Definitions

Additional Oil and Gas definitons are available on definitions.uslegal.com.  Vist it now: http://definitions.uslegal.com/search.php?q=oil

A

Abandon: To temporarily or permanently cease production from a well or to cease further drilling operations.

Abandoned: A dry hole in which no producible oil or gas was present, or a well that has stopped producing.  Abandoned wells must be plugged to prevent seepage of oil, gas, or water from one formation to another.

Acid fracture: To part or open fractures in limestone formations by using fluid under hydraulic pressure.

Acid Treatment: A refining process in which unfinished petroleum products such as gasoline, kerosene, diesel fuels, and lubricating stocks are treated with sulfuric acid to improve color, odor, and other properties.

Acidize: To treat formations with acid for the purpose of increasing production.

Acidizing: A technique for increasing the flow or oil and/or gas into a well.  Hydrochloric acid is pumped into the oil-bearing rock.  The acid dissolves limestone in the producing zone enlarging pores and flow into the well bore with less restrictions.

Adverse possession: A method of asserting and gaining title to property against other claimants, including the record owner.  The claim through adverse possession must include certain acts, as required by applicable state statute, over an uninterrupted interval of time.  It is also open, notorious, and hostile.

Artificial lift: Pumping an oil well with a rod, tubing, or bottom-hole centrifugal pump may be termed artificially lifting crude oil to the surface or doing so by mechanical means after a well ceases to flow.

Assignee: The party to whom oil and gas leases or overriding royalty are assigned.

Assignment: In oil and gas usage, an assignment is a transfer of a property or an interest in an oil or gas property; most commonly, the transfer of an oil or gas lease.  The assignor does the transferring and the assignee receives the interest of property.

Assignor: The party conveying oil and gas leases or overriding royalty in an Assignment.

B

Barrel: The unit of volume of crude oil in use in the oil industry, especially in the USA and the UK.  Dates back to the days of sailing ships, when oil was shipped in casks.  One barrel is the equivalent of 42 U.S. gallons or 0.15899 cubic meters (9,702 cubic inches).

Behind the Pipe: Refers to oil and gas reservoirs penetrated or passed through by wells, but never tapped or produced.  Behind the pipe usually refers to tight formations of low permeability that, although recognized, were passed through because they were uneconomical to produce at the time.  Today, however, with the growing scarcity of oil and high prices, many of these passed-through formations are getting a second look by producers.

Bit: A cutting or boring element used in drilling to break up rock mechanically in order to penetrate the subsoil gradually.  The bit will dig a circular hole.

Blowout: An uncontrolled flow of gas, oil, or other well fluids from the well to the atmosphere.  A well may blow out when formation pressure exceeds the pressure overburden of a column of drilling fluid.

Blowout preventer: Safety system that quickly closes a well in the course of drilling, to avoid accidental blowouts.

BOE: Barrels of oil equivalent.

Bonus: The cash consideration paid to for a mineral lease.  The payment is made in addition to any rental and the royalty obligations specified in the lease.

Bottom hole: The lowest or deepest part of a well.

Bottom hole pressure: 1). The pressure at the bottom of a bore hole.  It is caused by the hydrostatic pressure of the well bore fluid and, sometimes, by any back pressure held at the surface, as when the well is shut in with blowout preventers.  When mud is being circulated, bottom hole pressure is the hydrostatic pressure plus the remaining circulating pressure required to move the mud up the annulus.  2). The pressure in a well at a point opposite the producing formation, as recorded by a bottom hole pressure measuring device.

Brine: Water that has a quantity of salt, especially sodium chloride, dissolved in it; salt water.

BS&W: Basic sediment & water.

C

Cased hole: A well bore in which casing (pipe) has been run.

Casing: Set of steel tubular (pipe) elements used to line the inner wall of a drill hole, to consolidate it.  The casing is secured by cementing the annular space between the hole wall and the casing.  Each time tubing is installed, the well diameter is reduced, so that the tubing in a well forms a telescopic assembly.  The tubes are usually standard length, and are assembled by threaded sleeves.

Casing string: The entire length of all the joints of casing run in a well.

Cellar: A pit in the ground to provide additional height between the rig floor and the well head to accommodate the installation of blowout preventers, rat holes, mouse holes, and so forth.  It also may collect drainage water and other fluids for subsequent disposal.

Cement casing: To fill the annulus between the casing and wall of the hole with cement to support the casing and prevent fluid migration between permeable zones.

Choke: A device with an orifice installed in a line to restrict the flow of fluids.

Christmas tree: The control valves, pressure gauges, and chokes assembled at the top of a well to control flow of oil and/or gas after the well has been drilled and completed.  It is used when reservoir pressure is sufficient to cause reservoir fluids to rise to the surface.  Another name for a wellhead.

Coiled tubing: A continuous string of flexible steel tubing, often hundreds or thousands of feet long, that is wound onto a reel, often dozens of feet in diameter.  The reel is an integral part of the coiled tubing unit, which consists of several devises that ensure the tubing can be safely and efficiently inserted into the well from the surface.  Also called reeled tubing.

Complete a well: To finish work on a well and bring it to productive status.

Completion (well): The installation of permanent equipment (tubing, installation of valves, wellhead, etc.) to bring a producing well into operation.

Conductor casing: Generally, the first string of casing in a well.  Its purpose is to prevent the soft formations near the surface from caving in and to conduct drilling mud from the bottom of the hole to the surface when drilling starts.  Also called the conductor pipe or drive pipe.

Conductor hole: The hole where the crew starts the top of the well.

Core: A cylindrical sample taken from a formation for geological analysis.

Core sample: A small portion of a formation obtained by using a core barrel and bore bit in an existing well bore.

Coring: The process of cutting a vertical, cylindrical sample of the formations encountered as a well is drilled.

Crude oil: Oil as it comes from the well; unrefined petroleum.

Cutting: The fragments of rock dislodged by the bit and brought to the surface in the drilling mud.  Washed and dried cuttings samples are analyzed by geologists to obtain information about the formations drilled.

D

Daily drilling report: A record made each day of the operations on a working drilling rig and, traditionally, phoned, faxed, emailed, or radioed in to the office of the drilling company and possibly the operator, every morning.

Delay rental: Consideration paid to the lessor by a lessee to extend the terms of an oil and gas leases in the absence of operations or production that is contractually required to hold the lease.  This consideration is usually required to be paid on or before the anniversary date of the oil and gas lease during its primary term, and typically extends the lease for an additional year.  Nonpayment of the delay rental in the absence of production or commencement of operations, will result in lease termination.

Depletion allowance: An allowance granted on taxable income from oil and gas by the Federal and most State Governments.  The current Federal rate is 15% of gross income.  The law is rather involved and a tax specialist should be used when computing the tax free portion of income.

Depository bank: The bank to which payment of delay rental or other sums may be paid to the credit of lessor or his successors in interest.

Development: Activities following exploration, including the installation of facilities and the drilling and completion of wells for production purposes.

Developmental Well: A well drilled to a known producing formation in an existing oil field.

Directional drilling: Intentional deviation of a well bore from the vertical.  Although well bores are normally drilled vertically, it is sometimes necessary or advantageous to drill at an angle from the vertical.  Controlled directional drilling makes it possible to reach subsurface areas laterally remote from the point where the bit enters the earth.

Discovery Well: An exploratory well which encounters production in a previously unknown deposit.

Drill string: Set of drilling tools, comprising pipes connected to each other, the bit, and the different tools.  In drilling, the drill string is rotated by the rotary table.

Drilling fluid: Circulating fluid, one function of which is to lift cuttings out of the well bore and to the surface.  It also serves to cool the bit and to counteract down hole formation pressure.

Drilling Mud: Mixture of water and special additives circulating within the well for the purpose of cooling the drill-bit, removing rock cuttings and transporting them back up to the surface, preventing the well wall from caving in, maintaining sufficient pressure at the well bottom to avoid hydrocarbon blowout.

Dry gas: Natural gas from the well that is free of liquid hydrocarbons; gas that has been treated to remove all liquids; pipeline gas.

Dry hole: Any well that does not produce oil or gas in commercial quantities.  A dry hole may flow water, gas, or even oil, but not in amounts large enough to justify production.

E

Electric well log: A record of certain electrical characteristics (such as resistivity and conductivity) of formations traversed by the bore hole.  It is made to identify the formations, determine the nature and amount of fluids they contain, and estimate their depth.  Also called an electric log or electric survey.

Enhanced Oil Recovery (EOR): Techniques used to increase the amount of oil that can be extracted from an oil reservoir.

Exploration: The process of searching for minerals, preliminary to development.  Exploration activities include geophysical surveys, drilling to locate an oil or gas reservoir, and the drilling of additional wells after a discovery, to delineate a reservoir.  It enables the lessee to determine whether to proceed with development and production.

Exploration well: Well drilled to find an oil/gas field.

F

Flow line: The surface pipe through which oil or gas travels from a well to processing equipment or to storage.

Fluid injection: Injection of gases or liquids into a reservoir to force oil toward and into producing wells.

Frac fluid: A fluid used in the fracturing process (for example, a method of stimulating production by opening new flow channels in the formation surrounding a production well).  Under extremely high hydraulic pressure, frac fluids (such as distillate, diesel fuel, crude oil, dilute hydrochloric acid, water, or kerosene) are pumped downward through production tubing or drill pipe and forced out below a packer or between two packers.  The pressure causes cracks to open in the formation, and the fluid penetrates the formation through the cracks.  Sand grains, aluminum pellets, walnut shells, or similar materials (propping agents) are carried in suspension by the fluid into the cracks.  When the pressure is released at the surface, the fracturing fluid returns to the well but leaves behind the propping agents to hold open the formation cracks.

Fracture acidizing: A procedure by which acid is forced into a formation under pressure high enough to cause the formation to crack.  The acid acts on certain kinds of formations, usually carbonates, to increase the permeability of the formation.  Also called acid fracturing.

G

Gas drive: The use of the energy that arises from the expansion of compressed gas in a reservoir to move crude oil to a well bore.  Also called depletion drive.

Geologist: A scientist who gathers and interprets data pertaining to the formations of the earth’s crust.

Grantee: The person receiving the grant of lands, minerals, etc.

Grantor: A person who grants or conveys lands, minerals, etc.

H

Habendum clause: In an oil and gas lease, this clause fixes the duration of the lessee’s interest in both a primary and secondary term.  It is also referred to as a term clause.

Horizontal drilling: Deviation of the bore hole from vertical so that the bore hole penetrates a productive formation in a manner parallel to the formation.  This process can result in both increased production rates and greater ultimate recoveries of hydrocarbons; the cost of the well, however, tends to be more expensive.

Horse head: The generally horse head-shaped steel piece at the front of the beam of a pumping unit to which the bridle is attached in sucker rod pumping.

Hydraulic fracturing: An operation in which a specially blended liquid is pumped down a well and into a formation under pressure high enough to cause the formation to crack open, forming passages through which oil can flow into the well bore.

I

Injection water: Water that is introduced into a reservoir to help drive hydrocarbons to a producing well.

Injection well: A well through which fluids are injected into an underground stratum to increase reservoir pressure and to displace oil.  Also called input well.

J

Joint operating agreement: A contract in which two or more co-owners of a lease or the operating rights in a tract of land join together to share costs of exploration and possible development.

L

Landman: The person who secures leases and handles damages for oil companies who are drilling new wells or laying pipelines.

Lease: A contract between mineral owner, otherwise known as the lessor, and a company or working interest owner, otherwise known as the lessee, in which the lessor grants the lessee the right to explore, drill, and produce oil, gas, and other minerals for a specified primary term, and as long thereafter as oil, gas, or other minerals are being produced in paying quantities.  The lease gives the lessee a working interest.  The oil and gas lease is granted in exchange for bonus consideration and royalty payments to the lessor.

Lessee: The person who receives the lease.

Lessor: The person giving the lease, sometimes called the grantor.

Log a well: To run any of various logs used to ascertain down hole information about a well.

M

MCF: A thousand cubic feet.

Mud: The liquid circulated through the well bore during rotary drilling and work over operations.

Mud logging: The recording of information derived from examination and analysis of formation cuttings made by the bit and of mud circulated out of the hole.  A portion of the mud is diverted through a gas detecting device.  Cuttings brought up by the mud are examined under ultraviolet light to detect the presence of oil or gas.  Mud logging is often carried out in a portable laboratory set up at the well site.

N

Natural gas: A highly compressible, highly expansible mixture of hydrocarbons with a low specific gravity and occurring naturally in a gaseous form.

Non-operating interest: A working interest owner in a well, but is not the Operator.

Non-participating royalty: A royalty interest which “participates” in any oil or gas found but does not “participate” in granting a lease, lease bonuses, or rentals.

NORM: Normal Occurring Radioactive Material.

O

Oil: A simple or complex liquid mixture of hydrocarbons that can be refined to yield gasoline, kerosene, diesel fuel, and various other products.

Oil and Gas Lease: A contract between an oil operator and a landowner which gives the operator the right to drill for oil and gas on the property.

Oil gravity: The most widely used indicator of a crude oil’s worth to the producer is its API gravity.  Normally, the price which a producer receives for his oil depends on its gravity, the less dense oils (higher API gravity) being the most valuable.  This price schedule is based on the premise that the lighter oil contains higher percentages of the more valuable products such as gasoline.

Oil in place: Crude oil estimated to exist in a field or a reservoir; oil in the formation not yet produced.

Oil well: A well from which oil is obtained.

Operating expense: The expenses incurred through the operation of producing properties.

Operator: The individual, partnership, firm, or corporation having control or management of operations on a leased area or a portion thereof.  The operator may be a lessee, designated agent of the lessee, holder of rights under an approved operation agreement, or an agent of an operating rights holder.

Overriding Royalty: A royalty interest carved out of the working interest, in excess of the royalty provided in the Oil Lease.

P

Paid-up lease: An oil and gas lease in which delay rentals for the entire primary term are paid in advance with the bonus consideration.

Perforate: To pierce the casing wall and cement of a well bore to provide holes through which formation fluids may enter or to provide holes in the casing so that materials may be introduced into the annulus between the casing and the wall of the bore hole.  Perforating is accomplished by lowering into the well a perforating gun, or perforator.

Perforating gun: A special tool used downhole for shooting holes in the well’s casing opposite the producing formation.  The gun, a steel tube of various lengths, has steel projectiles placed at intervals over its outer circumference, perpendicular to the gun’s long axis.  When lowered into the well’s casing on a wireline opposite the formation to be produced, the gun is fired electrically, shooting numerous holes in the casing that permit the oil or gas to flow into the casing.

Perforations: Holes shot in an interval of casing in order to allow formation fluids to flow into the wellbore.

Permeability: 1). A measure of the ease with which a fluid flows through the connecting pore spaces of a formation.  The unit of measurement is the millidarcy.  2). Fluid conductivity of a porous medium.  3). Ability of a fluid to flow within the interconnected pore network of a porous medium.

Plug: To fill a well’s borehole 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; to screw a metal plug into a pipeline to shut off drainage or to divert the stream of oil to a connecting line to stop the flow of oil or gas.

Plug back: To place cement in or near the bottom of a well to exclude bottom water, to sidetrack, or to produce from a formation higher in the well.  Plugging back can also be accomplished with a mechanical plug set by wire line, tubing, or drill pipe.

Plugging a well: To fill up the borehole of an abandoned well with mud and cement to prevent the flow of water or oil from one strata to another or to the surface.  In the industry’s early years, wells were often improperly plugged or left open.  Modern practice requires that n abandoned well be properly and securely plugged.

Pooling: The consolidation and combining of leased land with adjoining leased tracts.  The area is called a pool or a unit.

Porosity: Ratio of the volume of empty space to the volume of solid rock in a formation, indicating how much fluid a rock can hold.   In oil fields, the oil and gas are contained in pores in the rock.

Primary recovery: The first state of oil production in which natural reservoir drives are used to recover oil, although some form of artificial lift may be required to exploit declining reservoir drives.

Primary term: The initial period in an Oil and Gas Lease.

Production casing: The last string of casing set in a well, inside of which is usually suspended a tubing string.

Production tubing: A string of tubing used to produce a well.

Propping agent: A granular substance (sand grains, aluminum pellets, or other material) that is carried in suspension by the fracturing fluid and that serves to keep the cracks open when fracturing fluid is withdrawn after a fracture treatment.

Proved developed reserves: Reserves that can be expected to be recovered through existing wells with existing equipment and operating methods.  Additional oil and gas expected to be obtained through the application of fluid injection or other improved recovery techniques for supplementing the natural forces and mechanisms of primary recovery can be included as “proved developed reserves” only after testing by a pilot project, or after the operation of an installed program has confirmed through production response that increased recovery will be achieved.

Proved reserves: The estimated quantities of crude oil, natural gas, and natural gas liquids which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions, i.e., prices and costs, as of the date the estimate is made.  Prices include consideration of changes in existing prices provided only by contractual arrangements, but not on escalations based on future conditions.

Proved Undeveloped Reserves: Reserves that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for completion.  Reserves on undrilled acreage are usually limited to those drilling units offsetting productive units that are reasonably certain of production when drilled.  Proved reserves for other undrilled units can be claimed only where it can be demonstrated with certainty that there is continuity of production from the existing productive formation.  Under no circumstances are estimates for proved undeveloped reserves generally attributed to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless those techniques have been proved effective by actual tests in the area and in the same reservoir.

Proven reserves: Oil and gas which has not been produced but has been located and is recoverable.

Pugh Clause: A clause, which is intended to prevent the holding of non-pooled acreage of a lease while certain portions of the lease acreage are being held under pooled arrangements.  The main purpose of a Pugh clause is to protect the landowner from having their entire property held under a lease by production from a very small portion.

R

Recompletion: The completion for production of an existing well bore in another formation from that in which the well has been previously completed.

Rent: Periodic payments made by the holder of a lease, during the primary lease term for the right to use the land or resources for purposes established in the lease.

Reserves (of a field): The volume of oil or gas trapped in a rock.

Reservoir rock: A permeable rock that may contain oil or gas in appreciable quantity and through which petroleum may migrate.

Rig down: To dismantle a drilling rig and auxiliary equipment following the completion of drilling operations.  Also called tear down.

Rig up: To prepare the drilling rig for making hole, for example, to install tools and machinery before drilling is started.

Royalty: Payment, in value (money) or in kind, of a stated proportionate interest in production from mineral deposits by the lessee to the lessor, based on a percentage of the gross production from the property, free and clear of all costs except taxes.  The royalty rate may be an established minimum, a sliding-scale, or a step-scale.  A step scale royalty rate increases by steps as the average production on the lease increases.  A sliding-scale royalty rate is based on average production and applies to all production from the lease.

Royalty clause: The clause in a lease that established the percentage of production paid to the lessor.

Royalty Deed: A deed conveying a royalty interest.

S

Salt Water Disposal Well: Many wells produce salt water while producing oil.  The disposal of this water is a problem to an operator because of pollution.  The best solution to the problem is to pump the waste back into a formation that is deep enough not to pollute shallow water sands.  Many stripper wells which are no longer commercial are converted for this purpose.

Sand frac: Method of fracturing subsurface rock formations by injection fluid and sand under high pressure to increase permeability.  Fractures are kept open by the grains of sand.

Scale: A mineral deposit (for example, calcium carbonate) that precipitates out of water and adheres to the inside of pipes, heaters, and other equipment.

Secondary recovery: A recovery improvement process such as water flooding or gas flooding.

Secondary term: The term of an oil and gas lease in which the lease is held in force after expiration of the primary term.  Production, operations, continuous drilling, and/or shut-in royalty payments are often used to extend an oil and gas lease into its secondary term.

Severed mineral interest: An interest in the minerals in, on, and under a given tract of land owned by a person other than the surface owner.

Severed royalty interest: Non-expense bearing interest in minerals produced and saved from a tract owned by someone other than the surface owner.  Owner of severed royalty interest gets a share of production from wells, but does not have to share the costs of production.  The interest may be set up prior or subsequent to the leasing of the land, granted or reserved for years, for life, in fee simple defeasible, or in perpetuity.

Shut in: To close the valves on a well so that it stops producing.

Shut In Royalty: A payment stipulated in the oil and gas lease, which royalty owners receive in lieu of actual production, when a gas well is shut-in due to lack of a suitable market, a lack of facilities to produce the product, or other cases defined in the shut-in provisions in the oil and gas lease.  It is the responsibility of the landowner to clearly establish the allowable time limits for a well to be shut in by way of an addendum.

Stripper Well: The final state in the life of a producing well.

Surface owner: Usually a landowner who owns no minerals under his land.

Sweet crude: Crude oil containing very little sulfur and having a good odor.

Sweet gas: Natural gas free of significant amounts of hydrogen sulfide (H2S) when produced.

T

3-D Seismic Program: Seismic surveys shot from surfaces to map underground stratigraphy; to profile the underlying strata in search of up-dips, down dips, faults, and other promising anomalies.

Tank battery: A group of tanks at a well site used to store oil prior to sale to a pipeline company.

Tertiary recovery: 1).  The use of improved recovery methods that not only restore formation pressure but also improve oil displacement or fluid flow in the reservoir.  2). The use of any improved recovery method to remove additional oil after secondary recovery.

Tight sand: Sand or sandstone formation with low permeability.

Top lease: An oil and gas lease that becomes effective only after the expiration or termination of an existing lease on the tract of land.

Total depth (TD): The maximum depth reached in a well.


U

Unit operator: The oil company in charge of development and production in an oilfield in which several companies have joined to produce the field.

Unitization: The combining of multiple wells to produce from a specified reservoir.

Unleased mineral interest: A mineral interest not subject to an Oil Lease.

W

Water drive: The reservoir drive mechanism in which oil is produced by the expansion of the underlying water and rock, which forces the oil into the well bore.  In general, there are two types of water drive: bottom-water drive, in which the oil is totally underlain by water; and edge water drive, in which only a portion of the oil is in contract with the water.

Water flooding: A secondary recovery method for the production of oil from a formation.  Oil will float on water.  When water is injected into some formations, the oil will float or be washed to the surface, thereby, increasing the amount of production from a well or field.  Some formations will not react to this type of situation.

Well: The hole made by the drilling bit, which can be open, cased, or both.  Also called bore hole, hole, or well bore.

Well completion: 1). The activities and methods of preparing a well for the production of oil and gas or for other purposes, such as injection; the method by which one or more flow paths for hydrocarbons are established between the reservoir and the surface.  2). The system of tubular, packers, and other tools installed beneath the wellhead in the production casing; that is, the tool assembly that provides the hydrocarbon flow path or paths.

Well-logging: Electrical recording of physical characteristics of rocks traversed by a well.

Working interest: The right granted to the lessee of a property to explore for and to produce and own oil, gas, or other minerals.  The working interest owners bear the exploration, development, and operating costs on either a cash, penalty, or carried basis.

Workover: Operation on a shut-in or producing well to restore or increase its production.


Inside Definitions