ative to other products of the refin- fuels are burned, with coal produ-
ing process and so is often CRACKED to cing 25 million Btu of energy per
form other more commercially valu- ton and oil producing 5.6 million Btu
able products. In its raw form, it is per BARREL.
used to make roads in the form of
asphalt. bunkering
The illegal removal, or theft, of oil
block from a PIPELINE or other distribution
Method used to designate an area system. Bunkering is sometimes as
of land which could be made up of simple as drilling a hole in a PIPELINE
several OIL FIELDS, which divides up and collecting the oil in a drum.
land into workable areas for separ- More complex operations involve
ate CONSORTIA or companies to work equipping tankers with false bot-
on. toms to conceal extra-legal ship-
ments, or to make unauthorised
blowout shipments from well site storage
The sudden and uncontrolled re- tanks. Bunkering is a chronic issue
lease of CRUDE OIL or NATURAL GAS from a in Nigeria and Iraq, although it ex-
well when pressure control systems ists in many other countries.
fail. This risk can be mitigated by "The theft of oil – known in Nigeria as
using a blow-out preventer (BOP), “bunkering” – along with fraud in the al-
however only as a last line of de- location of a controversial fuel subsidy,
fence to shut off the top of a well may together have cost the state US $14
and prevent a GUSHER. It was a blo- billion in 2011."
wout which was responsible for the - Financial Times 2010
Deepwater Horizon oil spill in the
Gulf of Mexico in 2010. cap rock
A layer of impermeable rock which
booking may trap oil, gas or water beneath it.
The process by which RESERVES are
added to the balance sheet of an oil coal bed methane (CBM)
company. This is a crucial point, as NATURAL GAS found in coal beds during
reserves form key assets for the underground mining operations.
company. Oil companies such as Sometimes referred to as coal seam
the SUPERMAJORS who have shares lis- gas (CSG), it is already in significant
ted on major stock markets must production in the United States and
conform to regulations concerning Canada, and enormous resources are
how they book oil and gas assets. proven in Australia and China. Glob-
Royal Dutch Shell triggered a global ally, it makes a modest contribution
scandal in 2004 when it was forced to the ENERGY MIX but this is expected to
to admit that it had overbooked increase. See also: UNCONVENTIONAL ENERGY
many of its assets. SOURCES
tested. See also: ELEPHANT FIELD safety concerns associated with the
procedure. See also: ENHANCED OIL RECOVERY
groundwater
Water held in rocks beneath the wa- hydrocarbons
ter table. It can be polluted or de- Compound existing exclusively of hy-
pleted during the drilling process, drogen and carbon; the majority of
particularly HYDRAULIC FRACTURING. See naturally occurring hydrocarbons are
also: ENVIRONMENTAL IMPACT ASSESSMENT found in CRUDE OIL, and all oil and gas
products as well as coal are hydrocar-
gusher bons.
A well from which oil gushes without
being pumped, and an icon of oil ex- Hubbert's curve
ploration during the 19th and 20th A mathematical model developed in
centuries, perhaps most memorably 1956 by the US geologist Marion King
depicted in the 1956 film 'Giant' star- Hubbert which depicts the life cycle
ring James Dean. Nowadays thought of a drilling operation as a bell
of as wasteful and polluting, gushers shaped curve and predicts extraction
usually happen as the result of tech- rates will slow once peak production
nical failures. at a field has been reached. It is
widely disputed but is seen as the
heavy oil foundation of PEAK OIL theory. See also:
More viscous grade of crude oil with a DEPLETION, PLATEAU PRODUCTION
lower API GRAVITY than LIGHT OIL. Produc-
tion of heavy oil is becoming more International Energy Agency (IEA)
common around the world despite Created in 1974 in response to the oil
greater extraction and processing crisis, the IEA first had the mandate
costs, because light oil supplies have of coordinating energy policy among
dwindled. Extra-heavy oil, such as consumer countries, particularly glob-
that found in the Orinoco belt of al disruptions of supply. Based in Par-
Venezuela, is generally defined as is, it has evolved into an influential
having an even lower API Gravity of 7 government-sponsored think tank
to 11°. See also: OIL SANDS and is sometimes seen as "the con-
sumers OPEC".
horizontal drilling
A type of directional drilling which al- integrated energy company
lows drillers to access pockets of re- A company active in all stages of the
serves that are harder to reach by a value chain, from exploration through
vertical well, often used as a cost-ef- production to shipping and refining,
fective technique at OFFSHORE locations. to distribution and retail marketing of
In 1990, Iraqi leader Saddam Hussein fuel products. Most SUPERMAJORS are in-
accused Kuwait of using horizontal tegrated energy companies.
drilling to steal Iraqi oil and used it as
a pretext to invade in the first Gulf international oil company (IOC)
War. See also: ENHANCED RECOVERY A private sector oil company with op-
erations in many countries. The
hydraulic fracturing largest IOCs are SUPERMAJORS and the
Also known as FRACKING, it involves largest historically were the SEVEN
shooting water, sand and other com- SISTERS. The term is often used in con-
pounds at rock structures at such trast to NATIONAL OIL COMPANIES, state-
high velocity that they produce small owned entities created after waves of
fractures through which CRUDE OIL and RESOURCE NATIONALISM in the 1960s and
NATURAL GAS can then be extracted. The 1970s led to nationalisation of the
development of fracturing in the sector in many countries.
United States since 2005 has led to a
massive increase in SHALE GAS produc- joint venture (JV)
tion, despite environmental and A well-established feature of the oil
45 JARGON BUSTER: GLOSSARY
and beyond a normal economic re- resource diplomacy in the Gulf, and
turn on activity or profit. The concept China is increasingly using it in Africa.
was first developed by economists
Adam Smith and David Ricardo in the resource nationalism
18th and 19th centuries. It dominates The political feeling that control of
the economics of the global oil in- natural resources should be in the
dustry because of sharply varying hands of the countries which own
costs of production for a commodity them. Resource nationalism grew in
sold at roughly the same price. For the oil industry as a result of domin-
example, it could cost US $5 to pro- ance by the SEVEN SISTERS and led to
duce a barrel of oil in Libya and $60 the creation of OPEC and nationalisa-
in some fields in Canada, yet both sell tion of the industry in many coun-
for the same price, meaning the mar- tries, leading to the rise of the NATIONAL
gins are massively different. Econom- OIL COMPANIES.
included. See also:: INTERNATIONAL OIL method. This is an umbrella term that
COMPANY shifts over time, but currently used to
refer to sources such as SHALE GAS, COAL
sweet oil BED METHANE and OIL SANDS.
CRUDE OIL GRADES which have low sul- "While these reserves may hold the key to
phur, increasing their market value, the future oil supply, companies must deal
in contrast to SOUR OIL. with the additional time, cost and resources
it takes to extract the unconventional oil."
swing producer
- Financial Times 2010
A country which has production capa-
city significantly above what its actu- unitisation
al levels of production are, allowing it The way a single oil bearing rock
to raise production overnight and formation is divided by two countries
therefore lower market prices. Saudi when it straddles a border. For ex-
Arabia has been the sole swing pro- ample the United Kingdom and Nor-
ducer for the last 30 years. Other way have a unitisation agreement in
countries such as Iraq and Libya the North Sea. Unitisation requires
sometimes debate a similar role. agreed borders, but since the oil
could be sucked from one side of the
tar sands
border to the other also goes beyond
see OIL SANDS
it to require agreement and coopera-
tight hole tion on geological studies and produc-
A drilling well about which all inform- tion figures.
ation is kept confidential, most often unproven reserves
used for APPRAISAL WELLS.
wet gas
NATURAL GAS containing other hydrocar-
bons that condense as the gas rises
to the surface and lower temperat-
ures than existed in the reservoir.
Typically, wet gas contains less than
85 percent methane. The natural gas
liquids are generally separated from
the methane to ensure that the nat-
ural gas sent to consumers has a con-
sistent thermal energy content;
though wet gas is sometimes more
valuable than DRY GAS, as the liquids
are themselves sellable commodities
such as butane. See also: DRY GAS,
CONDENSATES
wildcat well
An exploratory well into rock struc-
tures not known to contain oil
RESOURCES, under conditions of little or
no geological certainty. A high risk
"make or break" venture for drilling
companies. If the well is in a field that
has not produced before it is known
as a "new-field wildcat". If it is more
than 3 kilometres away from any pro-
ducing well it is called a "rank wild-
cat". If the well discovers oil, it is
known as the "discovery well" of that
field. See also: APPRAISAL WELL DEVELOPMENT
WELL
working interest
The percentage stake taken by a
company in an oil or gas operation,
where they are liable for a proportion
of the ongoing operating costs but
also has a claim to a share of the
profits. This contrasts with a ROYALTY
INTEREST. See also: PRODUCTION SHARING
CONTRACT, COST RECOVERY