For guidance purposes only. Not comprehensive or legal advice.
Designed for business, CRE, AEC, Tech/AI and Natural Resources professionals as part of the earlier Mainframe, Mini/PC, CADD, Web, Mobile/Cloud revolutions.
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The proper plugging and abandoning of a well in compliance with all applicable regulations, and the cleaning up of the wellsite to the satisfaction of any governmental body having jurisdiction and to the reasonable satisfaction of the operator
To cease efforts to find or produce from a well or field
To plug a well completion and salvage material and equipment
Proper abandonment is a regulatory requirement – states require operators to file a Form 6 (Colorado) or equivalent plugging report. Abandoned wells that are improperly plugged are a significant environmental liability and a common acquisition due diligence issue in oil and gas asset purchases. 1
Annulus
The space between two concentric cylindrical objects in a wellbore:
The casing and the wall of the borehole
Two strings of casing (e.g. surface casing and intermediate casing)
Tubing and casing
The annulus is used to circulate drilling mud, cement casing in place, and monitor wellbore pressure. Pressure in the annulus is a key indicator of well integrity – unexpected annular pressure can signal a casing leak or communication between zones. 1
Appraisal Well
A well drilled as part of an appraisal drilling program to determine the physical extent, reserves, and likely production rate of a field after an exploration discovery. Appraisal wells reduce geological uncertainty before a final investment decision (FID) is made on field development.
Appraisal drilling sits between exploration (finding the resource) and development (producing it). The number of appraisal wells required depends on field complexity and the capital required for development – a $5B deepwater development may require 5–10 appraisal wells before FID. 1,3
Blow-Down
A production strategy in which condensate and gas are produced simultaneously from the outset. Used in gas-condensate reservoirs where maintaining reservoir pressure above the dew point is not practical or economic. Below the dew point pressure, condensate drops out of the gas in the reservoir (“retrograde condensation”) and may be unrecoverable – blow-down accepts this loss in exchange for simpler, lower-cost production. 1
Blow-Out
An uncontrolled release of oil, gas, or other wellbore fluids to surface when well pressure exceeds the ability of wellhead valves and drilling mud to contain it. Oil and gas “blow wild” at the surface, creating extreme fire, environmental, and safety hazards.
Blow-outs are prevented by Blow-Out Preventers (BOPs) and maintained mud weight. The Macondo/Deepwater Horizon blow-out (2010) is the most consequential in US history – it resulted in 87 days of uncontrolled flow, 11 fatalities, and $65B+ in BP liabilities. Blow-out risk is a primary underwriting factor in oil well insurance and a key due diligence item for investors in exploration programs. 1,3
Blow-Out Preventers (BOPs)
High-pressure wellhead valves designed to shut off uncontrolled flow of hydrocarbons from a wellbore. BOPs are the primary safety barrier between the wellbore and the surface environment. Types include:
Annular BOP (Hydril). A donut-shaped rubber element that closes around drillpipe, casing, or an open hole – the most flexible type
Ram BOP. Hydraulically actuated steel rams that close across the wellbore – pipe rams seal around drillpipe; blind rams seal an open hole; shear rams can cut through drillpipe to seal the well
Subsea BOP Stack. Used in offshore drilling – the BOP stack sits on the seafloor and is controlled remotely from the surface rig
Post-Macondo, US offshore BOP requirements were significantly strengthened by the BSEE (Bureau of Safety and Environmental Enforcement). All BOPs must be tested to full rated pressure before each well. 1,3
Borehole
The hole as drilled by the drill bit. The borehole diameter typically decreases in stages from surface to total depth, as successively smaller casing strings and drill bits are run. Surface boreholes may be 30–36 inches in diameter; production intervals may be 6–8 inches. 1
Bradenhead (Casinghead)
The fitting installed at the top of the surface casing string, providing the structural and pressure connection between the surface casing and the wellhead equipment above. The Bradenhead (a trade name that became generic) supports the weight of the casing string and seals against annular pressure. A Bradenhead Test measures the integrity of the casing by pressuring the annulus. 1
Casing
Steel pipe cemented in the wellbore to seal off formation fluids, prevent the borehole from caving in, and provide a conduit for production. Multiple concentric casing strings are run from surface to progressively greater depths:
Conductor Casing. The outermost, shallowest string – prevents surface soils from collapsing and diverts returns to the mud pit
Surface Casing. Protects freshwater aquifers and supports the BOP stack; depth regulated by state authorities (e.g. COGCC Rule 317)
Intermediate Casing. Isolates abnormal pressure zones or lost circulation intervals encountered between surface and production depth
Production Casing (Liner). The innermost string through the producing interval – provides the conduit for production and the pressure barrier against the reservoir
1,3
Christmas Tree
The assembly of fittings, valves, and gauges installed at the top of the production casing to control and monitor oil and gas production rate and wellhead pressure. Named for its resemblance to a decorated tree. A Christmas Tree includes:
Master valves (upper and lower) – primary well shut-off
Wing valves – control flow to the production flowline
Choke – restricts and controls flow rate
Pressure gauges on casing and tubing
Kill and swab valves for well intervention access
Subsea Christmas Trees are installed on the seafloor in deepwater fields and controlled remotely via umbilical from the production platform. 1,3
Completion
The installation of permanent wellhead equipment and downhole completion hardware to prepare a well for production of oil and gas. Completion operations typically include:
Perforating the production casing to establish communication with the reservoir
Hydraulic fracturing (fracking) or acid stimulation to enhance reservoir flow
Installing production tubing, packers, and downhole safety valves
Installing the Christmas Tree and surface production equipment
Production testing to establish well deliverability
Completion costs are typically 30–70% of total well cost in unconventional (shale) plays where hydraulic fracturing is required. 1,3
Coring
Taking rock samples from a wellbore by means of a special tool – a “core barrel” – that cuts and retains a cylindrical sample of the formation. Cores provide direct physical evidence of reservoir rock properties (porosity, permeability, fluid content, mineralogy) that cannot be fully determined from well logs alone. Core analysis is essential for:
Calibrating petrophysical models used to estimate reserves
Designing completion and stimulation programs
Understanding reservoir heterogeneity and flow behavior
Whole core is cut continuously; sidewall cores are smaller plugs extracted from the borehole wall using a wireline tool. 1
Deepening
To increase the depth of a wellbore below a specified reference datum – typically below the original total depth. Wells are deepened to test deeper potential pay zones without drilling a new well from surface, reducing cost significantly versus a new well. 1
Derrick
The tower-like structure that houses the drilling controls and hoisting equipment above the wellbore. The derrick supports the traveling block, hook, and drillstring during drilling operations. Modern land rigs use self-erecting mast structures; offshore rigs use fixed derricks integrated into the rig structure. Derrick height determines the maximum length of stands of pipe that can be racked during tripping operations. 1
Drill / Drilling
To bore a hole into the earth using a rotating drill bit, drilling fluid (mud), and a rig and crew. “Drilling” in the regulatory sense encompasses:
Initial drilling of a new well
Suspension, completion, production testing, and capping
Plugging and abandonment
Deepening, plugging back, sidetracking, and redrilling
Converting wells between producing, injection, and observation uses
Stratigraphic test wells
Drilling costs include completion costs but typically exclude equipping costs (pumps, tankage, gathering lines). 1
Drilling Rig
A drilling unit not permanently fixed to the seabed (offshore) or the complete surface drilling system (onshore). Types:
Land Rig. Truck- or trailer-mounted; moved between well locations on roads
Jack-Up Rig. Three-legged offshore rig that jacks its hull above the water on steel legs resting on the seafloor; used in water depths up to ~400 feet
Semi-Submersible. Floating rig with pontoons partially submerged for stability; used in 1,000–10,000+ feet of water
Drillship. A ship with a moonpool through which drilling is conducted; the most mobile deepwater drilling unit
Day rates for premium deepwater rigs have ranged from $150,000 to $700,000+ per day depending on market conditions. Rig availability and day rates are primary drivers of E&P capital budgets. 1,3
Farm-In
A transaction in which a company (the farmee) acquires an interest in an exploration or production block or license by taking over all or part of the financial commitment for drilling a well or conducting work obligations. The farmor (the original interest holder) retains a carried interest or a back-in after payout.
Farm-ins are common in exploration where operators wish to reduce their drilling cost exposure by bringing in a partner with the capital to fund the well. For investors and CRE/AEC clients with capital to deploy, farm-in opportunities in oil and gas can provide attractive risk-adjusted returns in exchange for carrying a portion of the drilling program. 1,3
Fishing
The process of retrieving objects from the borehole that have been lost or left downhole – such as a broken drillstring, lost drill bit, wireline tools, or dropped equipment. Fishing operations use specialized tools including overshots, spears, junk mills, and impression blocks to locate and recover the lost item. Fishing can be expensive and time-consuming – costs of $50,000–$500,000+ per fishing job are common on complex wells. 1
Fracturing / Fracking (Hydraulic Fracturing)
A well stimulation method that breaks down a formation by pumping fluid at very high pressure through perforations in the casing into the reservoir rock, creating fractures that provide high-conductivity flow paths from the reservoir to the wellbore. Used to increase production rates and total recovery from:
Unconventional shale oil and gas plays (Permian Basin, Marcellus, DJ Basin, etc.) – where fracking is required to make any commercial production possible
Coalbed methane formations
Modern multi-stage hydraulic fracturing with horizontal drilling has unlocked the US shale revolution – transforming the US from an energy importer to the world’s largest oil and gas producer. A typical Permian Basin horizontal well may have 40–60 fracture stages using 5–15 million gallons of water and 1,000–3,000 tons of proppant. Regulatory oversight by COGCC (Colorado) and equivalent state agencies covers well permitting, water sourcing, wastewater disposal, and induced seismicity monitoring. 1,3
Kick
A well is said to “kick” when formation pressure exceeds the pressure exerted by the drilling mud column in the wellbore, causing formation fluids (oil, gas, or saltwater) to flow into the wellbore. A kick is an early warning sign of potential blow-out. Response: the driller immediately closes the BOPs, circulates out the influx using weighted mud, and increases mud density to regain overbalance before reopening the well. Early kick detection is one of the most critical skills in drilling operations. 1
Mechanical Integrity Test (MIT)
The act of setting a packer or retrievable bridge plug above the perforations in a wellbore and applying pressure to the annulus to ensure soundness of the casing. MIT is required by the Underground Injection Control (UIC) program for all injection wells before initial operation and periodically thereafter. Failure of an MIT indicates a casing leak that must be repaired before injection can continue. 1
Moonpool
An aperture in the center of a drillship or semi-submersible drilling rig through which drilling and diving operations are conducted. The moonpool allows the riser, drillstring, and BOP stack to pass through the hull of the vessel to reach the seafloor, regardless of vessel motion. The moonpool design is the enabling feature of floating drilling units for deepwater operations. 1
Mud
A mixture of base fluids and additives (also called “drilling fluid”) used to:
Lubricate and cool the drill bit
Transport drill cuttings to surface
Counteract formation pressure (primary well control) by maintaining hydrostatic pressure in the wellbore
Stabilize the borehole walls
Provide a medium for logging tools
Mud types include water-based mud (WBM), oil-based mud (OBM), and synthetic-based mud (SBM). Mud weight (density) is the primary variable used to control wellbore pressure – typically expressed in pounds per gallon (ppg). Overweighted mud causes lost circulation (fluid entering the formation); underweighted mud risks kicks and blow-outs. 1,3
Recomplete
A wellbore operation to modify the completion configuration. Recomplete operations include:
Deepening from one zone to another zone
Completing the well in an additional zone (dual completion)
Plugging back from one zone to another zone
Sidetracking to purposely change the location of the wellbore bottom (not including sidetracking solely to bypass borehole obstructions)
Conversion of a service well to an oil or gas well in a different zone
Conversion of an oil or gas well to a service well in a different zone
Recompletions are a cost-effective way to access new pay zones or improve production without drilling a new well. 1
Reenter
To enter a previously abandoned well – typically to deepen it to a new objective, recomplete in a different zone, or convert it to an injection or disposal well. Reentries can be significantly cheaper than new wells where the existing surface infrastructure and upper wellbore are in good condition. 1
Roughneck
Drill crew members who work on the derrick floor, handling the manual operations of screwing together (making up) and unscrewing (breaking out) sections of drillpipe when running or pulling the drillstring. Roughnecks also handle the iron roughneck (a mechanical pipe-handling tool) and operate the tongs used to torque pipe connections. One of the most physically demanding and hazardous roles on a drilling rig. 1
Roustabout
Entry-level rig workers responsible for handling the loading and unloading of equipment, maintaining the rig and wellsite, and assisting in general operations. Roustabouts perform the labor-intensive work that keeps a rig operating – painting, cleaning, moving equipment, and basic maintenance. Roustabout is typically the starting position for a career in drilling operations, with advancement to roughneck and then driller. 1
Sidetrack / Sidetracking
A wellbore segment extending from an existing wellbore at a kick-off point, drilled to a different bottomhole location than the original wellbore. Sidetracking is used to:
Bypass a lost fish or obstruction in the original borehole
Reach a new geological target not accessible from the original trajectory
Access additional pay zones without drilling a new well from surface
Rescue a well that has deviated off course
1
Spud-In
The operation of drilling the first part of a new well – the moment the drill bit first penetrates the earth. “Spud date” is the official start date of a well’s drilling operations, reported to state regulators. The term also marks the beginning of a well’s drilling cost clock – rig day rates begin at spud. 1
Toolpusher
The second-in-command of a drilling crew, under the drilling superintendent. Responsible for the day-to-day running of the rig, ensuring all necessary equipment is available and operational, and supervising the drillers on each shift. The toolpusher is the on-site manager of drilling operations – they live on the rig (offshore) or at the wellsite (onshore) for the duration of operations. 1
Workover
Remedial work performed on a producing well to restore, maintain, or improve its production performance. Workover operations include:
Pump replacement or rod pulling
Zone isolation and reperforating
Wellbore cleanout (removing scale, sand, or paraffin deposits)
Artificial lift system changes (rod pump to ESP, etc.)
Tubing replacement
Stimulation treatments on producing intervals
Workovers are typically performed using a workover rig (smaller than a drilling rig) or coiled tubing unit. They are a key lever for production maintenance in mature fields. 1,3
Natural gas found in association with crude oil in a reservoir – either dissolved in the oil (solution gas) or as a gas cap above the oil zone. Associated gas production is tied to oil production rates; managing associated gas is a key operational challenge in oil field development, as flaring (burning) of associated gas is increasingly regulated and priced as a carbon liability. 1
Condensate
Hydrocarbons that are in the gaseous state under reservoir conditions but become liquid when temperature or pressure is reduced at surface. Condensate consists primarily of pentanes and heavier hydrocarbons – it is essentially a very light crude oil (typically 50–70 API gravity) that condenses out of the gas stream as pressure drops from reservoir to surface conditions.
Condensate is valuable as a diluent for heavy crude oil transport and as a feedstock for petrochemical plants. Gas-condensate reservoirs (like the Arun field in Indonesia or the North Field in Qatar) produce both natural gas and significant condensate volumes, with condensate sales often providing a substantial portion of total revenue. 1,3
Crane Barge (Derrick Barge)
A large barge capable of lifting heavy equipment (topsides modules, jackets, subsea templates) onto offshore platforms or onto the seabed. Crane barges are essential for offshore platform installation and decommissioning. The largest crane vessels (e.g. the Heerema Sleipnir or Thialf) can lift 10,000+ metric tons – they are among the most expensive pieces of construction equipment in the world at $300,000–$500,000+ per day. 1
Crude Oil
Liquid petroleum as it comes out of the ground, before refining. Crude oil is characterized primarily by API gravity (a measure of density – higher API = lighter = more valuable) and sulfur content (sweet = low sulfur; sour = high sulfur):
Light Sweet Crude. High API (35+), low sulfur – easiest to refine, highest value. Examples: WTI (West Texas Intermediate), Brent.
Heavy Sour Crude. Low API (below 22), high sulfur – requires complex refinery upgrades; sells at significant discount to WTI/Brent. Examples: Canadian oil sands bitumen, Venezuelan heavy crude.
Medium Crude. API 22–35 – the largest category by global production volume.
WTI and Brent are the two primary global benchmark crudes used for pricing. The WTI-Brent spread reflects US domestic supply/demand dynamics versus global supply. 1,3
Dry Gas
Natural gas composed mainly of methane (CH⊂4;) with only minor amounts of ethane, propane, butane, and little or no heavier hydrocarbons in the gasoline range. Dry gas can typically be delivered directly to pipeline without processing. Contrast with “wet gas” – gas containing significant NGLs (natural gas liquids) that must be extracted in a gas processing plant before the gas can be delivered to pipeline specification. 1
Dry Hole
A well which has proved to be non-productive – either containing no hydrocarbons, or hydrocarbons in quantities too small to produce commercially. Dry hole costs are typically expensed immediately for accounting purposes. The dry hole rate (proportion of exploration wells that are non-commercial) is a key metric in exploration portfolio management – industry averages range from 50–80% for frontier exploration, falling to 20–40% for near-field exploration near proven producing areas. 1
Enhanced Oil Recovery (EOR)
Processes to recover oil beyond what can be produced by primary and secondary recovery methods. EOR techniques add energy to the reservoir or alter fluid properties to improve sweep efficiency:
Thermal EOR. Steam injection (SAGD in oil sands, cyclic steam stimulation) – heats heavy oil to reduce viscosity
Gas EOR (Miscible Flooding). CO⊂2; injection, nitrogen injection, or hydrocarbon gas injection to achieve miscibility with reservoir oil and improve displacement efficiency
EOR projects typically recover 10–25% of original oil in place (OOIP) beyond primary and secondary recovery, which typically recover 20–40% of OOIP. Carbon capture and storage (CCS) programs use CO⊂2;-EOR as a revenue-generating application of captured emissions. 1,3
Field
A geographical area under which one or more oil or gas reservoirs lie at various depths – all related to the same geological structure or stratigraphic trap. A “proven field” has had its physical extent and estimated reserves determined through appraisal drilling. A “commercial field” is one capable of generating sufficient net income to justify development. 1
Formation Pressure
The pressure of fluids within a formation’s pore space – the pressure the reservoir exerts on wellbore fluids. Also called pore pressure or reservoir pressure. Formation pressure is measured at the bottom of a well when it is shut in at the wellhead (static bottomhole pressure). Managing the balance between formation pressure and wellbore fluid pressure (hydrostatic head of mud column) is fundamental to well control. 1
Formation Water
Saltwater (brine) that naturally co-exists with oil and gas in the reservoir formation. Formation water must be separated from produced oil and gas at the surface and disposed of appropriately – typically by injection into a permitted disposal well (Class II UIC well). Produced water volumes often far exceed oil volumes in mature fields – water-to-oil ratios of 10:1 or higher are common. Produced water management is one of the largest operational costs in mature US oil fields. 1
Gas Field
A field containing natural gas but no commercially significant quantities of crude oil. Gas fields may contain dry gas, wet gas, or gas-condensate depending on reservoir conditions. The world’s largest gas fields include the North Field/South Pars (Qatar/Iran – the world’s largest), Urengoy (Russia), and Marcellus Shale (US – the world’s largest shale gas play). 1
Gas Injection
The process of pumping separated associated gas back into a reservoir for conservation purposes or to maintain reservoir pressure. Gas injection is an alternative to flaring associated gas and is increasingly required by regulators as a condition of operating in environmentally sensitive areas. Reinjection also improves oil recovery by maintaining reservoir pressure above the bubble point, preserving dissolved gas in solution. 1
Gas/Oil Ratio (GOR)
The volume of gas at atmospheric pressure produced per unit of oil produced, typically expressed as standard cubic feet per barrel (scf/bbl). GOR is a key indicator of reservoir fluid type and depletion:
Low GOR (100–500 scf/bbl) – typically a heavy or medium oil reservoir
Medium GOR (500–3,000 scf/bbl) – volatile oil or rich gas-condensate
High GOR (3,000–100,000+ scf/bbl) – gas-condensate or wet gas reservoir
Rising GOR over a well’s life indicates gas cap expansion or depletion below the bubble point – a signal of changing reservoir conditions that affects production optimization. 1,3
Hydrocarbon
A compound containing only the elements hydrogen and carbon. Hydrocarbons are the basis of all petroleum products. They exist as:
Gas: Methane (CH⊂4;), ethane, propane, butane
Liquid: Crude oil, condensate, NGLs
Solid: Wax, asphaltenes, bitumen, coal
The term “hydrocarbons” is used as a catch-all for oil, gas, and condensate in the upstream petroleum industry. 1
Injection Well
A well used to pump water, gas, or other substances into a subsurface formation. Types relevant to oil and gas operations:
Water Injection Well. Injects produced water or seawater into the reservoir to maintain pressure (secondary recovery) or sweep oil toward producing wells
Gas Injection Well. Injects gas (associated gas, CO⊂2;, nitrogen) for pressure maintenance or EOR
Disposal Well (Class II UIC). Injects produced water into a permitted disposal formation below the deepest underground drinking water source
Underground Storage Well. Injects and withdraws natural gas for seasonal storage
All injection wells in the US require UIC permits from EPA or delegated state agencies. 1
Jacket
The lower section (“legs”) of a fixed offshore platform – the steel lattice structure that sits on the seabed and supports the topsides above the waterline. Jackets are installed by crane barge or by launching and upending from a cargo barge. The world’s tallest jacket platforms stand over 500 meters tall (Bullwinkle, Gulf of Mexico – 412 meters). 1
Lay Barge
A barge specially equipped to lay submarine pipelines on the seafloor. Pipe sections are welded together on the barge and paid out over the stern (S-lay method) or over the bow (J-lay method for deepwater) as the barge moves forward. Lay barges are essential infrastructure for offshore field development – they connect wellheads to processing facilities via subsea pipelines. 1
Liquefied Natural Gas (LNG)
Natural gas (primarily methane) that has been cooled to approximately –162°C (–260°F) to convert it to liquid form for transportation and storage. LNG occupies approximately 1/600th of the volume of natural gas at atmospheric pressure, making it economically feasible to transport by specialized LNG tankers across oceans where pipelines are not possible.
The LNG market has transformed global gas trade – the US became the world’s largest LNG exporter in 2023 (Sabine Pass, Freeport, Corpus Christi, Calcasieu Pass). LNG projects require massive capital investment ($10–50B+ for a liquefaction facility) but generate long-term contracted cash flows that are attractive to infrastructure investors and natural resource funds. 1,3
Liquefied Petroleum Gas (LPG)
Light hydrocarbon material – primarily propane and/or butane – that is gaseous at atmospheric temperature and pressure but held in liquid state under modest pressure for storage, transport, and handling. LPG is a byproduct of both oil refining and natural gas processing. It is used as a heating fuel, petrochemical feedstock, and transportation fuel (autogas). LPG is transported in pressurized cylinders, tank trucks, railcars, and specialized LPG tankers. 1
Natural Gas
Gas occurring naturally in subsurface formations, often found in association with crude petroleum. Composed primarily of methane, with varying amounts of ethane, propane, butane, CO⊂2;, nitrogen, and hydrogen sulfide (H⊂2;S). Natural gas is the cleanest-burning fossil fuel – it produces approximately 50% less CO⊂2; than coal per unit of energy when combusted for power generation. The US is the world’s largest natural gas producer, with the Permian Basin, Marcellus Shale, and Haynesville Shale as the dominant production areas. 1,3
Oil (Crude Oil)
A mixture of liquid hydrocarbons of different molecular weights, occurring naturally in the subsurface. See Crude Oil for full entry. Abbreviated as O in COGCC well type codes; O&G = Oil and Gas. 1
Oil Field
A geographical area under which an oil reservoir lies. The term covers all surface and subsurface infrastructure associated with producing oil from that reservoir, including wells, gathering lines, processing facilities, and storage tanks. Major US oil fields include the Permian Basin (Texas/New Mexico), the DJ Basin (Colorado), the Williston Basin (North Dakota – Bakken), and the Eagle Ford (Texas). 1
Oil in Place (OIP)
An estimated measure of the total amount of oil contained in a reservoir. Oil in place is always a larger figure than recoverable reserves – only a fraction of OIP can be economically extracted. The ratio of recoverable reserves to OIP is the recovery factor, typically 20–50% for conventional reservoirs and 5–15% for unconventional tight oil reservoirs before stimulation. Enhanced oil recovery techniques aim to increase the recovery factor. 1
Payzone
Rock in which oil and gas are found in exploitable quantities – the producing interval of a well. Identifying the payzone is the primary objective of exploration drilling. In unconventional plays, multiple payzones may exist at different depths (e.g. Wolfcamp A, Wolfcamp B, Spraberry, Dean, Bone Spring in the Permian Basin), each requiring separate completion programs. 1
Permeability
The property of a formation quantifying the flow of fluid through pore spaces and into the wellbore. Measured in millidarcies (mD) or darcies. High permeability rocks (>100 mD) like sandstone produce oil and gas easily without stimulation. Tight formations (0.001–0.1 mD) require hydraulic fracturing to produce at commercial rates – the defining characteristic of the shale revolution. 1
Petroleum
A generic name for all naturally occurring hydrocarbons, including crude oil, natural gas liquids, natural gas, and their refined products. Derived from the Latin petra (rock) and oleum (oil). The term “petroleum” in regulatory contexts often encompasses all hydrocarbon compounds in their natural state. 1
Platform
An offshore structure permanently fixed to the seabed, providing the base for drilling and production operations in shallow to moderate water depths (typically up to 1,500 feet). Platform types include jacket platforms (steel lattice structures), gravity-based structures (GBS, concrete), and compliant towers. In deepwater (1,500–10,000+ feet), floating production systems replace fixed platforms: FPSOs (Floating Production, Storage and Offloading), TLPs (Tension Leg Platforms), and Spars. 1,3
Porosity
The percentage of void space (pores) in a rock compared to its total volume. Porosity determines how much fluid a rock can store. Types:
Intergranular porosity. Spaces between sediment grains – primary porosity in sandstones
Fracture porosity. Natural fractures in otherwise tight rock – critical in many carbonate reservoirs
Vuggy porosity. Cavities formed by dissolution of soluble minerals – common in limestone reservoirs
Commercial oil and gas reservoirs typically have porosity of 5–35%. Porosity is measured by core analysis and wireline logs. 1,3
Primary Recovery
Recovery of oil or gas from a reservoir using only the natural energy of the reservoir to drive production – reservoir pressure, gas cap expansion, dissolved gas drive, water influx, or gravity drainage. Primary recovery typically recovers 10–30% of original oil in place before reservoir pressure declines to uneconomic levels. 1
Reservoir
The underground formation where oil and gas have accumulated. A reservoir consists of:
A porous and permeable rock (sandstone, limestone, dolomite) to hold and transmit the hydrocarbons
A cap rock (shale, salt, anhydrite) with very low permeability to prevent upward migration
A trap geometry (structural, stratigraphic, or combination) that concentrates hydrocarbons in one place
Reservoir characterization – understanding the size, geometry, rock properties, and fluid distribution of a reservoir – is the central technical challenge of oil and gas development. 1,3
Riser
A pipe connecting the seafloor to a floating or fixed offshore structure:
Drilling Riser. A large-diameter pipe between the seafloor BOP stack and the floating drilling rig, providing a conduit for drilling fluid returns and a path for the drillstring
Production Riser. The section of pipework joining a subsea wellhead or flowline to the Christmas tree or production topsides – must withstand internal pressure, external hydrostatic pressure, and dynamic loading from vessel motion
1
Secondary Recovery
Recovery of oil or gas from a reservoir by artificially maintaining or enhancing reservoir pressure through injection of gas, water, or other substances. The two most common secondary recovery methods:
Waterflooding. Injecting water into the reservoir to maintain pressure and sweep oil toward producing wells – the most widely used secondary recovery method worldwide
Gas Injection (pressure maintenance). Reinjecting associated gas or purchasing gas to maintain pressure above the bubble point, preserving oil mobility
Secondary recovery typically recovers an additional 15–25% of OOIP beyond primary recovery. 1
Shut-In Well
A well that is capable of producing but is not currently producing. Reasons include:
Lack of market or pipeline capacity
Low commodity prices making production uneconomic
Equipment failure awaiting repair
Regulatory shut-in (compliance issue or environmental event)
Voluntary shut-in during workover of an adjacent well in the same reservoir
Shut-in wells are a form of “drilled but uncompleted” (DUC) inventory – they represent productive capacity that can be brought back on-stream relatively quickly when economics improve. 1
Suspended Well / Temporarily Abandoned
A well that has been capped off temporarily – isolated from the surface by a cement retainer, cast iron bridge plug, cement plug, tubing and packer with tubing plug, or any combination thereof. Temporarily abandoned status is granted by regulators when a well has future potential but is not currently producing. Different from permanent abandonment, which requires full plugging and surface restoration. 1
Topsides
The superstructure of an offshore platform – all the equipment installed above the jacket or hull, including process equipment (separators, gas treatment, dehydration), utilities (power generation, water treatment), living quarters, and drilling equipment. Topsides are typically fabricated onshore and installed as pre-assembled modules by crane barge. A large FPSO or platform may carry 20,000–50,000 tonnes of topsides. 1
Well Log
A continuous record of geological and petrophysical properties of formations penetrated during drilling, measured by wireline tools lowered into the wellbore. Well logs are the primary data source for reservoir characterization and reserves estimation. Key log types:
Gamma Ray (GR). Distinguishes shale (high GR) from sand/carbonate (low GR)
Resistivity. Identifies hydrocarbon-bearing zones (high resistivity) versus water-bearing zones
Neutron/Density. Measures porosity; used together to identify gas zones
Sonic. Measures formation velocity; used in seismic correlation and geomechanical modeling
Formation Tester (MDT/RFT). Measures reservoir pressure and collects fluid samples
1,3
Wildcat Well (Exploration Well)
A well drilled in an unproven area – where no previous production has been established. The highest-risk category of oil and gas drilling, with typical success rates of 10–30% in frontier exploration.
The term “wildcat” originated in West Texas in the 1920s, when wildcats were abundant in the oil country and those unlucky enough to be shot were hung from oil derricks – giving drillers the expression “drilling a wildcat.” Today, 3D seismic and advanced geological modeling have improved wildcat success rates significantly, but frontier drilling remains inherently speculative. 1
A range of exploration drilling scenarios from which activity levels are derived based on recent historical experience. The central estimate represents the most likely outcome – neither the optimistic nor the pessimistic case. In reserves reporting, the central estimate corresponds to the P50 (50% probability of being equaled or exceeded). 1
Commercial Field
An oil and/or gas field judged to be capable of producing enough net income to make it worth developing. Commercial viability depends on reserves size, production rates, commodity prices, development costs, and operating costs. A field that is commercial at $80/bbl WTI may not be commercial at $50/bbl – commerciality is price-dependent and must be re-evaluated as market conditions change. 1
Development Phase
The phase in which a proven oil or gas field is brought into production by drilling production (development) wells and installing production infrastructure. The development phase follows exploration and appraisal and precedes first production (first oil). It is the most capital-intensive phase of an oil and gas project – typically representing 70–90% of total project capital expenditure. 1
Exploration Phase
The phase of operations covering the search for oil or gas, including detailed geological and geophysical surveys (seismic acquisition and interpretation) followed by exploratory drilling where warranted. The exploration phase ends with a discovery (leading to appraisal) or a dry hole (leading to license relinquishment or write-off). 1
Net Revenue Interest (NRI)
The investor’s percentage share of the monthly income realized from the sale of a well’s produced oil and gas. NRI is always less than the Working Interest (WI) because of the mineral owner royalty burden on the well.
NRI/WI Explanation: When land is leased for drilling, the mineral owner is paid a cash consideration and provided a free interest (“royalty interest”) in all wells drilled on the leased acreage. This royalty interest is free and clear of all monthly operational expenses – the royalty owner receives income without bearing any production costs. Royalty interests are negotiable but typically range from 20–25%. Therefore, on a lease where the mineral owner receives a 25% royalty: the Working Interest (WI) = 100% (the working interest owner pays 100% of all monthly operational expenses), but the Net Revenue Interest (NRI) = 75% (100% − 25%). The working interest owner pays all costs but receives only 75% of revenue, with the remaining 25% going to the mineral owner. 2
NGLs – Natural Gas Liquids
Liquid hydrocarbons found in association with natural gas – ethane, propane, butane, isobutane, and natural gasoline (pentanes+). NGLs are extracted from the gas stream at a gas processing plant. NGL prices are linked to both natural gas and crude oil prices and vary significantly by component:
Ethane. Petrochemical feedstock (ethylene production); typically traded at gas-equivalent pricing
Propane/Butane. LPG components; heating fuel and petrochemical feedstocks
Natural Gasoline (C5+). Diluent for heavy crude, blendstock for gasoline
The NGL content of a gas stream is a key driver of well economics in “wet gas” plays like the Utica, Marcellus, and Eagle Ford. 1,3
Operator
The company that has legal authority to drill wells and undertake the production of hydrocarbons found on a lease or license. The Operator is often part of a joint venture consortium and acts on behalf of all interest owners. Operator responsibilities include:
Obtaining all regulatory permits and approvals
Drilling, completing, and operating wells
Managing joint venture partners and conducting joint interest billings
Environmental compliance and surface reclamation
Reporting production to royalty owners and regulatory authorities
Non-operator working interest owners share in costs and revenues but have no operational control – they are passive investors in the well program. 1
PD – Proven, Developed
Reserves that are expected to be recovered from existing wells and completion intervals, or from new wells where the cost of the equipment required for production has already been incurred. PD reserves are the highest-confidence category and carry the least technical risk. See also: PUD. 5
Possible Reserves
Those reserves which at present cannot be regarded as “probable” but are estimated to have a significant but less than 50% chance of being technically and economically producible. Also called “3P” reserves (Proven + Probable + Possible). The higher the reserve category uncertainty, the larger the discount applied by lenders and investors to the reserve value. 1
Probable Reserves
Reserves not yet proven but estimated to have a better than 50% chance of being technically and economically producible. Also called “2P” reserves (Proven + Probable). Probable reserves are used in mid-range financial planning but are typically not bankable – reserve-based lending is primarily against proven developed producing (PDP) reserves. 1
Proven Field
An oil and/or gas field whose physical extent and estimated reserves have been determined through sufficient appraisal drilling and production history to justify commercial development. 1
Proven Reserves
Those reserves which, on the available evidence, are virtually certain to be technically and economically producible – having a better than 90% chance of being produced (P90 in probabilistic terms). Proven reserves are the only reserve category recognized by the US Securities and Exchange Commission (SEC) for public company disclosure purposes. Also called “1P” reserves. 1
PUD – Proven, Undeveloped
Reserves expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for completion. PUD reserves must be drilled within 5 years of their initial booking under SEC rules (with certain exceptions). PUD reserves carry more risk than PD reserves because they require future capital expenditure that may or may not be available. 5
Recoverable Reserves
That proportion of the oil and/or gas in a reservoir that can be removed using currently available techniques at current economic conditions. The complement of oil in place that cannot be economically recovered – due to reservoir heterogeneity, unfavorable rock properties, high operating costs, or low commodity prices. 1
Recovery Factor
The proportion of original hydrocarbons in place that can be removed using currently available techniques. Ranges widely by reservoir type:
Conventional sandstone oil: 25–50%
Conventional carbonate oil: 15–40%
Tight oil (shale): 5–15%
Natural gas (conventional): 60–85% (gas is more mobile than oil)
Improving recovery factors is one of the highest-value opportunities in mature oil fields – a 1% improvement in recovery factor in a large field can represent hundreds of millions of barrels of additional reserves. 1,3
Royalty Payment
The cash or in-kind payment to the owner of mineral rights (the royalty owner) for the right to extract oil and gas from their land. Royalties are calculated as a percentage of gross production revenue – the royalty owner bears none of the production costs. Royalty rates are negotiated at the time of lease execution and typically range from 12.5% to 25% for private mineral rights. Federal and state royalty rates on public lands are set by regulation. Royalty income is a passive, low-risk revenue stream – mineral rights and royalty interests are separately tradeable assets. 1,3
Surface Reclamation
The restoration of the surface of a wellsite or production facility to productive use or natural condition after operations cease. State regulators (e.g. COGCC Rule 1002) require operators to reclaim drill pads, reserve pits, access roads, and pipeline rights-of-way to pre-disturbance standards. Financial assurance (bonding) for reclamation is required before drilling permits are issued. Reclamation liability is a growing environmental accounting issue for oil and gas companies with large orphan well inventories. 1
Working Interest (WI)
The percentage interest purchased in a well – representing the working interest owner’s percentage share of all monthly operational expenses. The WI owner has the right to explore, develop, and produce from the leased acreage but bears all costs of doing so. WI is always greater than NRI by the amount of the royalty burden. See Net Revenue Interest (NRI) for a full explanation of the WI/NRI relationship. 2
The act or process of reducing the intensity of pollution
The use of some method or technique for abating pollution
In oil and gas, abatement most commonly refers to methane abatement – reducing fugitive emissions from wellheads, storage tanks, compressors, and pipelines. EPA regulations (40 CFR Part 60 Subpart OOOOa and OOOOb) require oil and gas operators to implement Leak Detection and Repair (LDAR) programs and install vapor recovery systems on storage tanks. Carbon pricing and ESG investor pressure are accelerating abatement investment beyond regulatory minimums. 1
American Petroleum Institute (API)
The primary trade association representing the oil and natural gas industry in the United States. API develops and publishes industry standards covering:
Industry practices for drilling, completions, and production
API also publishes the API Gravity scale for crude oil density, lobbies on federal energy policy, and provides industry training and certification programs. 1
API Well Number
A unique well identifier assigned per API Bulletin D12A, consisting of:
2-digit API State Code (e.g. 05 for Colorado)
3-digit API County Code (identifying the county within the state)
5-digit Wellbore Number (unique within the state/county)
2-digit Sidetrack Code (00 for original wellbore, 01 for first sidetrack, etc.)
2-digit Event Sequence Code
The API Well Number is the universal identifier used by state regulators, federal agencies (EIA, USGS), and industry databases to track individual wellbores throughout their life. 1
COGCC – Colorado Oil and Gas Conservation Commission
The state agency responsible for regulating oil and gas exploration and production in Colorado, with a mission to regulate in a manner that protects and minimizes adverse impacts to public health, safety, welfare, the environment, and wildlife. COGCC administers well permitting, drilling regulations, production reporting, environmental compliance, and reclamation requirements. COGCC’s COGIS (Colorado Oil and Gas Information System) is an online database providing public access to well records, production data, and compliance information. 1
E&A – Exploration and Appraisal
The combined phase of oil and gas operations covering the search for hydrocarbons (exploration) and the determination of their commercial potential (appraisal). E&A spending is the highest-risk capital in oil and gas – fully at risk of total loss if no commercial discovery is made. 1
E&P – Exploration and Production
The upstream sector of the oil and gas industry – encompassing all activities from finding hydrocarbons to producing and selling them at the wellhead. E&P companies (also called “upstream” companies) include majors (ExxonMobil, Shell, BP), independents (Pioneer, Devon, Diamondback), and national oil companies (Saudi Aramco, ADNOC, Equinor). Distinguished from midstream (processing, transport) and downstream (refining, retail). 1
Geographic Information Systems (GIS)
A computer system capable of assembling, storing, manipulating, and displaying geographically referenced information. In oil and gas, GIS is used for lease mapping, well planning (surface location selection, horizontal wellbore targeting), pipeline routing, and regulatory compliance mapping. State oil and gas information systems (COGIS in Colorado) use GIS as the primary interface for public well data access. 1
MOU / MOA – Memorandum of Understanding / Agreement
Non-binding (MOU) or binding (MOA, depending on language) documents used to record the agreement between parties on the terms of a proposed transaction or relationship before a definitive agreement is executed. In oil and gas, MOUs are used to:
Formalize joint venture formation before a Joint Operating Agreement (JOA) is signed
Record farm-in terms before definitive assignment agreements
Establish terms for LNG offtake discussions before a Sale and Purchase Agreement
Whether an MOU is binding depends on its specific language – courts have found some MOUs to be enforceable contracts. Always involve legal counsel before signing. 1,3
Natural Gas Policy Act of 1978 (NGPA)
Enacted November 9, 1978, effective December 1, 1978. Replaced and amended the Natural Gas Act. The NGPA was the first major federal legislation to regulate natural gas prices at the wellhead, establishing price controls on different categories of natural gas. The NGPA was substantially amended by the Natural Gas Wellhead Decontrol Act of 1989, which phased out wellhead price controls by January 1, 1993. Refer to 15 USC §§3301–3432. 1
UIC – Underground Injection Control
A program required in each state by the Safe Drinking Water Act (SDWA) for the regulation of injection wells. The UIC program protects underground sources of drinking water (USDWs) from contamination by injected fluids. Six classes of injection wells are regulated:
Class I. Hazardous and non-hazardous industrial and municipal waste disposal wells
Class II. Oil and gas related injection wells (produced water disposal, EOR, storage) – most relevant to oil and gas operators
Class III. Solution mining wells (salt, potash, sulfur)
Class IV. Shallow wells for disposal of hazardous or radioactive waste (largely banned)
Class V. All other injection wells (stormwater drainage, septic systems)
Class VI. Wells for geological sequestration of CO⊂2;
Applicants for Class II UIC permits must demonstrate the well has no reasonable chance of adversely affecting the quality of an underground source of drinking water. 1,4
Measurements & Abbreviations
bbl. One barrel of oil = 35 Imperial gallons (approx.) = 159 liters (approx.); 7.5 barrels ≈ 1 metric ton; 6.29 barrels = 1 cubic meter
BOPD. Barrels of Oil Per Day
BPD. Barrels Per Day (oil or other liquids)
bcf. Billion cubic feet; 1 bcf ≈ 0.83 million tons of oil equivalent
COGCC Glossary of Oil and Gas Terms. The primary source for this glossary – the Colorado Oil and Gas Conservation Commission’s official definitions. COGCC also maintains the COGIS database providing public access to well records, production data, permit applications, and inspection reports for all Colorado oil and gas operations. COGCC.state.co.us
US Energy Information Administration – Oil and Petroleum Products Explained. The EIA is the authoritative source for US and global oil and gas production, consumption, reserves, and price data. The EIA’s “Energy Explained” series provides accessible overviews of crude oil, natural gas, LNG, LPG, and petroleum products for non-technical readers. EIA.gov
American Petroleum Institute – Exploration and Production. API’s resource hub for upstream oil and gas operations, including standards, safety guidelines, and industry data. API’s well completion and production standards are referenced in most US state oil and gas regulations. API.org
PanAmOp.com – Working Interest and Net Revenue Interest Explained. The source for the NRI/WI definitions and the royalty burden explanation in this glossary. An accessible reference for investors evaluating oil and gas working interest opportunities. PanAmOp.com
Prosper Systems Commodities. Covers Incoterms, letters of credit, SWIFT instruments, ATB/ATL, TTT/TTO, SGS certificates, and other trade finance terms relevant to crude oil and petroleum product transactions. Prosper Systems
Prosper Systems Funding. Capital formation terms for natural resources investors – accredited investor definitions, Regulation D exemptions, LP/GP structures, and syndication mechanics applicable to oil and gas working interest and royalty investments. Prosper Systems
Mining – NI 43-101, reserves classification, royalty structures, and junior mining finance terms for resource sector investors.
Commodities – Incoterms, letters of credit, shipping documents, and trade finance instruments for physical commodity transactions — the market layer for Oil & Gas and Mining output.
Funding – Capital formation, SEC exemptions, accredited investors, GP/LP structures, and syndication mechanics — the financial engine behind every sector.
Sales – Bank Guarantees, SBLCs, MTNs, SWIFT MT760/MT799, and trade finance instruments — the transaction layer for large asset and commodity deals.
Real Estate – Cap rates, NOI, pro forma, capital stack, REIT, leasing structures, and investment return metrics that underpin CRE financing decisions.
AI – Terms, tools, and deployment strategies for AI in CRE, AEC, and natural resources practice — the technology layer running across all PS sectors.
Neither Prosper Systems (PS), nor its Founder, Kenton H Johnson, are licensed Real Estate or Lending Brokers, Securities Dealers or Investment Advisers. However, PS has an Attorney on its Team, and works closely with and engages other licensed individuals or firms as needed. PS makes no warranties or representations as to the quality of an opportunity, the integrity of any party, or the value of a given transaction. PS is acting only as Collaborator. All due diligence is the responsibility of Investors, Buyers, Owners and their Collaborators.
The definitions in this Glossary are for guidance and educational purposes only and are not intended to be comprehensive or to constitute legal, financial, or investment advice. Source definitions are from COGCC, PanAmOp.com, and other noted sources – with minor edits. No responsibility, whether direct or indirect, can be accepted in the event of incomplete, erroneous, or misleading definitions. Users are strongly recommended to seek qualified legal and financial advice before acting on any information contained herein.
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Oil & Gas Glossary