Category: Oil and Gas business

The total volume of hydrocarbons estimated to be in place in an oil reservoir prior to commencement of production

In gas production operations involving multiple working interest owners, an imbalance in gas deliveries can occur. These imbalances must be monitored over time and eventually balanced in accordance with accepted accounting procedures

This is a clause in a gas sales contract that allows either buyer or seller to require the other party to re-negotiate the price of the oil or the gas, if they can demonstrate that they are suffering hardship as a result of the existing price level.

The Henry Hub spot price averaged $9.13/Mcf in 2008 but ended the year averaging $5.99/Mcf in December. The US Energy Information Administration cut its projected 2009 average Henry Hub spot price to $5.78/Mcf in January ($5.52/MMBtu) from its December forecast that prices would average $6.25/Mcf this year. Prices are expected to begin to increase in 2010 as the economy improves. EIA predicted prices to average $6.63/Mcf in 2010. Henry hub is the key marker for prices in the states, but the prices in the states are not necessarily the key indicator for prices in the rest of the world. If there is a lot of demand in Europe and in the States the gas will tend to go to Europe because the prices will tend to be higher. HH denotes the prices in the swing market in the states. Swing market is a market where there is a large potential ability to put in and extract quantities from the market place and thus prices will tend to fluctuate. Europe is more driven than the US by direct relationship between oil and gas. Much more of the market in the states is driven by a supply demand spot market and so the US market is the market of last resort in the Atlantic.

Including the hooking up of platforms in order to start the offshore platform operations

There are two ways to define the energy content of natural gas in common use — Higher Heating Value (HHV) and Lower Heating Value (LHV). The difference can be especially important when reviewing the performance of engine-driven systems. Higher Heating Values for a fuel include the full energy content as defined by bringing all products of combustion to 25° C. Natural gas typically is delivered by the local gas company with values of 1,000 – 1,050 Btu per cubic foot on this HHV basis. Since the actual value may vary from month to month some gas companies convert to therms. A therm is precisely 100,000 Btu. These measures all represent higher heating values. Some engine manufacturers rate their engines using Lower Heating Values (LHV) which can be both confusing and potentially misleading to the casual user of their product literature. Lower heating values neglect the energy in the water vapor formed by the combustion of hydrogen in the fuel. This water vapor typically represents about 10% of the energy content. Therefore the lower heating values for natural gas are typically 900 – 950 Btu per cubic foot. The error can occur when a manufacturer says their engine uses 900,000 Btu/hr but it was expressed on a LHV basis. The engine would actually use about 1,000,000 Btu/hr as purchased from a gas supplier. Therefore, always check the fuel rating method when natural gas is the fuel for the system. This potential confusion almost never exists with liquid fueled systems.

The petroleum resource management system (SPE-PRMS) divides the estimates to 3 possibilities groups:

Low Estimate (P90) – There should be at least a 90% probability (P90) that the quantities actually recovered will equal or exceed the conservative (low) estimate.

Best Estimate (P50) – There should be at least a 50% probability (P50) that the quantities actually recovered will equal or exceed the best estimate.

High Estimate (P10) – There should be at least a 10% probability (P10) that the quantities actually recovered will equal or exceed the high estimate.

The meaning of the parameter “Mean” or “Gross Mean Resources” (average potential of gas or oil reserves, as applicable) (the “Mean”) is the arithmetic mean of all these possibilities, or “the arithmetic average of all the possible outcomes”

Refers to the mean potential of gas reserves available in a gas field, somewhere between the P90 and P10 estimates. If this mean potential is stated to be 140 bcm the proven reserves may be as high as 200 bcm or as low as 80 bcm, with further certainty achieved after appraisal drilling and other drillings have been carried out.

Calculation of the “Mean” is done by running X number of observations in a probabilistic model and dividing their sum in the number of observations (X). It can be defined simplistically as the total sum of 30,000 values divided by 30,000. if you run a probabilistic model 1000 or x times, sum up all outcomes and divide by 1000 or x, you have the arithmetic mean.

It is important to point out that the mean value is different to the “best estimate” value and could be higher or lower. If one compares “mean” and P50, the two results would only be the same for a symmetrical normal distribution of values, namely for a bell curve,

A distillate fuel oil used in burners for domestic heating or for moderate capacity commercial and industrial burner units