In this glossary you will find the basic definition of terms often used in the context of related Hydrocarbon Exploration and Production activities.
Proven reserves (also known as P90).
2D (two dimensional) seismic is an acoustic measuring technology which generates a 2D cross-section of the subsurface of the earth and is used primarily when initially reconnoitering for the presence of oil or gas reservoirs. Acoustic energy is usually provided by the detonation of explosive charges or by large vibrating trucks.
3D seismic is shot similar to 2D, except the “shotpoints” are much closer together and are laid out on a grid, instead of in a straight line. The geophones that receive the reflected sound waves are also laid out in a grid. These technology is good at showing structural traps, but not ideal for showing stratigraphic traps.
Proven reserves + Provable reserves + Possible reserves.
Time-lapse of 3-D and is used once production has begun to see how the production flows are changing in the reservoir.
The American Petroleum Institute gravity, or API gravity, is a measure of how heavy or light a petroleum liquid is compared to water. If its API gravity is greater than 10, it is lighter and floats on water; if less than 10, it is heavier and sinks.
Exploration well drilled near a well already in production as part of an appraisal campaign, which is carried out to determine the physical extent and likely production potential of a field.
Aquifer (water) drive
Below the hydrocarbons may be a ground water aquifer. Water, as with all liquids, is compressible to a small degree. As the hydrocarbons are depleted, the reduction in pressure in the reservoir causes the water to expand slightly. Although this expansion is minute, if the aquifer is large enough, this will translate into a large increase in volume, which will push up on the hydrocarbons, maintaining pressure.
Artificial Lift Stage
Production of a well by lifting the oil column in the well bore using mechanical means or gas lifting (does not actually increase pressures in the reservoir).
Barrel – The standard barrel of crude oil or other petroleum product is 42 US gallons (34.972 Imperial gallons, or 158.987 L).
Barrels per day.
Billion cubic feet.
An uncontrolled flow of reservoir fluids into the wellbore, and sometimes catastrophically to the surface. A blowout may consist of salt water, oil, gas or a mixture of these. Blowouts may occur in all types of exploration and production operations, not just during drilling operations. If reservoir fluids flow into another formation and do not flow to the surface, the result is called an underground blowout. If the well experiencing a blowout has significant open hole intervals, it is possible that the well will bridge over (or seal itself with rock fragments from collapsing formations) downhole and intervention efforts will be averted.
“BOP” a series of valves at the base of the derrick, sealing the high-pressure drill lines in case of blowout.
Barrels of oil equivalent. A boe conversion ratio of 6 mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip. Boe does not represent a value equivalency at the wellhead.
Barrels of oil equivalent per day.
Bottoms, Sediments and Water. Any water, dirt or sediments brought up with the crude.
British thermal units.
Barrels of water per day.
An impermeable rock that forms a seal, preventing hydrocarbons from escaping to the surface.
A series of steel casing pipes used to prevent contamination of groundwater and water encroachment into the well, enhancing the structural integrity of the drill hole.
A trap that combines the properties of both structural and stratigraphic traps.
Legal document that allows an individual or organization to explore and produce oil on behalf of the mineral right’s owner. Usually, exploration must take place within a fixed time period and the lease will be extended if oil is discovered. Concessions are often put out for bidding in govt owned blocks. If production begins, a royalty is paid in cash or in crude.
At depths of interest, the drill bit is replaced by a hollow one that will extract a cylinder of several meters of rock. Confirms rock type, fluid content, dip, porosity and permeability.
“Chance of Success” – An estimate of the chance of all the elements within a hydrocarbon prospect working, described as a probability. High risk prospects have a less than 10% chance of working, medium risk prospects 10-20%, low risk prospects over 20%. Typically about 40% of wells recently drilled find commercial hydrocarbons. (or “POS”)
A mixture, consisting mainly of pentanes and heavier hydrocarbons that exists in the liquid phase in reservoirs and remains liquid at atmospheric pressure and temperature. Crude oil may contain sulphur and other nonhydrocarbon compounds, but does not include liquids obtained from the processing of natural gas. Classes of crude oil are often reported on the basis of density, sometimes with different meanings.
Acceptable ranges are as follows:
• Light: less than 870 kg/m3 (greater than 31.1° API)
• Medium: 870 to 920 kg/m3 (31.1o API to 22.3° API)
• Heavy: 920 to 1000 kg/m3 (22.3o API to 10° API)
• Extra-heavy: greater than 1000 kg/m3 (less than 10° API)
A drilling test that involves cuttings being brought to the surface by drilling mud are analyzed to determine what type of rock the drill bit is meeting.
Also known as the oil’s gravity- measured in API and indicative of what products the crude can be refined into. The higher the gravity, the lighter the oil.
Depth of OWC
The point where oil makes contact with water from an aquifer. Not all oil deposits make contact.
Development and Production Status
Each of the reserves categories (proved, additional, and possible) may be divided into developed and undeveloped categories.
• Developed reserves are those reserves that are expected to be recovered from existing wells and installed facilities or, if facilities have not been installed, that would involve a low expenditure (e.g., when compared to the cost of drilling a well) to put the reserves on production. The developed category may be subdivided into producing and non–producing.
• Developed producing reserves are those reserves that are expected to be recovered from completed intervals open at the time of the estimate. These reserves may be currently producing or shut in, they must have previously been on production, and the date of resumption of production must be known with reasonable certainty.
• Developed non–producing reserves are those reserves that either have not been on production, or have previously been on production, but are shut in, and the date of resumption of production is unknown.
• Undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (e.g., when compared to the cost of drilling a well) is required to render them capable of production. They must fully meet the requirements of the reserves classification (proved, probable, possible) to which they are assigned
In multi–well pools, it may be appropriate to allocate total pool reserves between the developed and undeveloped categories or to subdivide the developed reserves for the pool between developed producing and developed non-producing. This allocation should be based on the estimator’s assessment as to the reserves that will be recovered from specific wells, facilities, and completion intervals in the pool and their respective development and production status.
A production well drilled to begin production after a reservoir has been discovered and defined. Usually takes place over the area with the largest pay thickness in the reservoir.
The addition of diluents enables the diluted fluid to meet pipeline specifications in order for it to be efficiently transported. Typical diluents in these applications are naphtha or light oil used with very heavy oil or bitumen.
The slant of a reservoir.
An exploration well that has encountered hydrocarbons.
The industry sector of oil and gas that focuses on refining, marketing, and distribution of petroleum products and fuels.
The pressure differential between average reservoir pressure and pressure at the bottom of the well bore. It is the engine which makes the oil flow out of the reservoir.
A well that that does not encounter hydrocarbons.
E & P
Exploration and Production.
The “farmor” agrees to assign acreage to a second company (the “farmee”) in return for the second company performing specified drilling and testing obligations; the farmor may also reserve an interest in the acreage assigned and in the production from the wells drilled by the second company.
Any objects left in the way of the well bore (e.g. broken sections of drill pipe or drill bits) during the drilling operation.
Drill stem tests use a meter called a choke, which measures downhole pressure and the capacity of oil to flow within a reservoir. Also indicates permeability. These tests are also carried out on mature wells as well to determine rate of decline.
See Gravity survey – Magnetic survey – Seismic Survey.
A study of the earth’s gravity, which varies with changes in density of subsurface rock. This information is used for surveying prospectivity.
Average thickness of the entire reservoir.
Oil with a low API gravity density (generally <25°API). Heavy or extra–heavy crude oils as defined by the density ranges given, but with viscosities greater than 10,000 mPa.s measured at original temperature in the reservoir and atmospheric pressure, on a gas-free basis, would generally be classified as bitumen. Improved Oil Recovery “IOR” – Any methods used to extract oil other than natural and artificial lift. Infill Well A production well that is drilled in a proven area already producing. Used to recover oil from deposits previously inaccessible from the original well, speed up the extraction, and reduce the amount of water or gas produced with oil. JV Agreements Joint venture. All parties risk capital, but only one party is the field operator and runs the day-to-day for a fee. Kerogen Dense, heavy, dead organic material that contains thousands of carbon compounds. If buried at oil or gas window depth for a sufficient length of time, it will transform into hydrocarbons. Kick A bubble of natural gas that rapidly expands as it rises to the surface after a drill bit penetrates a gas cap above a reservoir. Km Kilometers. Levels of Certainty for Reported Reserves The qualitative certainty levels contained in these definitions are applicable to individual Reserves Entities, which refers to the lowest level at which reserves calculations are performed, and to Reported Reserves, which refers to the highest level sum of individual entity estimates for which reserves estimates are presented. Reported Reserves should target the following levels of certainty under a specific set of economic conditions: • P90: At least a 90 percent probability that the quantities actually recovered will equal or exceed the estimated proved reserves; • P50: At least a 50 percent probability that the quantities actually recovered will equal or exceed the sum of the estimated proved + probable reserves; • P10: At least a 10 percent probability that the quantities actually recovered will equal or exceed the sum of the estimated proved + probable + possible reserves. A quantitative measure of the certainty levels pertaining to estimates prepared for the various reserves categories is desirable to provide a clearer understanding of the associated risks and uncertainties. However, the majority of reserves estimates will be prepared using deterministic methods that do not provide a mathematically derived quantitative measure of probability. In principle, there should be no difference between estimates prepared using probabilistic or deterministic methods. Light crude Oil with a high gravity density (generally >30°API).
A study of the earth’s magnetism. Most oil is contained in nonmagnetic sedimentary rocks (igneous & metamorphic rocks are magnetic and contain no oil).
Thousand barrels of oil equivalent.
Thousand cubic feet.
Thousand cubic feet per day.
A chemical compound with the chemical formula CH4. It is the simplest alkane, and the principal component of natural gas.
The industry sector of oil and gas that focuses on transportation to refineries via tankers or pipelines.
Million barrels of oil equivalent.
Million British thermal units.
Million cubic feet.
Million cubic feet per day.
Million standard cubic feet per day.
Oil that flows through a well driven by the energy of the reservoir.
A mixture of lighter hydrocarbons that exist either in the gaseous phase or in solution in crude oil in reservoirs but are gaseous at atmospheric conditions. Natural gas may contain sulphur or other non-hydrocarbon compounds.
Natural Gas Liquids
Hydrocarbon components that can be recovered from natural gas as liquids including but not limited to, ethane, propane, butanes, pentanes; plus, condensate and small quantities of nonhydrocarbons.
Natural Lift Stage
The natural drive pressure differential pushes the heavy column of oil up the well bore toward the surface. Also known as a ‘natural flow well’
Net Reservoir Thickness/Net Pay or Oil Zone
Vertical extent thickness, measured in feet, of the productive portion of a reservoir.
Total of revenues from oil/gas, less all costs associated with getting oil/gas to market. These costs can include importing, transportation, production and refining costs and royalty fees.
Natural gas liquids.
Original Oil In Place”.
Oil water contact.
Measured in millidarcies (mD), measures how connected the pores are within the rock, indicating how easily oil will flow through it.
A type of stratigraphic trap. The termination, by thinning or tapering out (“pinching out”), of a reservoir against a nonporous sealing rock creates a favorable geometry to trap hydrocarbons, particularly if the adjacent sealing rock is a source rock such as shale.
Percentage of void space versus solid rock, which is the space where oil is potentially trapped.
Estimate of hydrocarbon reserves with a probability of 10% – 49% of being technically and commercially producible. Also known as P3 when referred to as an individual component.
The lowest temperature at which crude behaves as a fluid and can be pumped easily.
Extraction of oil using methods and mechanisms of natural lift or artificial lift.
Estimate of hydrocarbon reserves with a probability of 50% – 89% of being technically and commercially producible. Also known as P2 when referred to as an individual component.
Production Rate Decline
As pressure within a reservoir declines, the daily production rate also declines.
Production Sharing Agreements (PSAs)
Involve an oil company bearing the E&P costs and trying to recoup these costs over a fixed period of time before transferring ownership of the venture back to the land owner.
Production Total Decline
This happens when a well is over-produced or drawn too hard, too quickly. The total amount of oil recoverable from a reservoir is dependent on the rate at which the oil is removed.
Productivity Index (PI)
Estimate of hydrocarbon reserves with a probability of 90% or greater of being technically and commercially producible. Also known as P1 when referred to as an individual component.
Those quantities of oil and gas estimated on a given date to be potentially recoverable from undiscovered accumulations. They are technically and economically recoverable.
Measures the average numbers of bbl/d produced divided by the pressure (psi) of the drawdown – gives a metric with which different reservoirs can be compared.
Maximum percentage of oil in place which is technically recoverable.
Remote Imaging Analysis
Photographic and radar images from satellites, looking for signs of anticlines or fault lines.
Reserves Categories: Estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from know accumulations, from a given date forward, based on:
• Analysis of drilling, geological, geophysical and engineering data;
• The use of established technology;
• Specified economic conditions, which are generally accepted as being reasonable, and shall be disclosed.
Reserves are classified according to the degree of certainty associated with the estimates.
• Proved Reserves: Those reserves that can be estimated with high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.
• Probable Reserves: Additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved + probable reserves.
• Possible Reserves: Those additional reserves that are less certain to be recovered than probable reserves. It is unlikely that the actual remaining quantities recovered will exceed the sum of the estimated proved + probable + possible reserves.
Reservoir Pressure (Psi)
The average pressure across the reservoir.
A porous and permeable rock in which hydrocarbons accumulate.
Due to the high uncertainty in estimating resources, evaluations of these assets require some type of probabilistic method. Expected value concepts and decision tree analyses are routine; however, in high risk–high-reward projects, Monte Carlo simulation can be used. In any event, three success cases plus a failure case should be included in the evaluation of the resources. When evaluating resources, particulary contingent and prospective resources, the following mutually exclusive categories are recommended:
• Low Estimate: This is considered to be a conservative estimate of the quantity that will actually be recovered from the accumulation. If probabilistic methods are used, this term reflects a P90 confidence level.
• Best Estimate: This is considered to be the best estimate of the quantity that will actually be recovered from the accumulation. If probabilistic methods are used, this term is a measure of central tendency of the uncertainty distribution (most likely/mode, P50/median, or arithmetic average/mean.)
• High Estimate: This is considered to be an optimistic estimate of the quantity that will actually be recovered from the accumulation. If probabilistic methods are used, this term reflects a P10 confidence level.
Involves “push” mechanisms that attempt to maintain or increase reservoir pressure when primary recovery production rates fall. Water flooding is the most commonly used method.
Works on the principle of the time it takes for reflected sound waves to travel through rock of varying densities. 2D or 3D seismic surveys create virtual images of what a reservoir looks like.
Flat fee paid by mineral rights owner to E & P company to carry out the E & P. Only paid if production takes place.
After abandonment, the entire production surface completion, including wellheads, piping, buildings are dismantled and the storage tanks are removed. The well is plugged and the site is returned to its original state.
Oil with a high sulphur content (generally >1.5% by weight).
Rock rich in dead, organic material (kerogen) buried deep enough for heat and pressure to change it into hydrocarbons.
Initial stage of drilling.
Exploration well drilled outside the proven limits of an oil field, specifically to test whether the production area can be expanded.
Stock Tank Oil Initially In Place – The total hydrocarbon content of an oil reservoir.
Stratigraphic traps form when other beds seal a reservoir bed or when the permeability changes within the reservoir bed (change of facies). Examples of stratigraphic traps are: a) unconformity traps, b) pinchout traps, and c) lens traps.
Structural traps form because of a deformation in the rock layer that contains the hydrocarbons. Examples of structural traps are: a) anticlinal traps, b) fault traps, and c) salt dome.
Oil with a low sulphur content (generally <0.5% by weight).
Trillion cubic feet.
Also known as Enhanced Oil Recovery (“EOR”), an attempt to enhance reservoir rock permeability by creating fractures within the rock formations e.g. hydraulic fracturing; displacing oil by pumping inert gases; and lowering the viscosity of the crude in order to allow it to flow better e.g. combustion in situ.
Pulling the entire drill string out of the hold in order to replace drill bits or to make other necessary adjustments.
True vertical depth.
True vertical depth below sea level.
Quantities of oil and gas estimated on a given date to be contained in accumulations yet to be discovered. The estimated potentially recoverable portion of undiscovered resources is classified as prospective resources.
The industry sector of oil and gas that focuses on exploration and production of hydrocarbon’s.
Viscosity is a measure of how easily oil will flow. Inside the reservoir, viscosity is measured in poises (P); outside the reservoir, measured in centistokes (cS).
Water saturation (Sw)
The percentage of pore space filled with water. Generally, a reservoir should have less than 60% water.
A drilling test that defines the pay zone by using seismic, radiation, and electrical resistance equipment down the borehole.
An exploration well drilled in an unproven area. A rank wildcat is a well that is drilled in an area where no well has ever been drilled before.
A percentage of ownership in an oil and gas lease granting its owner the right to explore, drill and produce oil and gas from a tract of property. Working interest owners are obligated to pay a corresponding percentage of the cost of leasing, drilling, producing and operating a well or unit. After royalties are paid, the working interest also entitles its owner to share in production revenues with other working interest owners, based on the percentage of working interest owned.
Switching from natural lift to artificial lift is known as “working over a well”.
West Texas Intermediate, a reference oil crude used in setting prices.
Definition of Resources and Reserves
Taken from Section 5 of Volume 1 of the Canadian Oil and Gas Evaluation Handbook, by the Society of Petroleum Evaluation Engineers (Calgary Chapter) and the Canadian Institute of Mining, Metallurgy and Petroleum (Petroleum Society), June 30, 2002.