Process Engineering Term - C & D

Process Engineering Term - C

CARRIED WORKING INTEREST - A fractional interest in an oil and gas property conveyed or assigned to another party by the operator or owner of the working interest. In its simplest form, a carried working interest is exempt from all costs of development and operation of the property. However, the carried interest may specify “to casing point”, “to setting of tanks”, or “through well completion”. If the arrangement specifies through well completion, then the carried interest may assume the equivalent fractional interest of operating costs upon completion of the well. There are many different types of carried interests, the details varying considerably from arrangement to arrangement. One authority has observed, “The numerous forms this interest is given from time to time make it apparent the term ‘carried interest’ does not define any specific form of agreement but serves only as a guide in preparing and interpreting instruments”.

CASING - Steel pipe used in oil wells to seal off fluids in the rocks from the bore hole and to prevent the walls of the hole from caving.

CASINGHEAD - The top of the casing set in a well; the part of the casing that protrudes above the surface and to which the control valves and flow pipes are attached.

CASINGHEAD GAS - Gas produced from an oil well as distinguished from gas from a gas well. The casinghead gas is taken off at the top of the well or at the separator.

CASING POINT - A term that designates a time when a decision must be made whether casing is to be run and set or the well abandoned and plugged. In a joint operating agreement, casing point refers to the time when a well has been drilled to objective depth, tests made, and the operator notifies the drilling parties of his recommendation with respect to setting casing and a production string and completing the well. On a marginal well, the decision to set pipe is often difficult. To case a well often costs as much as the drilling. On a very good well there is no hesitation; the operators are glad to run casing and complete the well.

CEMENT - (1) To fix the casing firmly in the hole with cement, which is pumped through the drillpipe 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 casing. The casing is then perforated to allow oil and gas to enter the well. (2) Sedimentary. Mineral material, usually precipitated chemically, that fills the spaces between individual grains of a consolidated (hard) sedimentary rock; the binding material that holds the grains together. The most common binders are silica, carbonates, and certain iron oxides. Other cements are clay minerals, barite, gypsum, anhydrite, and pyrite.

CHOKE - A type of orifice installed at the surface on the tubing string to adjust and control the amount of oil or gas flowing from a well. It is customary to refer to the production of a well as so many barrels or thousands of cubic feet through a 1/4-inch or 1/2-inch choke, or whatever the size of the opening. The flowing pressure exerted by the well's production give an indication of the strength of the well, and is helpful in determining whether a well is commercial

CHRISTMAS TREE - (1) An assembly of valves mounted on the casinghead through which a well is produced. The Christmas tree also contains valves for testing the well and for shutting it in if necessary. (2) A subsea production system similar to a conventional land tree except it is assembled complete for remote installation on the seafloor with or without diver assistance. The marine tree is installed from the drilling platform; it is lowered into position on guide cables anchored to foundation legs implanted in the ocean floor. The tree is then latched mechanically or hydraulically to the casinghead by remote control.

COMMERCIAL WELL - A well of sufficient net production that it could be expected to pay out in a reasonable time and yield a profit from the operation. A shallow 50-barrel-a-day well in a readily accessible location onshore could be a commercial well. Such a well in virtually any offshore area where enormously expensive producing facilities and pipe lines would have to be constructed would not be considered commercial.

COMPLETED WELL - A well that has been mechanically completed for production or service use. There may be more than one completed zone in the well. (See Active well.)

COMPLETION - To finish a well so that it is ready to produce oil or gas. After reaching total depth (T.D.), casing is run and cemented; casing is perforated opposite the producing zone, tubing is run, and control and flow valves are installed at the wellhead. Well completions vary according to the kind of well, depth, and the formation from which the well is to produce.

COMPLETION FUNDS - Completion funds are formed to invest in well completions, to finance the completing and equipping of a potentially productive well. After a well is drilled into a productive formation, there remain the costs of setting pipe, (casing the well); perforating, testing, acidizing, or fracturing the formation; and running production tubing and installing pumping equipment, separators, stock tanks, etc. The operator who drills the well may not have the financial resources to complete the well, so he may sell part or all of his interests to a completion fund. Completion funds are not as risky an investment as drilling funds, but are less certain than income funds and royalty funds.

CONCESSION - Usually used in foreign operations and refers to a large block of acreage granted to the operator by the host government for a certain time and under certain government conditions which allows the operator to conduct exploratory and/or development operations. The Concession Agreement assures the holder of certain rights under the law.

CONDENSATE - A natural gas liquid with a low vapor pressure, compared with natural gasoline and liquified petroleum gas. It is produced from a deep well where the temperature and pressure are high. Gas condenses as it rises up the wellbore and reaches the surface as condensate. Similarly, condensate separates out naturally in pipelines or in a separation plant by the normal process of condensation.

CONTINENTAL MARGIN - A zone separating the emergent continents from the deep sea bottoms.

CONTINENTAL SHELF - A broad, gently sloping, shallow feature extending from the shore to the continental slope.

CONTINENTAL SLOPE - A relatively steep, narrow feature paralleling the continental shelf; the region in which the steepest descent of the ocean bottom occurs.

CORE SAMPLE - A solid column of rock, usually from 2 - 4 inches in diameter, taken from the bottom of a well bore as a sample of an underground formation. Cores are also taken in geological studies of an area to determine the oil and gas prospects.

CRUDE OIL - Oil as it comes from the well; unrefined petroleum.

Process Engineering Term - D

DEMONSTRATED RESERVES (API) - A collective term for the sum of proved and indicated reserves. Proved reserves are estimated with reasonable certainty to be recovered under current economic conditions. Indicated reserves are economic reserves in known productive reservoirs in existing fields expected to respond to improved recovery techniques where (1) an improved technique has been installed but its effect cannot yet be fully evaluated, or (2) an improved technique has not been installed but knowledge of reservoir characteristics and the results of a known technique installed in a similar situation are available for use in the estimating procedure.

DEPOSIT - An accumulation of oil or gas capable of being produced commercially.

DERRICK - A wooden or steel structure built over a wellsite to provide support for drilling equipment and a tall mast for raising and lowering drillpipe and casing; a drilling rig.

DEVELOPMENT WELLS - Wells drilled in an area already proved to be productive.

DIAPIR - A mass of rock, usually salt, which has come from a slightly deeper part of the earth's surface by piercing through overlying layers of sediment through a zone of weakness.

DIRECTIONAL DRILLING - The technique of drilling at an angle from the vertical by deflecting the drill bit. Directional wells are drilled to develop an offshore lease from one drilling platform; to reach a pay zone where drilling cannot be done, such as beneath a shipping lane.

DISCOVERY WELL - An exploratory well that encounters a new and previously untapped petroleum deposit; a successful wildcat well. A discovery well may also open a new horizon in an established field.

DOME - A roughly symmetrical upfold of the layers of rock in which the beds dip in all directions more or less equally from a common point; any deformation characterized by local uplift and approximately circular in outline; e.g. the salt domes of Louisiana and Texas.

DOWNHOLE - A term to describe tools, equipment, and instruments used in the well bore; also conditions or techniques applying to the well bore.

DRILL CUTTINGS - Chips and small fragments of drilled rock that are brought to the surface by the flow of the drilling mud as it is circulated.

DRILL PIPE - Heavy, thich walled, hollow steel pipe used in rotary drilling to turn the drill bit and to provide a conduit for the drilling mud.

DRILLING CONTRACTOR - A person or company whose business is drilling wells. Wells are drilled on several contract specifications: per foot, day rate, or turnkey (that is, upon completion). Most major oil companies do not own drilling rigs. Exploration and development drilling is contracted. Personnel manning the rigs work for the contractor.

DRILLING MUD - A special mixture of clay, water, or refined oil, and chemical additives pumped downhole through the drill pipe and drill bit. The mud cools the rapidly rotating bit; lubricates the drill pipe as it turns in the well bore; carries rock cuttings to the surface; serves as a plaster to prevent the wall of the borehole from crumbling or collapsing; and provides the weight or hydrostatic head to prevent extraneous fluids from entering the well bore and to control downhole pressures that may be encountered.

DRY HOLE - A well drilled to a certain depth without finding commercially exploitable hydrocarbons.

DRILLING PERMIT - In states that regulate well spacing, a drilling permit is the authorization to drill at a specified location; a well permit.

DRY GAS - A natural gas from the well free of liquid hydrocarbons; gas that has been treated to remove all liquids; pipeline gas.

Process Engineering Term - A & B

Process Engineering Term - A

ABANDONED WELL - 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.

ABANDONED WELL - A well no longer in use; a dry hole that, in most states, must be properly plugged.

ACIDIZING A WELL- A technique for increasing the flow of oil from a well. Hydrochloric acid is pumped into the well under high pressure to reopen and enlarge the pores in the oil-bearing limestone formations.

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.

ACOUSTIC LOG - A generic term for a well log that displays any of several measurements of acoustic waves in rocks exposed in a borehole, e.g., compressional-wave transmit time over an interval (sonic log) or relative amplitude (cement bond log).

ACTIVE WELL - A well in mechanical condition for production or service use (i.e., in active production or service use).

AMINE - Organic base used in refining operations to absorb acidic gases (H2S, COS, CO2) occurring in process streams. Two common amines are monoethanolamine (MEA) and diethanolamine (DEA).

AMINE UNIT - A natural gas treatment unit for removing contaminants (H2S, COS, CO2) by the use of amines. Amine units are often skid-mounted so they can be moved to the site of new gas production. Gas containing H2S and other impurities must be cleaned up before it is acceptable to gas transmission pipelines.

ANTICLINE - An upfold or arch of stratified rock in which the beds or layers bend downward in opposite directions form the crest or axis of the fold.

API - The American Petroleum Institute is the oil industry's trade organization. API's research and engineering work provides a basis for establishing operating and safety standard issues; specifications for the manufacturing of oil field equipment; and furnishes statistical and other information to related agencies.

APPRAISAL DRILLING - Wells drilled in the vicinity of a discovery or wildcat well in order to evaluate the extent and the importance of the find.

AREA OF INTEREST - The area immediately surrounding a successful well in which the investors (in the good well) have an implied right to participate in any future wells drilled by the same operator.

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.

ASSIGNMENT - In oil and gas usage, 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.

ASSOCIATED GAS - Gas that occurs with oil, either as free gas or in solution. Gas occurring alone in a reservoir is unassociated gas. Gas combined with oil. Known also as gas cap gas and solution gas, it provides the drive mechanism needed to force oil to the surface of a well. Associated gas is normally present in an oil reservoir in the early stages of production.

ATTIC OIL - An unscientific, but descriptive term for the oil above the borehole in horizontal wells; oil in the top few feet of a productive interval which will gravitate or be pressured into the horizontal drain hole.

AUSTRALIAN OFFSET - A humorous reference to a well drilled miles away from proven production.

Process Engineering Term - B

BACK-IN-PROVISION - A term used to describe a provision in a farmout agreement whereby the person granting the farmout (the farmor) has the option to exchange a retained override for a share of the working interest.

BARREL - The standard unit of measure of liquids in the petroleum industry; it contains 42 U.S. standard gallons.

BARREL of Oil EQUIVALENT (BOE) - The amount of energy resource (in this document, natural gas) that is equal to one barrel of oil on an energy basis. The conversion is based on the assumption that one barrel of oil produces the same amount of energy when burned as 5,620 cubic feet of natural gas.

BASIN - A depression of the earth's surface into which sediments are deposited, usually characterized by sediment accumulation over a long interval; a broad area of the earth beneath which layers of rock are inclined, usually from the sides toward the center.

BASKET PRICE - The blanket or average price of crude oil on the world market. For example, the basket price of $18.00/bbl. could mean average price of average gravity. Lower-gravity crude with high-transit cost would bring less than $18.00, and conversely, higher gravity crude with low sulfur and close to market would be a premium - a basket of crude oils of differing gravities, sulfur content, sweet and sour.

BATTERY - Two or more tanks connected together to receive oil production on a lease; tank battery.

BED - A layer of rock, usually sediments, which is homogeneous (the same) in composition. One bed is separated from another by a bedding plane.

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.

B.H.T. - Bottom-hole temperature. In deep wells, 15,000 feet and deeper, bottom-hole temperatures are above the boiling point of water, ranging up to 400 degrees Fahrenheit. At these depths and temperatures, water-base drilling muds can not be used, only oil-based.

BID - An offer for an OCS lease submitted by a potential lessee in the form of a cash bonus dollar amount or other commitments as specified in the final notice of sale.

BIOGENESIS - Formed by the presence or the actions of living organisms, for example, coral reefs and atolls. Biogenesis is also the theory that all life is derived from previously living organisms.

BIT, ROTARY - The tool attached to the lower end of the drillpipe; a heavy steel head equipped with various types of cutting or grinding teeth. Some are fixed; some turn on bearings. A hole in the bottom of the drill permits the flow of drilling mud being pumped down through the drillpipe to wash the cuttings to the surface and also cool and lubricate the bit.

BIT, SPUDDING - A bit used to start the borehole; a bit that is some variation of the fishtail or drag bit, one used in soft, unconsolidated, near-surface material.

BLINDPOOL - Money put into a drilling fund that is held by the fund managers until likely prospects for drilling are found or come along. The rationale for the blind fund is that with ready money, the fund managers can act quickly when good opportunities for investment arise. Blind fund money usually is kept in an interest-bearing account while waiting for a hot prospect.

BLOCK - A numbered area on an OCS leasing map or official protraction diagram (OPD). Blocks are portions of OCS leasing maps and OPD's that are themselves portions of planning areas. Blocks vary in size, but typical ones are 5,000 to 5,760 acres (about 9 square miles or 2,304 hectares). Each block has a specific identifying number, area, and latitude and longitude coordinates that can be pinpointed on a leasing map of OPD.

BLOWING A WELL - Opening a well to let it blow for a short period to free the well tubing or casing of accumulations of water, sand, or other deposits.

BLOWOUT - Out-of-control gas and/or oil pressure erupting from a well being drilled; a dangerous, uncontrolled eruption of gas and oil from a well; a wild well.

BLOWOUT PREVENTER - A stack or an assembly of heavy-duty valves attached to the top of the casing to control well pressure; a “Christmas tree”.

BONUS - Usually, the bonus is the money paid by the lessee for the execution of an oil and gas lease by the landowner. Another form is called an oil or royalty bonus. This may be in the form of an overriding royalty reserved to the landowner in addition to the usual one-eighth royalty.

BOREHOLE - The hole in the earth made by the drill; the uncased drill hole from the surface to the bottom of the well.

B.P.M. - Barrels per minute. The pumping rate of small rotary pumps.

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 borehole to be filled with cement when a well is plugged.

BUTANE - A hydrocarbon fraction; at ordinary atmospheric conditions, butane is a gas but it is easily liquefied; one of the most useful L.P.-gases; widely used household fuel.

BUTANE SPLITTER - A type of fractionator vessel at a gas reformer plant that produces commercial propane as well as normal and isobutanes. Splitters are fired with natural gas to provide heat for the distillation.