Glossary of Frequently Used Oil & Gas Terms

Acreage

The area over which a company has hydrocarbon exploration interest. Acreage is also the plural form of acre which is a land unit of measurement in the US. An acre is equal to 43,560 square feet or 4,046.86 square meters. Acres is the measurement used in Oil and Gas leases to determine payment of lease bonus and royalties to the landowner (Lessor).

Aquifer

A body of permeable rock that can contain or transmit groundwater.

Bonus Consideration Payment

Lease Bonus is usually the cash consideration that is paid by the lessee for the execution of an oil and gas lease by a landowner

Coal Bed Methane

Often referred to as CBM, is methane stored within coal by a process called adsorption. The methane is in a near-liquid state, lining the inside of pores within the coal. To extract the gas, a steel-encased hole is drilled into the coal seam reducing the pressure within the coal seam causing both gas and ‘produced water’ escape to the surface through tubes.

Completion

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

Condensate

A low-density mixture of hydrocarbon liquids that are present as gaseous components in raw natural gas.

Conventional Resource

Any area where natural gas or oil can be drilled and extracted vertically.

Cubic Foot of Gas

The amount of natural gas required at room temperature at sea level to fill a volume of one cubic foot.

Cubic Meter of Gas

The amount of natural gas required at room temperature at sea level to fill a volume of one cubic meter.

Directional Drilling

A technique that enables drilling at an angle to reach a particular underground formation.

Dry Gas

Natural gas not containing any liquid components.

Flaring

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

Hydraulic Fracturing

The pumping of water and sand into a reservoir with enough force that the reservoir rock is cracked creating a network of fractures resulting in the flow of oil or gas from the reservoir to the surface.

Horizontal Drilling

An advanced form of directional drilling in which the lateral hole is drilled horizontally.

Liquid-Rich Shale

Shale rocks that contain oil instead of, or in addition to, gas.

Marcellus Shale

A unit of marine sedimentary rock found in eastern North America. Named for a distinctive outcrop near the village of Marcellus, New York in the United States, it extends throughout much of the Appalachian Basin.

Natural Gas

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

Natural Gas Liquids (NGL)

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

Permeability

The state or quality of a material or membrane that causes it to allow liquids or gases to pass through it.

Play

Formation capable of exploitation.

Porosity

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

Reservoir

Porous, permeable rock containing oil and natural gas; enclosed or surrounded by layers of less permeable or impervious rock.

Royalty Payment

Whenever oil or gas production begins, the landowner is entitled to part of the total production. A royalty is agreed upon as a percentage of the lease, minus what was reasonably used in the Lessee’s production costs. The royalty is paid by the Lessee to the owner of the mineral rights, the Lessor in the Lease. It is based on a percentage of the gross production from the property and is free and clear of all costs, except for taxes.

Shale

Sedimentary rock with low permeability and porosity.

Shale Gas

Shale gas is natural gas formed from being trapped within underground shale formations. Shale gas has become an increasingly important source of natural gas in the US over the past decade, and interest has spread to potential gas shales in the rest of the world.

Shale Oil

Shale oil is oil contained within shale that can be extracted without heating. Similar drilling and fracturing techniques are used as in shale gas production. There is shale oil present in some of the large shale plays in the U.S.

Tight Gas

Similar to shale gas but is trapped in other types of low permeability rock. Reservoirs require artificial fracturing to enable the gas to flow. Horizontal drilling and hydraulic fracturing are also used to develop such resources.

Unconventional Resource

Any area (shales, tight sands, fractured carbonates) where natural gas cannot be drilled and extracted vertically.

Wellhead

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

Wet Gas

Natural gas containing liquid components.