Category: Oil and Gas business

In the summer of 2008, inadequate natural gas production capacity and strong demand created a large deficit that quickly exhausted inventories. The lack of an inventory buffer necessitated sharply higher prices to bring the demand down in line with supply to keep the market in balance (demand destruction). Due to the financial crisis which started towards the end of 2008, demand (for oil and gas) has fallen far below supply, such that large surpluses are beginning to breach global storage capacity, requiring production shut-ins motivated by sharp declines in spot prices (supply destruction). Storage is the mechanism that creates the link between spot and forward prices. As storage capacity is exhausted, spot prices are disconnected from forward prices. Global working oil storage capacity is less than 10 days of demand, so less than 10 days of use separates demand from supply destruction. In 1980 that number was more than 28 days, which suppressed volatility to a fraction of the level at the beginning of 2009

The physical, chemical or biological alteration of sediments into sedimentary rock at relatively low temperatures and pressures that can result in changes to the rock’s original mineralogy and texture and can result in the creation of some forms of porosity

Gas contract whereas all the gas in a specific field is dedicated to a single buyer. A depletion contract is usually for smaller amounts of gas or oil and it refers to a contract to supply hydrocarbons to a buyer from a seller’s specific dedicated field (as opposed to supply contract). In a depletion contract the buyer contracts to purchase all the gas that can be economically produced from a particular reservoir before a specified termination date. In gas purchase contracts, a depletion contract is an agreement to purchase the output of a field over its whole lifetime

Phase after the exploration well has been completed successfully and before full scale production. A development well, as defined in the rules and regulations of the SEC, is a well drilled within the proved area of a crude oil or natural gas reservoir to the depth of a stratigraphic horizon known to be productive

The actual physical transfer of natural gas from a company in question to facilities operated by another company or to consumers

Porosity developed in a sediment after its initial deposition as a result of chemical and biological changes and burial. A form of secondary porosity as opposed to primary porosity. Fracture porosity is not thought of as diagenetic porosity

Used to recover purified ethane from a high pressure, dense phase natural gas stream.

Drilling and related activities necessary to bring a field into production following a discovery. The aim of the development is to safely and economically install the appropriate facilities in order to optimally produce the hydrocarbon reserves in the field. The key stages include: drilling development wells; installing well production equipment (completions); installing the surface facilities (platform, pipelines); commissioning the facilities. The ultimate goal is to attain first production

In many countries, including in Israel the cost of the investment in oil and gas infrastructure is depreciated according to the amount of gas produced during said report year in relation to the total amount of estimated developed reserves in place in the specific reservoir.

Depreciation based on unit-of-production basis, means that each year the percentage of capital costs depreciated is equal to the volume of hydrocarbons produced, divided by the expected ultimate recoverable volumes of reserves in the reservoir