOSE - This is a flexible, steel-reinforced, rubber hose connecting
the mud pump with the swivel and kelly joint on the drilling rig. Mud is pumped
through the mud hose to the swivel and down through the kelly joint and drill
pipe to the drill bit at the bottom of the hole.
"L"
LANDOWNER ROYALTY - A share of the gross production of the oil and gas on a
property by the landowner without bearing any of the cost of producing the oil
or gas.
LAYING DOWN and/or LAY DOWN THE TUBING - To pull the tubing
from the well, a joint at a time, and remove it from the derrick floor to a
nearby horizontal pipe rack. As each joint is unscrewed from the string, the
lower end of the joint is placed on a low cart and pulled out to the rack as
the driller lowers the pipe, which is held up by the elevators.
LAY
OFF AN INTEREST - To sell off a portion of one's interest in a well to another
person to reduce the financial loss should the well be non-commercial or dry.
For example, an investor who has a 30 percent interest in a well to be drilled
may lay off five or ten percent of his interest for cash he needs and/or to
minimize his risk or to reduce his "exposed position."
LEASE - (1)The
legal instrument by which a leasehold is created in minerals. A contract that,
for a stipulated sum, conveys to an operator the right to drill for oil or gas.
(2) The location of production activity; oil installations and facilities;
location of oil field office, tool house, garages.
LEASE BROKER - A
person whose business is securing leases for later sale at a profit.
LIFTING AND OPERATING EXPENSE (L.O.E.) - In respect to any period, all cash
costs incurred in connection with the running and maintenance of production
wells.
LOSS OF CIRCULATION - A condition that exists when drilling mud
pumped into the well through the drill pipe does not return to the surface.
This serious condition results from the mud being lost in porous formations, a
crevice or cavern penetrated by the drill bit.
LOST CIRCULATION
MATERIAL - Material that is added to the drilling mud when circulation is lost
to assist in plugging the breached area of the well bore.
"M"
MARGINAL WELL - A low-producing well, a well with marginal
returns.
MCF - One thousand cubic feet of natural gas at atmospheric
pressure..
MILL - To grind up; to pulverize with a milling tool.
MINERAL LEASE - Refers to any interest in an oil or gas lease or other
right authorizing the owner to explore for and produce oil and gas.
MONOCLINE - A geological term for rock strata that dip in one direction.
MUD LOG - A progressive analysis of the well-bore cuttings washed up
from the bore hole by the drilling mud. Rock chips are retrieved and examined
by the geologist.
MUD PITS - See Reserve Pits. Excavations near the
rig into which drilling mud is circulated. Mud pumps withdraw the mud from one
end of the pit as the circulated mud, bearing rock chips from the bore hole,
flows in at the other end. As the mud moves toward the suction line, the
cuttings drop out leaving "clean" mud ready for another drip down the well
bore.
"N"
NET REVENUE INTEREST (N.R.I.) - An interest in
an oil and gas property which entitles the owner to a specific portion of the
production from such property.
NON-OPERATOR - The working-interest
owner or owners other than the one designated as the operator of the
property.
"O"
OFFSET WELL - A well drilled on the
adjacent location to the original well.
ONE-THIRD FOR A QUARTER - A
term used by independent oil operators who are selling interests in a well they
propose to drill. An investor who agrees to the one-third for a quarter deal
will pay one-third of the cost of the well to the casing point and receive
one-fourth of the well's net production. When the operator sells three of these
one-third interests he will have the cost of the well to casing point paid by
his investors.
OPEN HOLE - An uncased well bore; the section of the
well bore below the casing; a well in which there is no protective string of
pipe.
OPERATOR - A person or entity engaged in the business of
exercising direct responsibility and supervision over drilling, completion,
operation, maintenance and production from an oil/gas well.
OVERRIDING
ROYALTY - An interest in oil and gas produced at the surface free of any cost
of production; royalty in addition to the usual landowner's
royalty.
"P"
PACKER - An expanding plug used in a well
to seal off certain sections of the tubing or casing when cementing, acidizing
or when a production formation is to be isolated. Packers are used on the
tubing or the casing and when in position can be expanded hydraulically or
mechanically against the pipe wall or the wall of the well bore.
PAYOUT - The recovery from production of the costs of drilling, completing and
equipping a well. Sometimes included in the costs is a pro-rata share of lease
costs.
PERCENTAGE DEPLETION - A method of computing the allowance for
depletion of an oil or gas well, or other mining of minerals, for Federal
income tax purposes.
PERFORATING - To make holes through the casing
opposite the producing formations to allow oil and gas to flow into the well.
PERMEABILITY - A measure of the resistance offered by rock to the
movement of fluids through it.
PINCH-OUT - The disappearance or
"wedging out" of a porous, permeable formation between two layers of impervious
rock.
PLUGGED & ABANDONED - To fill a well's bore hole with cement
or other impervious material to prevent the flow of water, gas or oil from one
strata to another when a well is abandoned.
PLUGGING A WELL - To fill
a well's bore hole with cement or other impervious material to prevent the flow
of water, gas or oil when a well is abandoned.
POROSITY - The state or
quality of being porous; the volume of the pore space expressed as a percentage
of the total volume of the rock mass. An important property of oil-bearing
formations. Good porosity indicates an ability to hold large amounts of oil in
the rock. Porosity must be coupled with good permeability to allow the oil to
flow to the well bore.
PROVEN RESERVES - Oil and gas which has been
discovered and determined to be recoverable but is still in the ground.
PULLING UNIT - A portable, truck-mounted mast equipped with winch,
wire lines and sheaves, used for pulling rods and well work
over.
"R"
RAT HOLE - A slanted hole drilled near the
well's bore hole to hold the kelly joint when not in use. The kelly is
unscrewed from the drill string and lowered into the rat hole as a pistol into
a scabbard.
RESERVE PIT - See Mud Pits. An excavation connected to the
working mud pits of a drilling well to hold excess or reserve drilling mud; a
standby pit containing already-mixed drilling mud for use in an emergency when
extra mud is needed.
RESERVOIR PRESSURE and or DOWNHOLE PRESSURE - The
pressure at the face of the producing formation when the well is shut in. It is
equal to the shut-in pressure (at the wellhead) plus the weight in pounds of
the column of oil in the hole. The hydrostatic pressure exerted by a column of
oil 5,000 feet high, for example, would be several thousand pounds. In a
flowing well, the reservoir pressure would be sufficient to overcome the
pressure of the hydrostatic head.
RIG DOWN - A term meaning to
disassemble or take apart after operations are complete. This term applies to
any complex operation where multiple parts were assembled for an activity.
RIG UP - A term meaning to assemble or put together in preparation to
go into operation. This term applies to any complex operation where multiple
parts are assembled for an activity.
ROUND TRIP - Pulling the drill
pipe from the hole to change the bit and running the drill pipe and new bit
back in the hole. On deep wells, round trips or "a trip" may take 24 hours,
three 8-hour shifts.
ROYALTY INTEREST (R.I.) A share of the minerals
(oil and gas) produced from a property by the owner of the property.
Originally, the right of the king to receive a percentage of the gold or silver
taken from the mines of his realm. Entitles the owner to a share of gross
proceeds which is free of expense of drilling, completion and production, but
having no control over field activities.
RUN TICKET - A record of the
oil run from a lease tank into a connecting pipeline.
"S"
SALT WATER DISPOSAL WELL - A well, sometimes a formerly producing
well, that is used to inject produced salt water into a formation or formations
for disposal.
SANDS - Common terminology for oil-bearing sandstone
formations.
SCOUT TICKET - a standard form of information about
activities on a drilling location or well. The information includes date, the
well's depth, formations encountered, well logs and tests. Completion
information is briefly described as is the fate of the well, whether put in
production or plugged.
SEDIMENTARY BASIN - An extensive area where
substantial amounts of sediments occur. Most sedimentary basins are
geologically depressed areas. The sediments are usually thickest in the middle,
thinning toward the edges.
SEDIMENTARY ROCK - Rock formed by the
laying down of matter by seas, streams, or lakes; sediment deposited in bodies
of water through geologic ages. Limestone, sandstone and shale are sedimentary
rocks.
SEVERANCE TAX - A tax levied by some states on each barrel of
oil or each thousand cubic feet of gas produced.
SHUT-IN PRESSURE -
Pressure as recorded at the wellhead when the valves are closed and the well is
shut in.
SOUR GAS - Natural gas containing chemical impurities,
notably hydrogen sulfide or other sulfur compounds that make it extremely
harmful to breathe even small amounts.
SPUD - To start the actual
drilling of a well. The first section of the hole is drilled with a
large-diameter spudding bit down several hundred feet to accommodate the
surface pipe which may be 8 to 20 inches in diameter, depending upon the depth
of the well to which the well will ultimately be drilled. The surface pipe is
cemented into this hole to protect the surface formations which might contain
potable water.
SQUEEZE A WELL - A technique to seal off with cement a
section of the well bore where a leak or incursion of water or gas occurs;
forcing cement to the bottom of the casing and up the annular space between the
casing and the wall of the bore hole to seal off a formation or plug a leak in
the casing; a squeeze job.
STAND - When tubing is pulled from a well
it will often be pulled in multiple joint lengths, often in three-joint lengths
of up to ninety-feet. These multiple joints of tubing are called "Stands" and
are stacked in the rig during the "trip"
STEP-OUT WELL - A well
drilled adjacent to a proven well but located in an unproven area; a well
located a "step out" from proven territory in an effort to determine the
boundaries of a producing formation.
STIMULATION - The technique of
getting more production from a down hole formation. Stimulation may involve
acidizing, hydraulic fracturing, shooting or simply cleaning out to get rid of
and control sand.
STRATIGRAPHIC TRAP - A type of reservoir capable of
holding oil or gas, formed by a change in the characteristics of the formation
- loss of porosity and permeability, or a break in its continuity - which forms
the trap or reservoir.
STRIPPER WELL - An oil well in the final stages
of production.
STRUCTURAL TRAP - A type of reservoir containing oil
and/or gas formed by movements of the earths crust which seal off the oil and
gas accumulation in the reservoir forming a trap.
SUCKER RODS - Steel
rods that are screwed together to form a "string" that connects the pump inside
a well's tubing down hole to the pumping jack on the surface.
SWAB -
To clean out the bore hole of a well with a special tool attached to a wire
line. Swabbing a well is often done to start it flowing. By evacuating the
fluid contents of the hole the hydrostatic head is reduced sufficiently to
permit the oil in the formation to flow into the bore hole.
"T"
TANK BATTERY - Two or more stock tanks connected together to receive
oil production from a well or a producing lease.
TIGHT HOLE - A
drilling well about which all information - depth, formations encountered,
drilling rate, logs -- is kept secret by the operator.
TRIPPING THE
BIT - Removing the bit from the hole and running it in again.
TURNKEY
CONTRACT - A contract to drill and or complete and equip oil or gas well for a
set, predetermined price. The turnkey format is designed to limit the liability
of an investor to the amount of their capital contribution for drilling and
completion.
"W"
WATER-DRIVE RESERVOIR - An oil reservoir
or field in which the primary natural energy for the production of oil is from
edge, or bottom-water in the reservoir.
WATER-FLOOD - One method of
secondary recovery in which water is injected into an oil reservoir to force
additional oil out of the reservoir rock and into the well bores of producing
wells.
WORKING INTEREST (W.I.) - An interest in an oil and gas lease
or prospect that bears the costs of development and operation of the property;
the mineral interest less the royalty
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