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Oil and Energy Glossary
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NAMIBIA, MAURITANIA, CONGO, SENEGAL, MOROCCO, TANZANIA, TUNISIA, LIBYA, MOZAMBIQUE, UGANDA, CAMEROON, NIGERIA, CHAD, EQUAT, GUINEA, GHANA, SOUTH AFRICA, DR CONGO, SUDAN, BENIN, ZAIRE, ALGERIA, ETHIOPIA, EGYPT, GABON, IVORY COAST, ANGOLA, KENYA.
American Petroleum Institute measure of specific gravity of crude oil or condensate in degrees. An arbitrary scale expressing the gravity or density of liquid petroleum products. The measuring scale is calibrated in terms of degrees API; it is calculated as follows:
Degrees API = (141.5 / sp.gr.60 deg.F/60 deg.F) - 131.5
VIETNAM, CAMBODIA, NEW ZEALAND, SINGAPORE, PNG, HONG KONG, JAPAN, BANGLADESH, BRUNEI, EAST TIMOR, CHINA, INDIA, PAKISTAN, THAILAND, TADZHIKISTAN, AUSTRALIA, MALAYSIA, MYANMAR, PHILIPPINES, SOUTH KOREA, PAPUA, NEW GUINEA, INDONESIA, TAIWAN.
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Formally, backwardation means a downward sloping forward curve (as in an inverted yield curve). A backwardation starts when the difference between the forward price and the spot price is less than the cost of carry, or when there can be no delivery arbitrage because the asset is not currently available for purchase.
The opposite market condition to backwardation is known as contango, in which the spot price is lower than the forward price.
A unit of volume equal to 42 U.S. gallons.
Liquid fuels and blending components produced from biomass feedstocks, used primarily for transportation.
The quantity of heat required to raise the temperature of 1 pound of liquid water by 1 degree Fahrenheit at the temperature at which water has its greatest density (approximately 39 degrees Fahrenheit).
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The capacity utilization rate is the value of production capacity which is actually being utilized over a specific period of time. The capacity utilization rate is measured in percentages and is adjusted to reflect production aptitude of various capital goods and natural resource producers, as well as factories, utilities and the like.
Crude Oil capacity utilization equals crude oil production divided by crude oil production capacity.
In petroleum and natural gas extraction, a Christmas tree, or "Tree", (not "Wellhead" as sometimes incorrectly referred to) is an assembly of valves, spools, and fittings, used for an oil well, gas well, water injection well, water disposal well, gas injection well, condensate well and other types of wells. It was named for its crude resemblance to a decorated tree.
Closing Stock Represents the primary stock level at the end of the month within national territories; includes stocks held by importers, refiners, stock holding organisations and governments.
Stocks are a leading indicator of price movements: the level of oil stocks often
determines the price, e.g. when oil stocks are low, it means that there may be a shortage
or a need for replenishing, which indicates that prices will be rising. On the other hand, if
the industry is amply supplied with the right oil, there may be a price reduction expected.
This is why it is important to have information on the situation of oil stocks in the world.
In petroleum production, completion is the process of making a well ready for production (or injection). This principally involves preparing the bottom of the hole to the required specifications, running in the production tubing and its associated jewellery and perforating and stimulating as required. Sometimes, the process of running in and cementing the casing is also included.
Condensate is a mixture of hydrocarbons (such as Pentane) in natural gas which readily become liquid at normal temperatures and pressures. Condensates are typically found along with natural gas, and may also be found in crude oil wells. Condensates need to be separated from the gas (Methane) as they would otherwise liquify in the pipelines.
Contango is a term used in the futures market to describe an upward sloping forward curve (as in the normal yield curve). Such a forward curve is said to be "in contango" (or sometimes "contangoed").
Formally, it is the situation where, and the amount by which, the price of a commodity for future delivery is higher than the spot price, or a far future delivery price higher than a nearer future delivery. This is a normal situation for equity markets.
The opposite market condition to contango is known as backwardation.
OPEC Definition: Crude oil is technically defined as a mixture of hydrocarbons that exists in the
liquid phase in natural underground reservoirs and remains liquid at atmospheric pressure after passing through surface separating facilities.
Aside from this definition, crude oil may present itself in a number of forms. It may be viscous or thin, and may be a variety of different colours - depending on the field from which it originates. Crude oil of itself is not particularly useful and does not burn very well - as its name suggests, it requires refinement into petroleum products which are individually more useful.
Marketed production, after removal of impurities but including quantities consumed by the producer in the production process.
OPEC Definition: Production volumes reported as crude oil include total crude oil coming out of
degassing or treatment plants directly received or measured at storage facilities including
shares from joint fields.
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The total demand of oil in a country includes the volume of oil required to supply all final consumers, energy transformation units (including refineries), energy producers within the country and to provide all the national and foreign customers with fuels which they will use in international navigation and aviation (e.g. international aviation, marine bunkers, fishing etc.).
Total oil demand also includes volumes of crude oil, natural gas liquid and other hydrocarbons which are used directly without being processed in petroleum refineries (direct use). It concerns mainly oil which can be used unprocessed by power plants to generate electricity and heat.
Directional drilling (or slant drilling) is the practice of drilling non-vertical oil or gas wells. This is necessary because the fields themselves are often not vertical themselves or indeed may be situated in a position where vertical drilling is not possible (for instance of the field is located beneath a town).
A drillship is a ship that has been fitted with drilling apparatus. It is most often used for exploratory offshore drilling of new oil or gas wells in deep water or for scientific drilling. The drillship can also be used as a platform to carry out well maintenance or completion work such as casing and tubing installation or subsea tree installations.
It is often built to the design specification of the oil production companyor investors, but can also be a modified tanker hull outfitted with a dynamic positioning system to maintain its position over the well.
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In economics, a depression is a sustained, long-term downturn in economic activity in one or more economies. It is a more severe downturn than a recession, which is seen as part of a normal business cycle.
A depression is characterized by its length, and by abnormal increases in unemployment, falls in the availability of credit, shrinking output and investment, numerous bankruptcies, reduced amounts of trade and commerce, as well as highly volatile relative currency value fluctuations, mostly devaluations. Price deflation, financial crisis and bank failures are also common elements of a depression.
In economics, a recession is a general slowdown in economic activity over a long period of time, or a business cycle contraction. During recessions, many macroeconomic indicators vary in a similar way. Production as measured by Gross Domestic Product (GDP), employment, investment spending, capacity utilization, household incomes, business profits and inflation all fall during recessions; bankruptcies and the unemployment rate rises.
Effective exchange rate is a multilateral exchange rate which is a weighted average of exchange rates of home and foreign currencies, with the weight for each foreign country equal to its share in trade. It measures the average price of a home good relative to the average price of goods of trading partners, using the share of trade with each country as the weight for that country.
Energy intensity is a measure of the energy efficiency of a nation's economy. It is calculated as units of energy per "unit" of GDP.
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High energy intensities indicate a high price or cost of converting energy into GDP.
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Low energy intensity indicates a lower price or cost of converting energy into GDP.
AUSTRIA, DENMARK, FORMER SERBIA AND MONTENEGRO, EIRE, ROMANIA, CZECH, GERMANY, HUNGARY, SPAIN, PORTUGAL, CROATIA, POLAND, SLOVENIA, ITALY, TURKEY, UK, ALBANIA, BULGARIA, NETHERLANDS, SERBIA, NORWAY, CYPRUS, FRANCE, SWEDEN, GREECE, SLOVAKIA, YUGOSLAVIA.
Extended Reach Drilling (ERD) describes an extreme form of Directional drilling that achieves horizontal well departures beyond the conventional, or achieves particularly challenging geometries of a well in terms of horizontal versus vertical offsets from the surface location.
The aim of ERD are either to reach a larger area from one surface drilling location, or to keep a well for a longer distance in a reservoir in order to maximise its productivity and drainage capability.
The challenges in ERD are in cleaning of the hole and managing of the significant torsion in the drill string as well as any buckling of drill string or casing that is caused by the well geometry and length. It therefore uses special equipment. What exactly determines a well to be "extended reach" various over time and location with the development of technologies and of experiences. In 1981, a horizontal outstep of 5000 feet from the surface location was considered "extended reach", whilst in recent years over 40,000 feet outstep are achieved.
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Fixed platforms are built on concrete and/or steel legs anchored directly onto the seabed, supporting a deck with space for drilling rigs, production facilities and crew quarters. Such platforms are, by virtue of their immobility, designed for very long term use (for instance the Hibernia platform).
Fixed platforms are economically feasible for installation in water depths up to about 1,700 feet (520 m).
FOB is an acronym associated with the shipping of goods. Depending on specific usage, it may stand for Free On Board or Freight On Board, with similar but distinct implications.
FOB specifies which party (buyer or seller) pays for which shipment and loading costs, and/or where responsibility for the goods is transferred. The last distinction is important for determining liability for goods lost or damaged in transit from the seller to the buyer.
The forward price (or sometimes forward rate) is the agreed upon price of an asset in a forward contract. Using the rational pricing assumption, we can express the forward price in terms of the spot price and any dividends etc., so that there is no possibility for arbitrage.
A type of floating tank system used by the offshore oil and gas industry and designed to take all of the oil or gas produced from nearby platforms or templates, process it, and store it until the oil or gas can be offloaded onto a tanker or transported through a pipeline.
Comprises the following countries:
RUSSIA, AZERBAJIJAN, BELARUS, ESTONIA, GEORGIA, LITHUANIA, KYRGHYSTAN, KAZAKHSTAN, TAJIKISTAN, TURKMENISTAN, UKRAINE, UZBEKISTAN.
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OPEC Definition: Gas/diesel oil refers to heavy oils obtained from atmospheric distillation or
vacuum redistillation. The viscosity does not exceed 115” Redwood 1 at 38oC.
OPEC Definition: A complex mixture of relative volatile hydrocarbons, with or without small
quantities of additives that have been blended to form a fuel suitable for use in internal
combustion engines; includes gasoline used in aviation.
The gross domestic production(GDP) or gross domestic income (GDI) is a basic measure of a country's economic performance and is the market value of all final goods and services made within the borders of a country in a year. It is a fundamental measurement of production and is very often positively correlated with the standard of living though its use as a stand-in for measuring progress in increasing the standard of living has come under increasing criticism and many countries are actively exploring alternative measures.
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OPEC Definition: Fuel oil is heavier oils that remain after the distillate fuel oils and lighter
hydrocarbons are boiled off in refinery operations. The viscosity is above 115” Redwood
1 at 38oC. It is used for the production of electric power, space heating, vessel bunkering,
and various industrial purposes.
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OPEC Definition: Imports and exports comprise amounts having crossed the national territorial
boundaries of the country whether or not customs clearance has taken place. Quantities
of crude oil and oil products imported or exported under processing agreements (i.e.
refining on account) are included. Quantities of oil in transit are excluded.
Crude oil and NGLs are reported as coming from the country of origin; refinery
feedstocks and oil products are reported as coming from the country of last consignment.
Re-export of oil imported for processing within bonded areas are shown as an export of
product from the processing country to the final destination.
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Jack-up platforms (or jack-ups), as the name suggests, are platforms that can be jacked up above the sea using legs that can be lowered, much like jacks. These platforms are typically used in water depths up to 400 feet (120 m), although some designs can go to 550 feet (170 m) depth. They are designed to move from place to place, and then anchor themselves by deploying the legs to the ocean bottom using a rack and pinion gear system on each leg.
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OPEC Definition: Comprises Jet fuel and Other Kerosene. Jet Fuel: Fuel of naphtha and kerosene
type suitable for commercial or military purpose on aircraft turbine engines. Other
Kerosene: Light hydrocarbon distillates in the 150 to 280oC distillation range and used
as a heating fuel and as fuel for certain types of internal combustion engines.
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SURINAME, CHILE BOLIVIA, ARGENTINA, NETHERLANDS ANTILLES, BARBADOS, PERU, ECUADOR, VENEZUELA, COLOMBIA, GUATEMALA, TRINIDAD, MEXICO, BRAZIL.
Some crude oils are particularly runny (as opposed to viscous). This type of crude oil is easier to refine and is therefore the most sought-after variant of crude oil.
Liquefied Petroleum Gas (LPG) is the generic name for commercial propane and
commercial butane. It can be produced from natural gas processing plants or from
refineries.
LPG occurs naturally as gas at atmospheric pressure. It has the special property of
becoming liquid at atmospheric temperature if moderately compressed and can easily be
converted from liquid into gas by being released to atmospheric pressure. In order to
facilitate transport and storage, LPG is usually bottled in liquid state (about 250 times
more dense than in its gaseous form), propane however can also be supplied in bulk for
storage tanks at consumers’ premises.
LPG is used domestically, mainly for heating and cooking purposes and industrially, for
example as feedstock by the Petrochemical industry. It is also increasingly used in the
transport sector as vehicle fuel, because of its cleaner burning properties and often lower
end-use price.
OPEC Definition: LPG is a light hydrocarbons fraction of the paraffin series produced in refineries
and gas plants, comprising propane (C3H8) and butane (C4H10) or a mixture of these two
hydrocarbons.
All petroleum products, natural gas liquids, biofuels, and liquids derived from other hydrocarbon sources (coal to liquids and gas to liquids). Not include are compressed natural gas (CNG), liquefied naturalgas (LNG), and hydrogen.
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IRAQ, OMAN, UNITED ARAB EMIRATES, IRAN, SYRIAN ARAB, ISRAEL, YEMEN, BAHRAIN, JORDAN, UAE , QATARk SAUDI ARABIAk SYRIAk KUWAIT.
Short term mobile production system, mainly for early production systems.
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Natural gas is a gaseous mixture of hydrocarbon compounds, the primary one being methane. It is found associated with fossil fuels, in coal beds, as methane clathrates, and is created by methanogenic organisms in marshes, bogs, and landfills.
It is an important fuel source, a major feedstock for fertilizers, and a potent greenhouse gas. Natural gas is often informally referred to as simply gas, especially when compared to other energy sources such as electricity. Before natural gas can be used as a fuel, it must undergo extensive processing to remove almost all materials other than methane. The by-products of that processing include ethane, propane, butanes, pentanes and higher molecular weight hydrocarbons, elemental sulfur, and sometimes helium and nitrogen.
Oil and natural gas are produced by the same geological process: anaerobic decay of organic matter deep under the Earth's surface. As a consequence, oil and natural gas are often found together.
In common usage, deposits rich in oil are known as oil fields, and deposits rich in natural gas are called natural gas fields.
USA (GULF OF MEXICO), USA (DEEP US GULF), UAW, USA CUBA USA (CALIFORNIA), USA (ALASKA), USA (LOWER 48) CANADA.
North Sea oil is a mixture of hydrocarbons, comprising liquid oil and natural gas, produced from oil reservoirs beneath the North Sea. In the oil industry, the term "North Sea" often includes areas such as the Norwegian Sea and the UK "Atlantic Margin" (west of Shetland) that are not, strictly speaking, part of the North Sea.
Brent crude is still used today as a standard benchmark for pricing oil, although the contract now refers to a blend of oils from fields in the northern North Sea.
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An oil field is a region with an abundance of oil wells extracting petroleum (crude oil) from below ground. Because the oil reservoirs typically extend over a large area, possibly several hundred kilometres across, full exploitation entails multiple wells scattered across the area. In addition, there may be exploratory wells probing the edges, pipelines to transport the oil elsewhere, and support facilities.
An offshore platform, often referred to as an oil platform or an oil rig, is a large structure used to house workers and machinery needed to drill wells in the ocean bed, extract oil and/or natural gas, process the produced fluids, and ship or pipe them to shore.
Depending on the circumstances, the platform may be fixed to the ocean floor, may consist of an artificial island, or may float. Most offshore platforms are located on the continental shelf, though with advances in technology and increasing crude oil prices, drilling and production in deeper waters has become both feasible and economically viable.
A typical platform may have around thirty wellheads located on the platform and directional drilling allows reservoirs to be accessed at both different depths and at remote positions up to 5 miles (8 kilometers) from the platform.
Remote subsea wells may also be connected to a platform by flow lines and by umbilical connections; these subsea solutions may consist of single wells or of a manifold centre for multiple wells.
An oil refinery is an industrial process plant where crude oil is processed and refined into more useful petroleum products, such as gasoline, diesel fuel, asphalt base, heating oil, kerosene and liquefied petroleum gas. Oil refineries are typically large sprawling industrial complexes with extensive piping running throughout, carrying streams of fluids between large chemical processing units.
The oil-storage trade is a trading strategy where oil tank owners and companies that lease storage buy oil for immediate delivery and stick it in their storage tanks, then sell contracts for future delivery at a higher price. When delivery dates approach, they close out existing contracts and sell new ones for future delivery of the same oil.
The oil never moves out of storage. Trading in this fashion is only successful if the forward market is in "contango", that is if the price of oil in the future also known as forward prices are higher than current prices or spot prices. Storing oil became big business in 2008 and 2009, with many participants - including Wall Street giants such as Morgan Stanley, Goldman Sachs or Citicorp - turning sizeable profits simply by sitting on tanks of oil.
The difference between actual production and nominal maximum capacity that OPEC could implement within a period of three months. If there is plenty of spare capacity then a business should be able to increase its output without further investment cost.
The assumption is that supply will therefore be elastic in response to a change in demand. OPEC spare capacity has been used as a cushion to stabilise oil prices in the past and is regarded as a barometer of likely market price. The very low level of OPEC spare capacity experienced during 2004/5 was one of the main factors that drove up oil prices until 2008. OPEC is now reluctant to invest in spare capacity that serves only to moderate or lower prices.
Aggressive versus defensive strategies: However, there is a clear distinction between an aggressive strategy where live production capacity is withdrawn in order to raise prices as demand falls (strategy from late 2008 through 2009). Defensive capacity management strategy occurs where production is shut down to counteract growth in competing non-OPEC supply and to prevent price collapse (1985-2004). OPEC is still in aggressive strategy mode in 2012, with a risk of a switch to defensive if recession returns and non-OPEC supply responds to higher prices in 2012-2015.
Open Interests (also known as open contracts or open commitments) refers to the total number of derivatives contracts, like futures and options, that have not been settled in the immediately previous time period for a specific underlying security.
For each buyer of a futures contract there must be a seller. From the time the buyer or seller opens the contract until the counter-party closes it, that contract is considered 'open'.
Algeria (1969), Angola (2007), Ecuador (rejoined 2007), Indonesia (1962), the Islamic Republic of Iran (1960), Iraq (1960), Kuwait (1960), the Socialist People’s Libyan Arab Jamahiriya (1962), Nigeria (1971), Qatar (1961), Saudi Arabia (1960), United Arab Emirates (1967), Venezuela (1960).
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Petroleum coke (often abbreviated Pet coke or petcoke) is a carbonaceous solid derived from oil refinery coker units or other cracking processes. Other coke has traditionally been derived from coal.
Marketable coke is coke that is relatively pure carbon and can be sold for use as fuel (i.e. fuel grade coke), or for the manufacture of dry cells, electrodes (ie anode grade coke).
Needle coke, also called acicular coke, is a highly crystalline petroleum coke used in the production of electrodes for the steel and aluminum industries.
Catalyst coke is coke that has deposited on the catalysts used in oil refining, such as those in a fluid catalytic cracker. This coke is impure and is only used for fuel.
In geology, a petroleum play, or simply a play, is a group of oil fields or prospects in the same region that are controlled by the same set of geological circumstances.
Primary stocks are held by the various companies supplying the market, ranging from
producers, refiners to importers. They are held in refinery tanks, bulk terminals, pipeline
tankage, barges and coastal tankers (if they stay in the same country), tankers in port (if
they are to be discharged at port) and in inland ship bunkers. Additionally, stocks held for
strategic purposes by governments (e.g. US SPR) or by stockholding organisations (e.g.
EBV in Germany) are included in the primary stock category.
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The maximum amount of input to crude oil distillation units that can be processed in an average 24-hour period. |
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OPEC Definition: Total input of crude, NGL, condensates and feedstocks to atmospheric crude
distillation unit.
OPEC Definition: The total amount of petroleum products produced from refinery input in a given
period, excluding refinery fuel and loss.
Refinery utilization rate represents the use of the atmospheric crude oil distillation units. The rate is calculated by dividing the gross input to these units by the operable refining capacity of the units.
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Secondary stocks are stocks in small bulk plants (marketing facilities below a certain
capacity e.g. 50,000 bl in US, which receive their product by rail or truck) and retail
establishments.
Semi-submersible platforms have hulls (columns and pontoons) of sufficient buoyancy to cause the structure to float, but of weight sufficient to keep the structure upright. Semi-submersible platforms can be moved from place to place; can be ballasted up or down by altering the amount of flooding in buoyancy tanks; they are generally anchored by combinations of chain, wire rope and/or polyester rope during drilling and/or production operations, though they can also be kept in place by the use of dynamic positioning. Semi-submersibles can be used in water depths from 200 to 10,000 feet (60 to 3,050 m).
Crude oil with a relatively high content of sulphur (as opposed to sweet crude). Sulphur needs to be removed from oil products during processing, so this oil is more expensive to refine.
The price for a one-time open market transaction for near-term delivery of a specific quantity of product at a specific location where the commodity is purchased “on the spot” at current market rates.
OPEC Definition: Stock changes reflect the difference between closing levels on the last day of the
period and opening stock levels on the first day of the period of stocks on national
territory held by producers, importers, energy transformation industries and large
consumers. A stock build is shown as a positive number, and a stock draw as a negative
number.
OPEC Definition: Stocks include all nationally owned crude oil, refined products and gas plant
products held within and outside national boundaries (on shore as well as floating) held
by importers, governments, national oil companies and major non-importing final
consumers in the following facilities; bulk terminals, refinery tanks, pipeline tankage,
barges and tankers.
Subsea is a general term frequently used to refer to equipment, technology, and methods employed in marine biology, undersea geology, and in the offshore petroleum exploration/development and offshore wind power industries. This may be in "shallow" or "deepwater".
Deepwater is a term often used to refer to subsea projects located in water depths greater than 1,000 feet and may include floating drill vessels, semi-submersible oil platformss and floating wind turbines.
Shallow or shelf is used for shallower depths which may include standing jackup oil drilling or production rigs. Similarly, jackup barges are frequently used in the construction of monopile-foundation, fixed-bottom wind turbines.
Crude oil that contains very little sulphur. Sulphur needs to be removed from the oil before it can be sold, so sweet crude costs less to process.
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Tertiary stocks are stocks held by final end-consumers, they can be power plants,
industrial entities or consumers in the residential/commercial sector.
Total oil includes all oil products: the five main product groups described above (LPG,
Gasoline, Kerosene, Gas/diesel Oil and Heavy Fuel Oil) but also all the products which
were not identified separately : refinery gas, ethane, naphtha, gasoline type jet fuel,
petroleum coke, white spirit & SBP, paraffin waxes, bitumen, lubricants and other
products.
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Wellhead production is all oil which exits the ground (wellhead). When the crude oil has
been brought to the surface, it requires further treatment so that it can be sent to
refineries for processing. The oil produced at the well-head varies considerably from field
to field, due not only to the physical characteristics, but also to the amount of gas and
water which it contains. Before the oil can be sold, the remaining gas, water and other
impurities need to be removed. Once this is done, the oil is stored at the terminal before
transport to refineries. It is at this point that the produced oil becomes marketable
(production).
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Glossary of Terms