Absorption Absorption is the ability of liquids and solids to soak up water or other fluids,

including unwanted gases, in natural gas processing.

Access Access is a system under which market players are allowed to use capacity in a
pipeline, network, gas store or other gas facility. Access is central to the implementation of gas
market liberalisation and contrasts, therefore, with the traditional model where the owners of
transportation systems, stores etc own all the gas flowing through their equipment and act as
exclusive merchants for it. See also Common Carriage, Limited Access, Negotiated Access,
Third Party Access.

Acid Gas Acid Gas is Natural Gas containing a proportion of gases such as Carbon Dioxide or
Hydrogen Sulphide which, when combined with moisture, form acidic compounds.
ACQ Annual Contract Quantity.
ADP Annual Delivery Programme.
Advance Make Good Alternative name for Carry Forward.
Annual Contract Quantity The Annual Contract Quantity (ACQ) is the volume of gas which the
Seller must deliver and the Buyer must take in a given contract year. It may be expressed as a
discreet number or as a multiple of the Daily Contract Quantity. In practice, many contracts
are written in forms which allow the Buyer to take considerably below the stated ACQ. See also
Downward Quantity Tolerance.
Annual Delivery Programme The Annual Delivery Programme (ADP) is a schedule of gas
volumes to be delivered on certain dates or within certain periods in a forthcoming contract year
in a long term contract. In practice this will often take the form of a detailed schedule covering
the first few months, with looser numbers for the remainder of the year which are then firmed up
at times laid down in the contract.
Aquifer An Aquifer is a body of porous rock saturated with water. Gas fields are usually
underlain by an aquifer which often provides pressure known as Water Drive to assist gas
production. Underground storage of gas can be achieved by pumping gas down into aquifers
below impermeable cap rocks thus effectively making a gas reservoir. See also Reservoir,
Underground Storage.
Arbitrage Arbitrage is buying and selling the same product in two different locations or markets
to take advantage of differences in price.
Associated Gas Associated Gas is gas which coexists with oil in a predominantly oil field. It
may be Cap Gas or Solution Gas, the behaviour and treatment of which are different.
Associated gas will normally be sold as sellers nomination gas, i.e. the seller nominates the
volumes of gas available. In traditional gas markets such gas would command a lower price
than Non Associated Gas.
Autogeneration Autogeneration is the generation of electricity by an industrial concern
primarily to meet the needs of its own operations See also Combined Heat and Power.
Backhauling Backhauling is the transportation of gas apparently in the reverse direction to the
main flow of the pipeline. This is usually achieved by swap arrangements rather than by
physical movements. Also known as Reverse Flow.
Balancing Agreement Balancing Agreements are used to define procedures for the use of
capacity in pipelines or production from a gas field:
1) Pipelines: A balancing agreement for a pipeline is an agreement between a pipeline owner
and other users of the pipeline on the procedures to be adopted to ensure that gas volumes
input to and removed from the pipeline are equal over a given period of time. Pipelines
commonly require daily balancing, but some require balancing over shorter periods, down to an
hour, especially where there is a heavy power generation load on the pipeline. Others may allow
longer periods e.g. 3 days up to monthly. Monthly balancing is only appropriate where third
party loads are very small (a few percent) in relation to the main users loads.
2) Reserves: A balancing agreement for reserves is an agreement between the owners of a gas
field who are marketing their shares of the gas independently of each other. Since each buyer
may have a different demand pattern, the owners agree between themselves that they will not
withdraw reserves at a rate which will cause imbalance in the ownership of the remaining
reserves to exceed certain agreed tolerances. The agreement also defines the remedies that
are to be taken should these tolerances be exceeded. The purpose is to ensure that the
ownership share of the remaining reserves remains constant for all practical purposes.
Base Gas Base Gas is an alternative name for Cushion Gas.
Base Load Base load is the rate of delivery (or demand) below which sendout (or demand) is
not expected to fall during a given period.
Beach Price Beach price is a term, mainly used in the UK, to define the price at which offshore
gas is transferred by the producer at the exit from the onshore treatment plant, at which point
ownership is transferred before onward transmission or use.
Blast Furnace Gas Gas produced as a by product from the use of coke in traditional blast
furnaces. This gas was of low Calorific Value (roughly a quarter to a third that of natural gas)
but was used mixed with Manufactured Gas in the days before natural gas.
Block A block is a geographical area defined in a Concession agreement, often prefixed by
Exploration, Development or Production. Often defined in terms of latitude and longitude,
but may also be defined by reference to a local grid system, for example in the Gulf of Mexico.
Blowdown A method of producing a gas/condensate Reservoir by letting the reservoir
pressure fall as gas is produced over time without re-injecting any gas. With this method of
production some Condensate may condense within the reservoir, where its recovery is no
longer a practical proposition.
Boil Off Gas (BOG) Boil off is a term used in LNG projects. However well insulated LNG
storage tanks may be, the LNG is always at its boiling point, and small quantities will continue to
boil off. In liquefaction plants a small volume of boil off gas is required to ensure that the plant
flare is operational. Boil off not needed for this purpose will normally be used in the plants own
low pressure fuel system. On LNG tankers driven by steam turbines the gas is normally used as
a fuel to drive the ships.
Booster Station An alternative name for a Compressor Station.
Border Price The price at which gas is sold at the border between two countries. Typically
based on customs or other official import/export data. Frequently used, especially in Europe, as
a point of reference in gas contracts.
Bottled Gas LPG, usually Butane or Propane stored in the liquid state at moderate pressure in
steel containers for use in small residential and commercial applications.
Bundled The provision of various services, such as transportation, storage etc. in a compulsory
package which the buyer must accept in total, without being able to choose which elements it
requires. See also Unbundling.
Butane A member of the alkane group of Hydrocarbons with four carbon atoms in its molecule
(C4H10, often abbreviated to C4 in non technical usage). Butane is a colourless, flammable gas
at normal temperature and pressure but is easily liquefied by pressure for storage and
transportation. There are two isomeric forms, normal and iso-butane. At atmospheric pressure
iso-butane liquefies at 1200C and normal butane at -100C.
C&F Cost and Freight.
Calorific Value (CV) Calorific Value is the quantity of heat produced by the complete
combustion of a fuel. This can be measured dry or saturated with water vapour; and net or
gross. See also Gross Calorific Value, Net Calorific Value.
Cap 1. A clause in a supply contract under which the buyer is assured that he will not have to
pay more than a given maximum price. This type of contract is analogous to a call option. 2. In a
Supply Contract where the buyer has flexibility in the volume it can request, the maximum to
which it is entitled either over a period (e.g. a year) or over the life of the contract.
Cap Gas Gas found in a Gas Cap in association with oil but not commingled with it.
Capacity Charge A capacity charge is the payment made for reserving capacity in a pipeline, a
gas store or other piece of infrastructure. Often used interchangeably with Demand Charge.
Capacity Trading The buying and selling of acquired rights to move gas through the pipelines
of a Transporter.
Carbon sequestration and storage The capture of carbon emissions to the atmosphere and
their storage in carbon sinks, which cam be natural, or may be depleted hydrocarbons fields.
Carbon Trading A systematic procedure for exchanging permits to produce carbon emissions.
See EU ETS.
Carry Forward A provision within a long term Take or Pay Contract under which a Buyer which
takes more than its Annual Contract Quantity in any year is allowed, under conditions defined
in the contract, to offset this against undertake in subsequent years which might otherwise have
incurred some form of sanction, such as Take or Pay. Sometimes known as Advance Make
Good.
Casing Head Petroleum Spirit (CHPS) An alternative name for Condensates and especially
for those dropping out at or close to the well head. Mainly used in North America.
CBM Coal Bed Methane.
CCGT Combined Cycle Gas Turbine.
CCS Carbon Sequestration and Storage.
CHP Combined Heat and Power
Churning Churning is a term used in gas trading to indicate the number of times on average
that gas is traded between initial sale and ultimate consumption.
CIF Cost, Insurance and Freight. See Delivered.
City Gas City gas is a term used in some parts of the world, for instance Egypt, India, Japan,
Korea, to refer to gas distributed to customers through a local distribution system, downstream
of the City Gate. Such customers will be a mixture of residential, commercial and industrial
depending on particular local circumstances but will, typically, exclude power generators. In the
past city gas may have been gas manufactured from coal and oil but is now predominantly
natural gas. See also Town Gas.
City Gate The point at which a local distribution system, often based on one town or city,
accepts gas from a transmission company or system. A transfer price at this point is called a
City Gate Price.
CMM Coal Mine Methane.
CNG Compressed Natural Gas.
Coal Bed Methane (CBM) Coal bed methane is methane that is or can be recovered from coal
seams. Also known as Coal Seam Gas. CBM is recovered by drilling wells into suitable coal
seams and then reducing pressure in the rock, usually by pumping out water, which may be
saline and present environmental issues, until the methane can be desorbed from the coal.
CBM, unlike conventional natural gas, is not trapped beneath a Seal but is adsorbed into the
coal. It can therefore occur in coal deposits which are laterally very extensive. Production rates
are typically much less than for conventional gas. Depletion rates are typically quite slow and
wells may produce for many years. CBM may also be produced as a safety measure before
coal is mined to reduce the incidence of potentially explosive gas mixtures during mining
operations. See Coal Mine Methane.
Coal Gas Coal Gas is gas manufactured by the destructive distillation of bituminous coal. The
chief components are hydrogen (more than 50%), methane (10% to 30%) carbon monoxide and
higher hydrocarbons. The water vapour in coal gas kept old pipe joints tight, thus minimising
loss of gas. If natural gas is introduced into the same pipes without remedial action substantial
losses may occur. The carbon monoxide is of course poisonous. Inhaling coal gas was a
favoured way of committing suicide in cities with coal gas distribution.
Coal Mine Methane (CMM) Methane recovered from coal mines, either while active or after
abandonment, which can be used in local power generation or heat production. It is rarely
available in sufficient quantity to justify processing to pipeline quality for delivery into a pipeline
system. See: Coal Bed Methane.
Coal Seam Gas See Coal Bed Methane.
Cogeneration Alternative name for Combined Heat and Power.
COI Confirmation of Intent See Memorandum of Intent.
Coke Oven Gas Coke oven gas is produced as a by-product of the coking of coal and was at
one time a main ingredient of Manufactured Gas.
Combined Cycle Gas Turbine A Combined Cycle Gas Turbine (CCGT) is a type of electricity
generation plant in which the heat generated from combustion of the gases is used twice. First,
the gas is burned to drive a Gas Turbine. Then the hot exhaust gases pass through a heat
exchanger to raise steam for a secondary steam turbine unit. Combined cycle plants have a
thermal efficiency approximately 50% greater than a normal simple or open turbine.
Combined Heat and Power (CHP) Combined Heat and Power (CHP) is the use of a single
unified system to supply both the heat and power requirements of a project, minimising the
waste of heat. The power is produced through Gas Turbines or another prime mover. The
exhaust heat is harnessed for requirements other than electricity generation. Also known as
Cogeneration and Total Energy.
Commodity Charge Tariff term for a charge made for each unit of gas actually taken or
transported. May be in volumetric or heat units. Distinguish from Standing Charge and
Demand Charge.
Common Carriage Common Carriage is a term often used interchangeably with Open Access
and Third Party Access but which is in fact more specific. In a common carriage system all
applicants for capacity (for instance in a pipeline or store) are given access on equal terms. If
the total volume requested exceeds available capacity, the usage of all parties is reduced pro
rata: capacity is rationed among users. Under Open Access, if applicants seek more capacity
than is available, capacity is apportioned on a first come, first served basis or a pay-to-book
system which allows capacity to be contracted for and traded just like renting and subletting
space in a building. A pipeline or store owner who wishes also to use some capacity for itself
must, under Open Access, do so through an arms-length affiliate whose commercial relations
with the capacity provider are transparently identical to those of other users. Open Access is
required on US interstate pipelines, where it is known as Contract Carriage. In Europe the term
Open Access is sometimes used loosely as synonymous with Third Party Access, to define the
right of third parties to use the pipeline or equipment of another company. In its general form it
encompasses Open Access, Common Carriage, Negotiated Access and Regulated Access.
One aspect of Third Party Access is that it does not in itself imply any solution to the issue of
discrimination between the parties using the facilities. See also Limited Access.
Compressed Natural Gas (CNG) CNG is natural gas compressed into gas cylinders, chiefly
used as an alternative for liquid fuels in road vehicles. CNG remains a gas irrespective of the
amount of pressure. Not to be confused with Liquefied Petroleum Gas.
Compressor Station Gas loses pressure as it travels long distances through pipelines. To
ensure an even flow, and an adequate pressure at the point of off-take, it must be
recompressed at compressor stations, typically located every 60 km to 100 km along onshore
transmission pipelines. Offshore and in remote areas, it may be convenient and preferable to
maintain higher pressures and allow greater distances between compressor stations. On large
pipelines compressors are normally driven by gas turbines. Smaller pipelines may use diesel
engines.
Concession A license awarded either by a Government or State Oil company. It defines an
area, often referred to as a Block, granted to a company or group of companies for the
exploration, production or transportation of oil and/or gas under specified terms and conditions
and for a fixed period. Concession areas are frequently initially awarded for exploration. If this is
successful then a smaller area is defined, within the exploration block, to be a production block.
May also be applied to permits to construct pipelines, power stations etc.
Condensate Condensate is a natural gas liquid with low vapour pressure, produced from a
reservoir with high pressure and temperature. Condensate will separate naturally in a pipeline or
separation plant through the normal process of condensation. Can refer to any mixture of
relatively light Hydrocarbons which remain liquid at normal temperature and pressure. There
will be some propane and butane dissolved in it. Unlike Crude Oil, it contains little or none of
the heavy hydrocarbons which constitute heavy fuel oil. There are three main sources of
condensate: a) The liquid hydrocarbons which are produced from a gas/condensate reservoir.
These may be only slightly distinguishable from a light stabilised crude oil. b) The liquid
hydrocarbons which are recovered at the surface from non-associated gas. c) The liquid
hydrocarbons which are separated out when raw gas is treated. This condensate typically
consists of C5 to C8.
Condensing boiler A condensing boiler is a water heating device designed for increased
efficiency by using flue gases otherwise vented to atmosphere to pre-heat water in the boiler.
Confirmation of Intent (COI) See Memorandum of Intent.
Connection Charge Sometimes used as a synonym for Standing Charge but more correctly
defined as an amount to be paid by the customer in a lump sum or by instalments for a
connection to the suppliers system.
Contract Carriage An alternative term for Common Carriage used in the US.
Contractor A term having a specific meaning in a Production Sharing Agreement. The
Contractor is the company (usually a producing company) which undertakes to explore and/or
produce for the host government in return for defined volumes of the gas or oil produced.
Convergence A loosely defined term which refers to the increasing use of natural gas in the
generation of electricity. Where generation becomes wholly or largely dependent on natural gas,
the interests of the gas supplier and the power generator converge, and the possibility arises of
switching gas between generation and direct supply, depending on the price available for each
outlet. Prices converge when there is no benefit in switching.
Cost and Freight (C&F) See Delivered.
Cost Gas Cost gas is the gas which a Contractor acquires under a Production Sharing
Agreement to cover the costs of its operations under the contract. Normally the Contractor
operates at its own risk and, if no hydrocarbons are discovered, the costs are entirely for its
account. See also Profit Gas.
Cost, Insurance and Freight (CIF) See Delivered.
Critical Pressure The minimum pressure which must be applied to a gas before it can be
liquefied.
Critical Temperature The temperature above which a gas will not liquefy, irrespective of the
pressure applied.
Crude Oil A mixture of Hydrocarbons that exists as a liquid in natural underground reservoirs
and remains liquid at atmospheric pressure after passing through surface separating facilities.
Crude is the raw material which is refined into gasoline, heating oil, jet fuel, propane,
petrochemicals, and other products.
Cryogenics The process of producing, maintaining and utilising very low temperatures (below -
46C / - 50F). Relevant in the LNG business.
Cushion Gas Cushion Gas is gas left in a gas store to provide the pressure needed to produce
stored gas, but which itself remains un-produced. It is typically of the order of 50% of the total
stored volume for an Aquifer and depleted fields, but less for other types of storage. When the
store is initially established Cushion Gas, unless it is un-produced reserves left in a partly
depleted field, may be a large part of the capital cost. Cushion Gas may finally be used when
the store is decommissioned. Also known as Base Gas.
CV Calorific Value.
Daily Average Send-Out Total volume of gas delivered during a period of time, divided by the
total number of days in the period.
Daily Contract Quantity (DCQ) The amount of gas which a Buyer nominally undertakes to
purchase and a Seller undertakes to deliver in a defined 24 hour period. Although featuring in
many contracts, in practice this expression is of little meaning in itself. It may serve as a means
of expressing the Annual Contract Quantity if the latter is expressed as a number of days
multiplied by the DCQ. It may also define the rate at which the Seller must be able to supply
gas. See also: Daily Delivery Rate.
Daily Delivery Rate The Daily Delivery Rate (DDR) is the rate at which the Sellers facilities
must be capable of delivering gas, expressed as a volume of gas per day, or as a multiple of the
Daily Contract Quantity. Also known as the Maximum Daily Quantity.
Daily Peak Daily Peak is the maximum volume of gas which can or must be delivered/required
on any one day during a given period (usually one year).
DCQ Daily Contract Quantity. See Delivered
DDR Daily Delivery Rate
Dedication Contract A Dedication Contract is the correct term for a Depletion Contract, under
which the entire production from a gas field is bought and sold.
Degree Day A degree day is a measure of average temperature over a day, and is usually
related to a temperature threshold. For instance, an actual average temperature of 5C on a day
is 2 degree days warmer than an expected average temperature of 3C. Can also be used to
measure cumulative cold weather over a period. Thus if the Seasonal Normal temperature for
a month is 18C and the average actual temperature through the month is expected to be 8C,
the month will be 10 x 30 = 300 degree days colder than normal.
Delivered A term used mainly in LNG shipping contracts for an arrangement under which the
seller is responsible for arranging and paying for the shipping of the gas, and title passes at the
port of delivery. Generally, the sellers risks are greater in a delivered transaction because the
buyer only pays for the landed quality/quantity, and the Boil Off Gas is the sellers
responsibility. The seller is responsible for clearance through customs and payment of all duties
unless the contract provides otherwise. An alternative name for a Delivered contract is Ex Ship.
Very similar to Delivered is Cost, Insurance and Freight (CIF). This is an arrangement under
which the Seller arranges and pays for shipping and insurance, as for a Delivered contract, but
risk and title are transferred from the seller to the buyer in a manner defined in the agreement
(e.g. on shipment or on delivery of the bill of lading to the buyer). CIF and Delivered are
frequently, but erroneously, treated as if they were identical because the costs to the seller are
the same. Under a CIF contract, however, the seller can avoid being in possession of the cargo
within the jurisdiction of the buyer countrys government. This may be important for fiscal or
legal reasons. The third arrangement frequently met in the shipping of LNG is Free on Board,
(FOB), which is used to denote deliveries where the buyer arranges for the shipping and there is
a delivery and change of title at the time the cargo is loaded into the ship at the loading port.
Demand Charge A monthly or annual fee paid by a Buyer for a nominated, reserved peak or for
the actual peak volume of gas taken in an hour or day in a given period. Thus a typical
expression might be Dollars per thousand cubic feet of peak hourly capacity per month. Often
used interchangeably with Capacity Charge although it can be argued that in strict logic
Demand Charge should apply to a gas sale and Capacity Charge to a transportation
arrangement.
Depletion Contract A depletion contract is a production sales contract in which the sale
volumes are essentially governed by the performance characteristics of the particular gas field.
A build-up pattern, an expected Plateau and a method for determining decline volumes will be
defined initially, but may be amended as the production capabilities of the field are better
understood through operating experience. The buyer thus assumes a large share of the
production risks. See also Dedication Contract and Supply Contract.
Depletion Drive Reservoir A gas Reservoir from which gas is recovered by expansion as the
gas pressure falls with the production of gas originally in place. The reservoir can therefore be
treated as if it were a closed tank. Recovery factors of up to 90% of the gas in place can be
achieved. In such reservoirs there is no Water Drive.
Deregulation Deregulation is the reduction in the role of regulatory bodies usually associated
with an increase in open competition, and achieved by the simplification of the regulatory
framework. Deregulation should not be confused with Liberalisation which may require the
introduction of transparent regulatory processes.
Derivatives Derivatives are financial instruments ultimately based on trading a physical
commodity, including gas and other forms of energy. See also Futures, Swaps.
Dew Point The temperatures below which either hydrocarbons (hydrocarbon dew point) or
water (water dew point) will start to condense out of a given gas stream. Condensation reduces
the accuracy of metering and creates the nuisance of liquid slugs in pipelines, which will need to
be cleared out periodically by passing a Pig though the pipeline. In addition, water may react
with carbon dioxide or hydrogen sulphide in the gas stream to form acids, and with methane
itself, under appropriate conditions, to form Hydrates. Therefore, at the Treatment stage, water
is normally removed from the gas stream to reduce the Dew Point to somewhere around -10C
at standard pipeline pressures.
Distribution The final phase in the transportation of gas (and electricity) and its sale to end
consumers through medium-sized pipelines and small diameter low pressure Reticulation
grids.
Diurnal Storage Literally, daily storage. The short-term or peak storage of gas in pipelines or
gas holders, to meet local, within-day fluctuations in demand, as opposed to seasonal storage.
Diversity Factor The ratio of the sum of the individual maximum demands of several
consumers or loads, to their simultaneous maximum demand. Usually less than 1 to reflect that
not all customers are expected to take their maximum demands simultaneously. See also Load
Factor.
Downstream Those activities in the gas chain closest to final customers. See Upstream.
Downward Quantity Tolerance (DQT) The Downward Quantity Tolerance (DQT) is the amount
by which a buyer may fall short of its full Annual Contract Quantity in a Take or Pay gas sales
contract without incurring sanctions. If there is no provision requiring the buyer to take
supplementary volumes in subsequent years to make good for the deficiency, the Annual
Contract Quantity becomes in effect the ACQ minus the DQT. See also Make Good and Make
Up.
DQT Downward Quantity Tolerance
Dry Gas An alternative name for Lean Gas. It does not mean free of water, though in some
cases it may be.
Dry Gas Field A reservoir which will yield dry/lean gas and very small quantities of
Condensate; typically less than 10 barrels per million cubic feet. This is equivalent to 350
barrels/MMcm or 60 cubic metres oil/MMcm gas assuming 0.159 barrels/cubic metre.
Dry Hole: A borehole that cannot produce commercial volumes of oil or gas. Conventionally the
term Well is restricted to a borehole that can produce oil or gas.
EFET The European Federation of Energy Traders. A pressure group of European energy
trading companies dedicated to stimulating and promoting energy trading.
Efficiency Efficiency, or Heat Efficiency, is the ratio of energy output to energy input in a
process. One of the most frequently encountered uses of this ratio in the gas industry is in the
use of gas for power generation, where the electricity send out is expressed as a percentage of
the gas consumed, measured on the basis of a common unit e.g. kWh. Care needs to be taken
to distinguish between net and gross efficiency. See also Gross Calorific Value, Net Calorific
Value.
End user The consumer of gas, in the residential, commercial or industrial sector. The final
player in the gas chain.
Entry-Exit An Entry-Exit System is one where a gas shipper is charged an entry price for
putting gas into a transmission or distribution network at a defined entry point, and an exit price
for removing the gas at a defined exit point. The prices can reflect congestion at entry and exit
points, but are the same for any user. The system may be contrasted with point to point
systems, where transportation charges depend on the actual or theoretical distance travelled by
each consignment of gas. Entry-Exit is strongly favoured by the EU as a means of promoting
gas liberalisation.
ERGEG The European Regulators' Group for Electricity and Gas. ERGEG is the European
Commission's formal advisory group of energy regulators. ERGEG was established by the
European Commission, in November 2003, to assist the Commission in creating a single-EU
market for electricity and gas. ERGEG's members are the heads of the national energy
regulatory authorities in the EU Member States.
Ethane Ethane (C2H6, often abbreviated to C2 in non technical usage) is one of the main
constituent elements of natural gas along with methane. Boils at -84.4C. At normal
temperatures it is a dry, colourless and odourless gas. A feedstock for ethylene production.
Ethylene Also known as Ethene. A colourless gas (C2H4) produced by cracking
Hydrocarbons such as Ethane or naphtha and used as a feedstock for petrochemicals, such
as fibres and many plastics. Boils at -103.7C.
EU ETS The European Union Emission Trading System. The largest multi-national, emissions
trading scheme in the world, and a major pillar of EU climate policy.
Excess Gas Excess Gas is either: a) Gas taken at a rate in excess of the Daily Delivery Rate
at a premium price; or b) Gas taken in excess of the Annual Contract Quantity. Depending on
the terms of the contract and the status of deliveries such gas may qualify as Carry Forward,
Make Good or Make Up gas.
Ex Ship An alternative name to Delivered, used in LNG shipping.
Federal Energy Regulatory Commission (FERC) A US federal government agency whose
responsibilities include regulating the interstate gas industry. Has no jurisdiction over gas
pipeline and supply where the trade is entirely within individual states.
Feedstock Hydrocarbons used as raw material in an industrial process, not as a fuel. The
principal uses of natural gas as a feedstock are in the manufacture of ammonia and ammonia-
based fertilisers and methanol. A potential major market is the use of gas to make synthetic oil
products such as motor gasoline and middle distillates (see Gas to Liquid). May also be used
to denote the feedstock used to produce electricity, but statistical summaries of gas
consumption normally distinguish this use from chemical feedstock uses. See also Middle
Distillate Synthesis.
FERC The Federal Energy Regulatory Commission
Field Appraisal The process of quantifying reserve levels and production potential of a newly
discovered petroleum (oil and/or gas) reservoir, usually by drilling one or more delineation or
appraisal wells.
Firm Gas Gas which a supplier commits to supply to a purchaser under terms defined in the
contract, without interruption. See also: Interruptible Gas.
Fischer-Tropsch Process A chemical process to convert Synthesis Gas to paraffins by
polymerization. Originally developed in the early 20th Century to make gasoline from coal.
Recent research has identified catalysts which greatly increase the efficiency of the process by
creating very long waxy products, which can then be turned into very high quality liquid fuels by
conventional cracking. See Middle Distillate Synthesis.
Flammability Limits The minimum and maximum percentages of gas in air within which the
gas will ignite. For natural gas these limits lie approximately between 5% and 15%.
Flaring The process of burning unwanted natural gas or oil. In the case of gas, usually occurs
when it is associated with oil and cannot be economically exploited or re-injected. Now less
prevalent, as governments seek to profit from the increased value of gas and reduce the advert
environmental impact of burning hudrocarbons.
Flow Meter A type of Meter used to measure gas flows.
FLNG Floating LNG
Floating LNG Floating LNG (FLNG) is the use of purpose built or converted ships to enable
regasification of LNG (and liquefaction) to be carried out offshore. FLNG has the advantage that
LNG production and importation can start more quickly than could happen onshore, where lead
times are often lengthened by the local approval process. It also enables the processes to move
location to satisfy short term demand.
FOB Free on Board. Term used in LNG contracts. See Delivered.

Force Majeure A contractual term used to define circumstances in which a party to a contract is
not obliged to carry out its obligations because of major events outside its control. Force
Majeure can mean very different things, depending upon the law under which the contract is
written and the provisions of the clause, which can vary widely. Examples of force majeure
could be war, extreme weather, industrial action.
Forward Trading Buying and selling gas (and other commodities) to be delivered at a later
date, not under a long term contract. See Futures.
Free on Board (FOB) Term used in LNG contracts. See Delivered.
Fuel Cell Equipment used to generate electric energy directly from the reaction of hydrogen and
oxygen in the presence of a catalyst, without combustion. Natural gas can be used as a
feedstock from which to obtain the hydrogen. Carbon dioxide will then be produced in the
reformation process.
Fuel Gas Gaseous fuels, in particular low pressure natural gas used to fuel production or
treatment facilities.
Futures A future is a contract to buy or sell a specified quantity of gas (or any other commodity)
for a specified price on a pre-arranged date. The contract is usually of standard form and can
itself be traded at an exchange such as NYMEX or the IPE.
Gas:Oil Ratio: The gas:oil ratio is the relationship between the volume of gas produced at
atmospheric pressure and the volume of oil produced in a given field. This volume will normally
vary considerably over the life of the field. May be expressed as a simple volumetric ratio e.g.
500:1 or as cu ft/Barrel. See also Solution Gas.
Gas and Electricity Markets Authority (GEMA) The body which determines strategy and
takes major policy decisions for Great Britains gas and electricity regulation. Day to day
management of policy, resources and operational issues is carried out by the Office of Gas and
Electricity Markets (OFGEM).
Gas Cap In a field where oil is saturated with gas, so that it can dissolve no more, some gas will
collect at the top of the reservoir, where it is known as cap gas, and forms a gas cap. Cap Gas
overlies the oil and thus provides additional pressure for oil production, but will therefore often
be produced only after all the oil has been produced and will then be treated as Non
Associated Gas. Unlike Solution Gas, it is not commingled with the oil.
Gas Condensate Field A field consisting of one or more reservoirs containing a mixture of
gases at reservoir temperature and pressure, but which at normal temperature and pressure
separates out into natural gas and Condensates. A gas condensate field is richer in liquids than
a Dry Gas field but there is no precise point at which one becomes the other. Sometimes a
reservoir will be produced primarily to obtain the condensate; the gas may be re-injected, used
as a secondary product, e.g. for LNG production or, particularly in areas remote from the
market, flared. The liquid in a gas condensate field is often more valuable than the gas. See
also Gas Cycling.
Gas Condensate Ratio The ratio of gas to condensate in a gas/condensate reservoir, usually
expressed in practice as the ratio of Condensate to gas. Typical units are barrels of condensate
per million cubic feet of gas.
Gas Cycling or Re-Cycling A process in which produced gas is re-injected into the reservoir
after removal of the condensate. This is to maintain the reservoir pressure and prevent
Condensate from condensing in the reservoir and then becoming difficult to recover. This
contrasts with Blowing Down the gas condensate field.
Gas Day A period of 24 hours starting and ending at a stated time (often 0600 hours).
Gas Detector An instrument used to detect the presence of various gases, often as a safety
precaution to guard against leakage of flammable or toxic gases.
Gas Gathering System A gas gathering system is a network of pipelines from a number of
fields, collecting gas and bringing it to a central point, often a processing system or the inlet to a
major transportation pipeline. Sometimes built where individual fields are not big enough to
justify investment in separate pipelines and processing plant.
Gas Grid A gas grid or network is a connected set of pipelines for the transmission and
distribution of gas in a region or country to industrial, commercial and domestic users. See
Reticulation.
Gas Holder Over ground structure used to hold gas for within-day Peak Shaving purposes in
urban areas. Gas holders are relics of the manufactured gas era and are steadily disappearing,
their function being largely usurped by Line Pack.
Gas Lift Injection of gas into an oil reservoir in order to mix gas with oil, reduce the fluid density
and so assist oil flow.
Gas Liquefaction The conversion of natural gas into LNG.
Gas Marketer A company that supplies gas to end users. See also Shippers, and Local
Distribution Companies. Marketers are also major users of transportation capacity.
Gas Processing The separation of oil and gas, and the removal of impurities and natural gas
liquids from natural gas to meet the delivery Specification of a gas transportation pipeline.
Gas Supplier A company that sells gas to the end consumer (UK).
Gas to Liquid Gas to Liquid GTL processes convert natural gas into Synthetic Gasoline or
Middle Distillates, using the Fischer Tropsch synthesis method. Increasingly relevant where
gas is found in fields remote from markets such that delivery by pipeline is likely to be
uneconomic.
Gas Turbine A turbine propelled by the expansion of compressed air, heated by the
combustion of a fuel such as natural gas or gas oil. Widely used for power generation. See
Combined Cycle Gas Turbine.
Gas Well A borehole sunk into the ground with the objective of bringing natural gas to the
surface.
GCV Gross Calorific Value.
GEMA Gas and Electricity Markets Authority.
GHV Gross Heating Value. See Gross Calorific Value.
GNL The French language acronym for LNG, stands for Gaz Natural Liquifi.
Greenfield Often used to refer to a planned development which must be built from scratch on a
new site, hence green field, without existing infrastructure.
Grid Alternative name for Network. See Reticulation.
Gross Calorific Value (GCV) The heat generated by the complete combustion of a unit volume
of gas in oxygen, including the heat which would be recovered by condensing the water vapour
formed. The preferred value for expressing gas calorific quality in gas contracts. Also known as
Gross Heating Value, Higher Calorific Value (HCV) or Higher Heating Value (HHV). See also
Net Calorific Value.
Gross Heating Value (GHV) Alternative name for Gross Calorific Value.
GTL Gas To Liquid.
HCV Higher Calorific Value. See Gross Calorific Value.
Heads of Agreement A non-binding statement of the main elements of a proposed agreement.
See Memorandum of Intent (MOI).
Heel LNG LNG left in ship and shore storage tanks to maintain their cryogenic temperatures.
Henry Hub Henry Hub is the largest centralized point for natural gas spot and futures trading in
the United States. The New York Mercantile Exchange (NYMEX) uses Henry Hub as the
notional point of delivery for its natural gas futures contract. NYMEX deliveries at Henry Hub are
treated in the same way as cash-market transactions. Many natural gas marketers also use
Henry Hub as their physical contract delivery point or their price benchmark for spot trades of
natural gas. Henry Hub is owned and operated by Sabine Pipe Line, LLC, which is a wholly
owned subsidiary of ChevronTexaco. Henry Hub is based on the physical interconnection of
nine interstate and four intrastate pipelines in Louisiana.
Hexane A colourless gas (C9H14) naturally occurring in gas fields and normally left as part of
the Condensate stream after separation. Boils at -69C.
HHV Higher Heating Value. See Gross Calorific Value.
Higher Calorific Value (HCV) See Gross Calorific Value.
Higher Heating Value (HHV) See Gross Calorific Value
High Sulphur Fuel Oil (HSFO) The bottom of the oil barrel. The lowest priced oil product now,
for environmental reasons, often banned or only allowed to be used where rigorous control of
emissions is practiced. In some countries with developing gas-to-oil competition it may
represent the marker for power station fuel.
HOA Heads of Agreement
Hourly Peak The maximum volume of gas delivered or demanded in any one hour during a
given period (usually 24 hours).
HSFO High Sulphur Fuel Oil.
Hub A term, met most frequently in the U.S., but also now used in Europe, for a geographical
point at which several pipelines meet, storage is often available, and opportunities for gas
trading can be exploited. There are many hubs in the U.S., of which the most important is Henry
Hub. In Europe the largest hub is the National Balancing Point in the UK.
Hydrates Ice-like solids in which methane molecules are held within the molecular spaces of
the water molecule. Can form in pipelines and wells under certain conditions of near freezing
temperatures and high pressures. Their formation is averted by ensuring that water vapour
levels in the gas are kept below specified levels. See also Treatment, Dew Point. Hydrates are
found naturally beneath the ocean at depths greater than 300m in many areas, where they are
estimated to have locked up many trillions of cubic metres of methane. There is speculation that
these hydrates may provide a commercial resource in the future. Hydrates have also been
proposed as a means of transporting natural gas by sea, possibly competing with LNG.
Hydrocarbon An organic compound containing only the elements hydrogen and carbon.
Hydrocarbons exist as solids, liquids and gases.
IEA International Energy Agency.
IGU International Gas Union.
Impurities At the wellhead, natural gas will probably contain methane and various heavier
fractions. It may also contain a number of non-hydrocarbons, some or all of which will need to
be removed. There may also be substances introduced into the well as a result of drilling
operations, such as inhibitors, mud etc. The principal harmful impurities in the gas itself are
likely to be carbon dioxide and sulphur compounds, notably hydrogen sulphide, which can
create corrosion in the pipelines in the presence of water and can seriously damage chemical
plant units built of aluminium. Hydrogen Sulphide is also extremely toxic. Excessive water
vapour can lead to the formation of acids and Hydrates. Some impurities, such as sulphur or
helium, can be recovered economically as by-products if in sufficient concentration in the gas.
Other impurities, such as inert gases and nitrogen cause no directly harmful effects but dilute
the Calorific Value of the gas and mean that pipeline capacity is being wasted. Whether or not
they should be removed is simply a question of economics. See also Treatment, Natural Gas
Liquids, Condensates.
Independent Power Plant (IPP) An IPP is an electric power generation plant owned and
operated independently of the major national or regional entity, producing electricity for an
industrial complex and/or for sale to the electricity grid.
Inert Gas: A chemically inert gas, resistant to chemical reactions with other substances.
Integrated Gasification Combined Cycle (IGCC) A means of generating electricity from coal
and other low grade hydrocarbons by gasifying them at the electricity generation site thereby
gaining some of the efficiency of Combined Cycle Gas Turbine generation. While the chemical
& engineering principles are well understood it has yet to be demonstrated as a commercial
proposition.
International Energy Agency A Paris-based organisation which co-ordinates the energy
policies of its member countries. The IEA also compiles detailed energy statistics and country
reports, including countries outside the organisation itself. An autonomous wing of the
Organisation for Economic Co-operation and Development (OECD).
International Gas Union The International Gas Union (IGU) was founded in 1931. A worldwide
non-profit organisation of national gas industry associations whose objective is to promote the
technical and economic progress of the gas industry. Organises the triennial World Gas
Conference.
International Petroleum Exchange The IPEis an energy futures and options exchange based
in London. Gasoil futures have been traded since 1981, Brent crude futures from 1988, and
natural gas futures since 1997. Absorbed into ICE, the InterContinental Exchange in 2005. See
also New York Mercantile Exchange.
Interruptible Gas Gas made available under agreements permitting the supplier to terminate,
or interrupt deliveries, usually for a limited number of days in a specific period. Usually sold at a
reduced price and used to boost sales/transportation in slack seasons (normally the summer).
Important in load balancing because (by reducing gas demand) it is an alternative to using
stored gas. The converse of Interruptible Gas is Firm Gas.
Into Plant Price (IPP) The price charged for gas at its entry to the plant.
IPE International Petroleum Exchange.
IPP Either Independent Power Plant or Into Plant Price.
Joint And Several A contract term relating to responsibilities under a contract, usually for
payment, often misunderstood. Where, for example, there are several buyers in one contract, a
joint responsibility does not mean an equal or pro rata responsibility. It means that if one buyer
defaults on its liabilities the other buyers will be liable to make good that default. Where
responsibilities are several, each party is responsible only for its own default.
Kyoto Japanese city which was the location for an international agreement on the need to
reduce the level of emissions of greenhouse gases into the Earths atmosphere.
LCV Lower Calorific Value See Net Calorific Value.
LDC Local Distribution Company.
Lean Gas Lean gas is gas high in methane content (typically 95% or more) and with few higher
fractions. Hence of relatively low Calorific Value. Also known as Dry gas. The converse of Rich
Gas.
Letter of Intent (LOI) See Memorandum of Intent.
LHV Lower Heating Value See Net Calorific Value.
Liberalisation A term often confused with Deregulation but often meaning quite the reverse.
Liberalisation is the process of freeing a market from what are perceived as undue monopolistic
forces, to achieve which a high degree of regulation may be required, at least in early years.
Limited Access Limited Access refers to a gas distribution system in which the host pipeline
owner moves its own merchant gas under different rules to those applying to outsiders
contracting for spare capacity. The system applies to local distribution companies and intrastate
pipelines in the US and is analogous to but not identical with Negotiated Access. See also
Common Carriage.
Limited Liability A provision in very large gas contracts under which limits are set to the
amounts payable by a defaulting party in a contract.
Limited Recourse Financing See Project Financing.
Line Pack Line pack is a procedure for allowing more gas to enter a pipeline than is being
withdrawn, thus increasing the pressure, packing more gas into the system, and effectively
creating storage. The packed gas can subsequently be withdrawn when needed. A useful
method of meeting short term (hourly or diurnal) peak demand requirements. In some areas,
where there is a particularly high peak demand, a series of additional pipeline loops may be laid
near the entry to a network to provide additional line pack. Such systems are effectively a
modern version of the traditional Gas Holder.
Liquefaction The conversion of natural gas into LNG.
Liquefied Natural Gas See LNG.
Liquid Market A trading market characterised by the ability to buy and sell with relative ease,
usually because there are many buyers and sellers.
Liquefied Petroleum Gas Liquefied Petroleum Gas (LPG) is Propane, Butane, or propane-
butane mixtures which have been liquefied through pressure, mild refrigeration, or a
combination of both. Usually a derivative of refinery operations but often stripped out of natural
gas streams, if rich enough. Conventionally sold in steel containers as Bottle Gas. Not to be
confused with LNG.
LNG (Liquefied Natural Gas) LNG is Natural Gas which has been cooled to a temperature,
around the boiling point of methane (-162C), at which it liquefies, thus reducing its volume by a
factor of around 600. The exact boiling of any gas mixture and the reduction in volume will
depend on its composition. The process of Liquefaction is carried out in a liquefaction plant.
Mostly these are very large scale plants built for projects transporting gas by sea, but in many
countries small LNG plants have been built to liquefy gas during the seasons of low demand to
provide Peak Shaving when required. LNG Plants consist of one or more LNG Trains, each of
which is an independent gas liquefaction unit. It is more cost effective to add a train to an
existing LNG plant, than to build a new LNG plant, because infrastructure built for early trains,
such as ship terminals and other utilities, may be capable of being used or expanded for new
LNG trains. The term Train is sometimes extended loosely to embrace the relevant shipping,
storage and other facilities required to bring the resultant LNG to market. Liquefied gas is
transported and stored as a boiling liquid under slight positive pressure until required for use,
when it is warmed and allowed to re-gasify. In the case of Peak Shaving, the gas will normally
be regasified at the plant itself or possibly transported for short distances by road, but large
scale transportation is by sea, in specially designed insulated LNG vessels and delivered to
LNG terminals, which have the requisite facilities for storage and regasification - the process by
which LNG is warmed, usually through a heat exchanger, in order to become once more
gaseous before emission into the Gas Grid.
LNG Plant See LNG (Liquefied Natural Gas).
LNG Storage See LNG (Liquefied Natural Gas).
LNG Terminal See LNG (Liquefied Natural Gas).
LNG Train See LNG (Liquefied Natural Gas).
LNG Vessels See LNG (Liquefied Natural Gas)
Load Duration Curve A visual and statistical expression of a number of (daily) demands over a
long period, most often a year. Demands are normally ordered with the highest to the left and
the lowest to the right, so that the horizontal scale bears no relation to calendar timing. Can be
used, among other things, to measure volumes of demand (or supply) above a given threshold.
The area beneath the curve and between horizontal thresholds represents the volume required
to supply a particular market segment. The approach is used in both electricity and gas
industries.
Load Factor A measure of utilization for plant, or of the relationship between average and peak
demand or supply, as determined by the formula: Average x 100 / Peak. For supply and
demand calculations average and peak most often refer to daily demand within a year, but any
other periods are possible. The resulting figure is usually expressed as a percentage but, where
the period covered is a year, the percentage is sometimes multiplied by 8760, so that the load
factor is expressed as a number of hours. Thus a 50% Load Factor can also be expressed as
4380 hours. See also Swing.
Local Distribution Company (LDC) A company that distributes natural gas primarily to small,
residential and industrial end-users.
LOI Letter of Intent. See Memorandum of Intent.
Looping Increasing the capacity of a pipeline system, by adding parallel piping along part or
whole of the route. Does not apply to the addition of compression facilities.
Lower Heating Value (LHV) Alternative name for Net Calorific Value.
Lower Calorific Value (LCV) Alternative name for Net Calorific Value.
Low Sulphur Fuel Oil (LSFO) Fuel oil with a low sulphur content. Usually less dense than High
Sulphur Fuel Oil. In new markets with gas-to-oil competition this often represents the marker
fuel for large segments of the industrial market.
LPG Liquefied Petroleum Gas.
Madrid Forum The Madrid Fotum, otherwise known as the European Gas Regulatory Forum,
set up to discuss issues regarding the creation of a true internal European gas market. The
participants include national regulatory authorities, Member State governments, the European
Commission, transmission system operators, gas suppliers and traders, consumers, network
users, and gas exchanges.
Make Good Make Good Gas is gas which a buyer must take in a later year because it has
failed to take its full Annual Contract Quantity obligation in an earlier year, but has not used its
full Downward Quantity Tolerance. It must nevertheless take excess gas in subsequent years
to make good its deficiency, before it is entitled to claim any Make Up Gas to which it is entitled
through shortfalls greater than the Downward Quantity Tolerance.
Make Up Make Up Gas is gas for which a buyer has paid under Take or Pay obligations but not
taken, and may have rights to receive in subsequent years for no further charge or at reduced
prices after it has taken gas in excess of an agreed threshold volume. This is commonly the
Annual Contract Quantity but may, for example, be ACQ minus Downward Quantity
Tolerance. Make up gas should not be confused with Make Good Gas.
Manufactured Gas Gas manufactured from coal or oil to supply town grids in the days before
Natural Gas. See also Blast Furnace Gas, Coke Oven Gas, Coal Gas, Oil Gasification,
Town Gas.
Maximum Daily Quantity (MDQ) An alternative name for Daily Delivery Rate.
Maximum Daily Rate (MDR) An alternative name for Daily Delivery Rate.
MDR Maximum Daily Rate.
MDQ Maximum Daily Quantity. See Daily Delivery Rate.
MDS Middle Distillate Synthesis.
Memorandum of Intent (MOI) Also known as Confirmation of Intent and Letter of Intent. A half
way house to the signing of a full contract. Its legal status is rather unclear and its value lies
largely in how it is viewed by the parties concerned. It will normally be a fairly brief document
setting out the principal framework of the contract and specifying a date by which it is expected
that a full contract will be completed. An MOI will often have a relatively brief validity, but in
some cases they have served to govern active operations over a period of years. Also known as
a Memorandum of Understanding (MoU) and Heads of Agreement (HoA).
Memorandum of Understanding (MOU) See Memorandum of Intent.
Mercaptans Chemical compounds of sulphur used as Odorants.
Merchant Pipeline A pipeline system which itself buys and sells part or all of the gas it
transports, in contrast to a pipeline which simply carries gas on behalf of others. See also Open
Access, Negotiated Access, Common Carriage.
Meter Measuring devise, usually located at a point where ownership is transferred, for example
at the entry to a customers premises, city gate, national border or gas processing plant. Note
that to determine the energy content of the gas it will be necessary to monitor the composition &
hence calorific value of the gas. This is done at high pressure meter stations but not normally
downstream of a city gate. Depending on the size of flow, meters may be: Flow meters,
measuring gas throughput using a rotor which is made to revolve by the gas flowing through
them; Ultrasound meters, more sophisticated, based on the principle that sound waves travel
faster with than against the flow. By measuring the difference in travelling time between the two
sets of measurements the gas flow rate can be measured to an accuracy of more than 0.5%;
Orifice plate meters, older, and less accurate than other meters. Calculate flow rates by
measuring the drop in pressure over a pierced obstructing plate placed in the pipeline. See also
Telemetry.
Methane A colourless, odourless flammable gas, lighter than air under normal conditions (CH4,
often abbreviated to C1 in non technical usage). Methane is the first member in the alkane
(paraffin) series and is the chief constituent of Natural Gas. At atmospheric pressure, it liquefies
at -162C.
Methanol Methyl alcohol, produced from natural gas via Synthesis Gas. Used as a chemical in
the resin and paint industry and in the manufacture of Methyl Tertiary Butyl Ether, (MTBE) and
acetic acid, but also of interest as a possible total or partial substitute for motor gasoline in cars.
Very toxic.
Middle Distillate Synthesis (MDS) A chemical process using the Fischer-Tropsch synthesis
method for making synthetic middle distillates (principally naphtha, kerosene and gas oil) from
natural gas.
Midstream Those activities in the gas chain concerned with moving gas between the source
and local distribution. See Upstream.
MoU Memorandum of Understanding. See Memorandum of Intent.
National Balancing Point (NBP) The NBP is an imaginary (notional, or virtual) point at which
all gas that has paid the entry charge to enter the UK National Transmission System is deemed
to be located. The point at which most UK gas trading takes place, and the largest gas hub in
Europe. See Entry Exit.
Natural Gas Natural gas (NG) is a mixture of generally gaseous hydrocarbons occurring
naturally in underground structures. Natural gas consists mainly of Methane and variable
proportions of Ethane, Propane and Butane. There will usually be some condensate and/or oil
associated with the gas. More specifically, the term is also used to mean treated natural gas
which is supplied to industrial, commercial and domestic users and meeting a specified quality.
Natural Gas Act (NGA) Seminal example of deregulation/ liberalisation in the USA.
Natural Gas Liquids (NGLs) Heavier hydrocarbons found in natural gas production streams
and extracted for disposal separately. Within defined limits ethane, propane and butane may be
left in the gas to enrich the Calorific Value. Whether to extract them or not is largely a
commercial decision. Heavier fractions which are liquids at normal temperatures and pressures
will be removed. The terms Natural Gas Liquids and Condensates are in practice used virtually
interchangeably. Rather confusingly, there is no agreement on whether the term NGLs includes
or excludes LPGs and both usages are current.
Natural Gas Vehicle (NGV) A motorised vehicle powered by natural gas. See Compressed
Natural Gas.
Natural Gasoline Butanes and heavier fractions extracted from rich natural gas which, after
stabilisation (removal of the lighter fractions) may be blended into motor gasoline.
NBP National Balancing Point.
NCV Net Calorific Value.
Negotiated Access Negotiated Access is a restricted form of Third Party Access, which
excludes the requirement for the access terms to be transparent or applied equally to all
applicants. It has been proposed in the European Union as a compromise by opponents of
Open Access. Sometimes abbreviated to nTPA. Broadly defines access by one party to another
partys facilities through negotiation, the result of which is, by implication, confidential, and not
necessarily consistent with negotiations between the facility owner and other parties. See also
Access, and Limited Access.
Net Calorific Value, (NCV) The heat generated by the complete combustion of a unit volume of
gas in oxygen, excluding the heat which would be recovered by condensing the water vapour
formed. Net Calorific Value is usually seen as a measure of the effective heat produced rather
than the total heat in the gas. Also known as Lower Calorific Value or Lower Heating Value. For
natural gas, typically 10% lower than the GHV or HHV. See also Gross Calorific Value.
Net Heating Value (NHV) See Net Calorific Value.
Netback The price or value of a gas, at e.g. the border or the wellhead, calculated by deducting
the costs associated with getting it from that point to the eventual point of sale from its
competitive value at that point of sale. Used to estimate the comparative value of selling gas to
various markets, and the worth of producing gas at all.
NetworkL Alternative name for a Gas Grid.
Network Code A detailed contractual regime governing access to a gas grid. Network Codes
exist or are being developed in several countries, especially in Europe. In North America the
rules of the system are referred to as The Tariff. In particular, the contractual regime for the
gas grid in Great Britain operated by National Grid. It is continually amended through rules
approved by the GB energy regulator, (Ofgem). See also Tariff and Rates.
New York Mercantile Exchange (Nymex) The worlds largest physical commodity futures
exchange. Has existed for 130 years and pioneered the development of energy futures and
options contracts in the 1970s.
NGLs Natural Gas Liquids.
NGV Natural Gas Vehicle.
NHV Net Heating Value, an alternative name for Net Calorific Value.
Nitrogen Oxides Oxides of Nitrogen (NOx) resulting from the combustion of fuels, causing
atmospheric pollution in the form of smog.
Non Associated Gas Non-Associated is gas found in a reservoir which contains no crude oil,
and can therefore be produced in patterns best suited to its own operational and market
requirements. See also Associated Gas.
Non Recourse Financing See Project Financing.
nTPA Negotiated Third Party Access. See Negotiated Access.
NYMEX New York Mercantile Exchange.
OCM On the day Commodity Market.
Odorants Strong smelling chemicals injected into natural gas, which otherwise is odourless, in
order to make its presence more easily detectable. See Mercaptans.
Odorisation The process of giving odourless natural gas a smell for safety reasons by injecting
small quantities of organic sulphur compounds, such as Mercaptans, typically at the rate of 30
ppm. Usually carried out at the city gate or at the exit from the high pressure transmission
system.
OFGEM Office of Gas and Electricity Markets, (OFGEM) The regulator for the gas and
electricity industries in Great Britain. Governed by the Gas and Electricity Markets Authority.
Its powers are provided by the Gas Act 1986, the Electricity Act 1989 and the Utilities Act 2000.
Successor organisation to OFGAS and OFFER, the former separate Gas and Electricity
Regulators.
Offtake Point The point in a gas system where gas is taken by supply pipe to a consumer.
OFGAS Office of Gas and Electricity Markets (OFGEM).
Oil Gasification The conversion of oil or naphtha into gas to be used as a fuel. See also
Manufactured Gas.
On the day Commodity Market (OCM) System of within-day gas trading introduced into Great
Britain in 1999. A screen-based system designed to allow shippers, traders and the system
operator (then Transco, now National Grid) to resolve within-day demand and supply
imbalances in an orderly fashion.
Open Access A system offering all applicants access to specified infrastructure. See Common
Carriage.
Open Cycle Gas Turbine (OCGT) A gas turbine, often derived from aero-engines, used for
peak generation of electricity. Also used in conjunction with a steam turbine in a combined cycle
power plant. When only the gas turbine is used it may be termed single cycle.
Open Season A procedure for demonstrating to a regulator that capacity is offered on a
transparent basis. It is used principally where pipelines are required by regulation to offer only
transportation services, for example in North America and the Southern Cone of South America.
It is also being used elsewhere as a means of gathering information about potential interest in a
pipeline , LNG, storage etc project to help the sponsors decide how and when to size the
project.
Off-Peak The period during a day, week, month or year when the load being delivered by a gas
system is not at its maximum volume.
Orifice Plate Meter A type of gas Meter.
Over the Counter Trading (OTC) Trading that takes place outside a formal Exchange.
Peak Day The day in the year on which the demand for gas is highest. In temperate areas this
is normally a cold day in mid winter. In warmer areas it may occur midsummer, when there is a
high air conditioning load met either directly by gas or by gas-fired power. A crucial indicator in
planning and sizing gas infrastructure.
Peak Hour The hour in the day in which demand for gas is highest. Chiefly relevant to
distribution systems. Is normally around the midday or evening meal time
Peak Load The maximum load produced or consumed by a unit in a stated period of time. In
some tariff systems it is an important component of the tariff design, since it defines the capacity
that is booked in the gas delivery system and must be paid whether or not used.
Peak Shaving Peak shaving is a means of reducing the Peak Load on the gas transportation
and supply system by supplying some gas from sources at or close to the point of ultimate
consumption, thus improving the average Load Factor. Peak shaving may be daily or seasonal
and will be handled in a variety of ways: - Underground storage, peak shaving LNG plants,
Line Pack, Gas Holders, propane-air plant and, occasionally, special peak shaving supply
contracts. A non-storage alternative to peak shaving is to interrupt Interruptible Gas supplies.
Pentanes Plus Often used interchangeably with Condensates or C5+ but excluding Propanes
and Butanes.
Permeability A measure of the ease with which liquids or gas flow through a reservoir rock.
Compare this with Porosity. Gas will flow more easily than oil, and so can be recovered from
rocks with lower permeability. Permeability is measured in Darcies. Gas reservoirs may have
permeabilities of only a few millidarcies.
Petrochemical An intermediate chemical derived from petroleum, hydrocarbon liquids, or
natural gas, such as ethylene, propylene, benzene, toluene, and xylene.
Petroleum The general name for Hydrocarbons, including Crude Oil, Natural Gas and NGLs.
The name is derived from the Greek word petros (rock) and the Latin word oleum (oil).
Pig Equipment used to clean or flush out liquids and other accumulated and unwanted items
from the inside of an oil or gas pipeline. It is inserted into the pipeline and carried along by the
flow of oil or gas. An intelligent pig includes measuring and sensing equipment which can be
used to inspect a pipeline internally, which is useful after it has been buried underground
Pipeline A tube for the transportation of crude oil or natural gas between two points, either
offshore or onshore.
Pipeline Capacity The amount of oil or gas that can be passed through a pipeline over a given
period of time.
Plateau In long term gas contracts the period of years for which the Annual Contract Quantity
remains flat. The Plateau will normally be preceded by a build up period, during which the
volumes increase and, in the case of a Depletion Contract will be followed by a period of
decline until further production is no longer economic.
Porosity The proportion of a rock volume (expressed as a percentage) that is occupied by the
voids between mineral grains. Used to help estimate the volume of hydrocarbons in a field.
Compare this with Permeability.
Possible Reserves One of several definitions of gas reserves. See Proven Reserves.
Power Purchase Agreement (PPA) A contract between a power station and the electricity
purchasing organisation for the sale of electricity.
Primary Energy The gross amount of energy used, measured in the quantities of the original
fuel produced (e.g. crude oil) before conversion to other forms (e.g. refined petroleum products
or electricity). Thus hydroelectric power and nuclear power are Primary, but power from
generating stations consuming fossil fuels is not.
Probable Reserves One of several definitions of gas reserves. See Proven Reserves.
Production Sharing Agreement (PSA) An agreement between an international producing
company and a host government or state oil company under which the international company
acts as risk-taking contractor investing in exploration and/or production facilities in return for the
right to export or sell a quantity of gas or oil that may be produced from the Concession or
Block. Sometimes known as a Production Sharing Contract. The terms are interchangeable
and the use of one or the other depends on the country.
Production Sharing Contract (PSC) An alternative name for a Production Sharing
Agreement.
Profit Gas Frequently used to signify the gas received by a Contractor in a Production
Sharing Agreement to provide the profit in the operation. Normally the Contractor will receive
Cost Gas to cover its costs and, after other minor provisions, the remaining gas will be split with
the host government in agreed proportions. In some countries profit gas is also subject to
income tax, in other jurisdictions the State Oil Company is assumed to pay the income tax
liability of the contractor. The proportion of profit gas is adjusted depending on local practice.
May be used to signify the totality of gas remaining after Cost Gas, Royalty and similar items,
including therefore both the Governments and the Contractors shares.
Project Financing A method of financing in which the lender makes loans directly to a project
and may claim repayment only out of that project. In theory, the lender has no recourse to the
project sponsors other assets (non-recourse financing) but in practice this is rare. More
commonly the extent of the sponsors liability is strictly defined (limited recourse financing).
Propane A member of the alkane (paraffin) group of hydrocarbons with three carbon atoms in
its molecule ( C3H8, often abbreviated to C3 in non technical usage). A frequent component of
natural gas, also sold as a form of Bottled Gas. Liquefies at -42C.
Proven Reserves Those quantities of petroleum which, by analysis of geological and
engineering data, can be estimated with reasonable certainty to be commercially recoverable,
from a given date forward, from known reservoirs and under current economic conditions,
operating methods, and government regulations. Proven (proved) reserves can be categorised
as developed or undeveloped. Where probabilistic methods have been used to estimate
reserves, proven reserves are those with a better than 90% chance of being economically
recoverable. Sometimes abbreviated as P90. Reserves with a greater than 50% chance but less
than 90% chance are defined as Probable, or P50. Reserves with a greater than 10% chance
but less than 50% chance are Possible or P10. Reserves may be classified as proved, if
facilities to process and transport them to market are operational at the time of the estimate or
there is a reasonable expectation that such facilities will be installed. Reasonable expectation
is usually taken to mean that a developer has taken the decision to build the necessary facilities
and the development plan has been approved by the relevant authorities. Thus large resources,
such as those known to exist in North Alaska, are not classified as proven because there is no
route to market. Different countries have adopted many different definitions of reserves, but gas
contracts often refer to the Society of Petroleum Engineers (SPE) definitions. These and similar
definitions from the World Petroleum Council were harmonised in 1997.
PSA Production Sharing Agreement.
PSC Production Sharing Contract. See Production Sharing Agreement.
Public Service Obligation A Public Service Obligation (PSO) is a requirement imposed by
government on a company or companies to provide services which might not otherwise be
profitable but are judged to be in the public interest. These could, for instance, include supplying
gas to small or poor consumers, ensuring that appliances and other infrastructure is operating
efficiently and safely, and ensuring that there are sufficient back-up gas supplies to cover
emergency interruptions in supply.
Public Utility Commission (PUC) State commissions in the USA responsible for regulating
gas, and other utilities that operate within the boundaries of the state. See Regulation.
Ramping Rate The rate at which the level of production can be increased after a partial or
complete interruption.
Rates North American term for the charges for the use of pipeline and storage capacity,
referred to in other parts of the English-speaking world as Tariff. The North American definition
of Tariff is more nearly equivalent to Network Code.
Raw Natural Gas Natural gas still containing impurities and unwanted substances, such as
water, nitrogen, carbon dioxide, hydrogen sulphide gas and helium. See also Impurities,
Treatment.
Recovery Factor The percentage of gas or oil in place in the reservoir which can be
economically recovered. Gas Recovery factors may be around 60-70% in reservoirs with water
drive from an Aquifer and up to 90% in Depletion Drive Reservoirs.

Regasification The reconversion of LNG into gas suitable for pipeline transportation. See LNG.
Regulated Access Access to infrastructure under terms and conditions set by or agreed with a
Regulator. Such access will usually be open to all qualifying customers. See Common
Carriage.
Regulator
(1) A mechanical device for controlling the pressure of gas within acceptable limits. Typically
installed when has enters a low pressure distribution system for final use by small customers.
(2) The person or body appointed to oversee the operation of the regulated parts of a gas
industry. See Regulation.
Regulation Regulation is a substitute for free market operation typically, in the gas industry,
where all or part of the operations are carried out by institutional or natural monopolies.
Provides a temporary or permanent counterweight to the economic power of the monopoly.
Often exercised politically by government departments, but in many countries independent
regulation is thought preferable. In any case the rules governing regulation will normally have
been laid down explicitly by government legislation. Regulation can be economic restricting
the revenue and profits of operators - or legal policing legislation. Regulators are normally
closely involved in the setting up of liberalised market systems, when they may use their central
position to interpret and rule on the applicability of legislation either ex-ante or ex-post. See
Common Carriage.
Renewable Energy An energy form, the supply of which is partly or wholly regenerated in the
course of the annual solar cycle. Thus solar and wind energy, hydropower and fuels of
vegetable origin are regarded as renewable; mineral fuels and nuclear power are not.
Reservoir A reservoir is an accumulation of oil and/or gas in a permeable and porous rock such
as sandstone. A petroleum reservoir normally contains three fluids (oil, gas and water), which
separate into distinct sections, owing to their varying specific gravities. Gas occupies the upper
part of the reservoir as it is the lightest, oil the middle section, while water occupies the lower
section. See also Permeability, Porosity, Gas Cap, Aquifer, Solution Gas, Proven
Reserves.
Reticulation A reticulation network is a small diameter, low pressure gas system serving
residential and commercial customers. (From the Latin word reta, meaning net). See also
Distribution.
Retrograde Condensate A gas condensate which, in the reservoir, is close to the Dew Point of
the fluid. A small reduction in pressure, by production of the field, leads to the condensation of
higher hydrocarbons in the reservoir, causing a lower Recovery Factor.
Reverse Flow An alternative term for Backhauling.
Rich Gas Rich gas is gas with relatively large quantities of heavier fractions in its composition
(typically up to about 15%) and thus of high Calorific Value. Also known as Wet Gas. The
converse of Lean Gas. See also Natural Gas Liquids, Condensates.
Royalty A tax on production volumes, often paid in kind, which is levied as a percentage of
production. It is therefore not related to the profitability of the production project, merely to the
volume of gas (or oil) produced.
R:P Ratio The Reserves: Production Ratio is the number of years that current reserves would
last at current production levels. Thus reserves of 100 divided by consumption of 20/year gives
an R:P ratio of 5, and implies a life of 5 years for the reserve.
RPI-X A regulatory formula by which a regulated monopoly is allowed to increase its prices each
year by the retail price index (RPI) minus a defined amount or percentage x (x is a variable).
Gives consumers falling real prices and forces the utility to reduce costs if it is to maintain its
level of profitability.
Sales Gas Raw gas, after processing to remove LPG, condensate and carbon dioxide. Sales
gas usually consists mainly of methane and ethane and is odorised. See Odorisation.
Salt Cavity Storage The storage of gas in caverns leached out in gas-tight salt strata. Such
caverns may be generated during the recovery of salt for commercial purposes, or may be
purpose-built for gas storage.
Scrubbing The process of purifying a gas or liquid by washing it with suitable chemicals in a
contact vessel.
Seal The layer of rock overlying a gas field which prevents the gas escaping from the reservoir.
It is therefore of low Permeability. Salt and fine clays can provide good seal.
Seasonal Normal The average (or normal) result for the time of year. Thus Seasonal Normal
Temperature (SNT) is the average temperature on a calendar day, where the average has been
measured over a suitably long period. Likewise Seasonal Normal Demand, Seasonal Normal
Weather. SNT is an important factor in developing forecasts of gas usage. See Weather
Correction.
Seasonal storage Storage designed to be filled at times of low (season) demand and emptied
at times of high demand, over months rather than days.
Security of Supply Security of supply is a term with several meanings including: the provision
of adequate infrastructure to cope with annual and peak demand; the provision of sufficient gas
to meet annual and peak demand; ensuring that a country or area does not rely exclusively on
one, or very few sources of supply.
Seismic Survey A technique for establishing the presence of underground geological strata
using sound waves. There are two main techniques - reflection or refraction. In the oil and gas
industry by far the most common is reflection. In a reflection survey sound waves are sent into
the ground and the echoes from boundaries between rock with different properties of density
and sound velocity are recorded. The sound waves recorded at the surface can then be used to
create maps of the rock layers in the subsurface to reduce the risk of drilling dry holes. A
reflection seismic survey may be either 2D, in which the reflections are recorded along a line or
3D, in which the lines are very closely spaced to deliver a three dimensional view of the
subsurface. A refraction seismic survey is a different technology in which the sound waves are
refracted along rock boundaries rather than reflected from them.
Send-Out The quantity of gas delivered by a plant or system during a specified period of time.
Shipper A party negotiating for the transport of gas on its own behalf or as an agent for another.
In liberalised markets shippers may not be allowed to operate transportation systems.
Slug Catcher Plant installed in a gas pipeline system or gas processing plant to catch slugs of
liquid. Usually this takes the form of a long section of pipe, inside which the pressure is allowed
to drop by a controlled amount. See also Pig.
SNT Seasonal Normal Temperature.
Solution Gas Solution Gas, unlike Cap Gas is Associated Gas dissolved in oil. Produced
inevitably with the oil and separated from it at the well-head. Solution Gas production is thus a
function of oil production and of the Gas/Oil Ratio, which changes over the life of the field. It is
therefore an unreliable gas supply and difficult to market, unless the buyer or seller have large
alternative sources. Has in the past largely been flared or vented but this is becoming less
acceptable, largely for environmental reasons, although is still not uncommon in remoter areas.
Separation is often carried out in two or three stages to maintain the gas pressure for pipelining
as far as possible. Gas from the final stage separator is at low pressure and is normally used in
the field or on the platform during production. The gas may be re-injected into the reservoir if it
will not break through into the oil wells.
Sour Gas Gas containing a high level of Carbon Dioxide or Hydrogen Sulphide, which are
corrosive in the presence of water. They may therefore require drying or removal to preserve
the pipeline. The converse of Sweet Gas.
Spark Spread The spark spread represents the difference between the cost of fuel and the
price of electric power produced. A positive spread indicates that the price of the power is higher
than that of the fuel, and the spread is profitable. The spread can be calculated for any input
fuel, such as natural gas, coal, or heating oil.
Specification The technical description of the allowable limits of the chemical composition of
gas which may be admitted into a pipeline or process.
Specific Gravity The ratio of the density of gas to that of air, or the ratio of the density of a
liquid to that of water, in both cases at the same temperature and pressure.
Spot Trading A loose term covering the buying and selling of gas other than under a long term
contract. Generally in trading parlance spot delivery means immediate delivery.
Standing Charge Tariff term for a fixed charge, typically per quarter or per year, irrespective of
the amount of gas actually taken. Synonymous with Connection Charge but to be
distinguished from Demand Charge.
Storage For natural gas storage facilities fall into several categories. Seasonal storage
comprises depleted gas fields; Aquifers; Salt Cavity Storage; mined caverns; and disused
mines. Peak storage includes Gas Holders, Line Pack, lengths of pipeline buried specifically
for storage use, and LNG storage used either for base-load or peak-shaving duties, depending
on the market. Increasingly used in liberalised markets to enable gas to be trade at any time of
the year for reasons not related to peak demand. See also Peak Shaving.
Straddle Plant A gas processing plant that straddles a gas transportation pipeline to remove
NGLs from the gas stream. Because it is often more economic to transport Rich Gas a straddle
plant is required to process the plant to final sales specification. The alternative location of a gas
processing plant is close to the producing field. NGLs are then transported as liquids away from
the field area either by separate pipeline or other means.
Supply Contract A contract under which the seller undertakes to supply gas in guaranteed
volumes over a fixed period of time. A Supply Contract is therefore in sharp contrast to a
Depletion Contract as the seller assumes the volume risks. Whilst certain fields may be
envisaged in the contract, the seller will normally have the right to substitute other suitable gas if
necessary.
Swaps
(1) Arrangements under which gas destined for a market is delivered elsewhere, and substitute
gas is supplied to the final market. For instance, Nigerian LNG contracted to Italy is delivered to
France, and other gas contracted to France is delivered to Italy.
(2) In trading, the exchange of a fixed price for a floating price for a future delivery.
Sweet Gas Gas containing little or no Carbon Dioxide or Hydrogen Sulphide. Converse of Sour
Gas.
Swing The inverse of Load Factor, defined as: Peak volume transported (sold) / Average
volume transported (sold) Expressed as a percentage. Thus a load factor of 60% is a swing of
167%. Often used to describe the flexibility of supplies over a year.
Syngas Synthesis Gas.
Synthesis Gas Also known as Syngas, Synthesis Gas is a mixture of carbon monoxide and
hydrogen produced from methane or other hydrocarbons and steam and used to produce
various chemicals, notably methanol. It is also the basis for the Fischer Tropsch process. See
also: Middle Distillate Synthesis.
Synthetic Gasoline Motor gasoline produced from coal (by the Fischer Tropsch process) or
from natural gas (by the Fischer Tropsch process or via methanol). See also Middle Distillate
Synthesis.
Take or Pay Take or Pay (TOP) is a common provision in gas contracts under which, if the
Buyers annual purchased volume is less than the Annual Contract Quantity minus any
shortfall in the Sellers deliveries, minus any Downward Quantity Tolerance, the Buyer pays
for such a shortfall as if the gas had been received. The Buyer may have the right in subsequent
years to take the gas paid for but not received, either free or for an amount to reflect changes in
indexed prices. See also Make Up Gas.
Tariff A schedule of rates or charges offered by a common carrier or utility. Tariffs are
commonly available for all parts of the gas industry where third party access is enforced or
offered, for example for gas transmission in pipelines, for the use of gas stores, for gas sales to
residential customers.
Telemetry A technique used in the gas industry for recording information at a distance from the
Meter or other recording device, typically by radio transmission of the data.
Temperature/ Demand Analysis The statistical analysis of the causal relationships between
weather (and other) factors and the demand for gas. An essential prelude to forecasting
demand. See Seasonal Normal and Weather Correction.
Temperature Correction The process of adjusting actual gas usage to what it would have been
at Seasonal Normal Temperatures, to allow comparisons to be made between results for
different time periods, typically years. See weather correction.
Third Party Access Abbreviated as TPA. See Common Carriage.
Title Transfer Title transfer is the transfer of which ownership of gas from the seller to the
buyer. Typically this may occur somewhere between the well head and entry into the
transmission system, at national border crossings, at the City Gate etc. In the world of traded
gas, possible points of transfer become more numerous. A special case is the transfer of LNG
at some specified point on the high seas. See Delivered.
TOP Take or Pay.
Total Energy An alternative name, now obsolete, for Combined Heat and Power.
Town Gas Manufactured Gas piped to consumers from a gas plant.
TPA Third Party Access See also Common Carriage.
Trading Volume The number of contracts that change hands during a specified period of time.
See also Churning.
Train An LNG production unit. See LNG.
Transit The transportation of gas through a country or gas system en route to the final
customer. For example, Russian gas may transit through Ukraine en route to customers in
western Europe.
Transmission The transportation of large quantities of gas at high pressures, often through
national or regional transmission systems. The gas is then transferred into local distribution
systems for supply to customers at lower pressures.
Transmission Company The company responsible for operating a transportation system. In
liberalised markets there is increasing pressure for such companies to be restricted to offering
capacity in pipelines for sale, and to be barred from selling gas itself. The companies are also
commonly known as Transmission System Operators (TSOs) a title which reinforces their
restricted role. See Unbundling.
Transmission Pipeline A network of pipelines moving natural gas from a gas processing plant
via compressor stations, to storage centres or distribution points.
TSO Transmission System Operator. See Transmission Company.
Transparency A general term meaning open publication of information. In the gas industry it is
generally used in relation to costs, prices and capacity, where information has traditionally been
considered commercially confidential. Costs and prices generally reflect a number of elements,
such as production, transportation, storage, service. Transparency generally involves separating
out or Unbundling these elements, usually as a result of regulatory requirements. A further step
towards transparency involves the publication of the methodology used to calculate the different
elements of costs and prices.
Transporter A gas pipeline company transporting gas belonging to other companies. Also the
operator of LNG vessels. See Transmission Company.
Trap A configuration of reservoir and seal rocks that can confine gas (or oil) which are lighter
than water normally contained in the reservoir rock. Structural traps are formed by a closed
structure of Reservoir rock overlain by a sealing formation (the Seal). May also be formed by
stratigraphic changes within a reservoir rock in which case it is known as a stratigraphic trap.
Treatment Any gas purification process, but most generally applied to the treatment of gas
immediately after production, to bring it to acceptable standard for the market in question and/or
to extract valuable components for separate sale. This may involve the removal of LPGs and
will certainly involve stripping out Condensates, Carbon Dioxide and Hydrogen Sulphide and
other sulphur compounds (see also Acid Gas) mercury and excessive water which may be in
the raw gas. Other impurities are occasionally encountered. Whether other inert gases such as
nitrogen, helium etc are extracted will be a matter for economic evaluation.
Ultra-Sound Meter See Meter.
UKCS United Kingdom Continental Shelf.
Unbundling Unbundling is a term with several meanings for the gas industry but more
accurately, and originally, it was used to denote the separation of different services and the
charges associated with them. Originally used in the US in restructuring the telephone industry ,
it was adopted in the gas industry to denote the separation of gas sales from transportation and
storage services. This is still the most usual meaning of the term, particularly in North America,
where large customers are now free to purchase gas and services separately. However the
European Commission uses the term Unbundling to mean the financial disaggregation of
different functions within integrated companies, such as transmission and marketing. Where
companies perform multiple functions, the Commission has sought to require separate
accounting for the functions. Its aim is therefore much more related towards Transparency and
eliminating the potential for anti-competitive cross subsidisation activities.
Underground Storage The storage of gas, for strategic or peak shaving reasons, in
underground reservoirs. Depleted gas fields are often suitable. Other possibilities include
depleted oil fields, Aquifers and Salt Cavity Storage. In the context of LNG, underground
storage refers to normal LNG storage tanks which are, however, buried to provide greater safety
in the event of leakages.
Unitisation Agreement When a gas field extends over two or more production licences or
leases with different ownership, most countries require that the field owners unitise their
holdings i.e. decide how the reserves and production of the total field will be shared between the
licensees, thus enabling the efficient depletion of the reserves. The Unitisation Agreement
normally provides for the appointment of a field operator, a method of determining the reserves
underlying each licence or lease and the frequency of reserve re-determination.
Upstream Upstream, Midstream and Downstream are imprecisely defined terms used to
separate activities along the gas and oil chain into homogenous groups. Upstream typically
refers to exploration, development & production of oil & gas. Sometimes also defined to
embrace Midstream, which typically covers transmission (as opposed to distribution) LNG
shipping etc. Downstream typically refers to activities associated with delivery to final
consumers, such as distribution systems and connections to customer premises.
Valley Gas Interruptible Gas supplied during the slack months, usually summer.
Water Drive In a porous rock, as gas is withdrawn from the reservoir, water expands into the
region formerly occupied by the gas as pressure is released. This often has the result of
trapping volumes of gas so that they cannot be produced, thus reducing the recovery of gas.
Not a problem with a Depletion Drive Reservoir. See Aquifer.
Water Gauge A measure often used to express the pressure of gas in distribution systems,
using water instead of mercury. The gauge records how far up a gradated tube gas will lift a
column of water. Distribution systems normally operate at about 300mm (12 inches) water
gauge (i.e. 300mm above atmospheric pressure). For comparison, atmospheric pressure is a
little above 10 metres of water.
Wayleave The strip of land around a gas pipeline or other utility to which the utility has legal
right of access for building and maintenance.
Weather correction A procedure for estimating what customer demand would have been in
Seasonal Normal weather conditions. Thus in a cold year seasonal normal demand will be
lower than actual demand and vice versa.
Well A hole drilled into the ground, mostly by rotary rigs, in which a drill bit, which actually cuts
the rock, is turned on the end of a drill string, made up of lengths of hollow steel pipe which are
added to the string as the bit drills deeper into the ground. Wells have various descriptions
depending on the stage of the production process at which they are drilled. Exploration wells are
drilled to discover if gas (or oil) can be found; Evaluation or appraisal wells are drilled to obtain
more information about a previous discovery; Development wells are drilled to produce gas from
a field which is being developed, and are called Producing wells when the field enters
commercial production.
Wet Gas Natural gas containing condensable Hydrocarbons. A synonym for Rich Gas.
Wheeling Physically redirecting gas from one pipeline system to another at a Hub as opposed
to changing the title by swap arrangements.
Wobbe Index Occasionally referred to as the Wobbe number. A measure of the rate at which
gas will deliver heat on combustion and hence of the compatibility of a gas with gas burning
equipment.
Working Gas In a gas store, the total volume of gas present less Cushion Gas, In other words
the gas available for normal working. Hence working gas capacity - the total capacity of a
storage facility minus cushion gas.
GLOSSARY OF UNITS
Absolute Pressure The sum of Atmospheric Pressure and Gauge Pressure i.e. pressure by
reference to a vacuum
Atmosphere: A measure of pressure, now largely superseded by the Bar to which it is nearly
identical. Originally equal to 760 mmHg it has now been redefined as 101,325 pascals and
consequently 1 atmosphere = 1.01325 bars.
Atmospheric Pressure The pressure of the weight of air and water vapour on the surface of
the earth.
Bar The most used unit for expressing gas pressure. It is equal to 100,000 pascals (N/m2),
which is the official SI unit. 1 Bar is approximately atmospheric pressure.
bbl A US barrel, 1 barrel = 0.159 cubic metres = 42 U.S. gallons (approx=35 imperial gallons).
The abbreviation is also sometimes written as B or b.
bbl/day Barrels per day. Usually used to quantify a refiners output capacity or an oilfields rate
of flow.
Bcm Billion cubic metres (i.e milliard or 109 cubic metres).
Billion In the US 109. Although elsewhere billion often signifies 1012, the Natural Gas industry
has generally adopted the US usage.
Boe Barrels of oil equivalent - a frequently used number to quantify general energy
requirements for practical purposes. One boe is usually taken as representing 5.8 MMBtu
gross.
British thermal unit A unit of heat still widely used in the gas industry, notably in North America
and in LNG. Originally defined as the amount of heat required to raise the temperature of one lb
of water from 60 to 61 Fahrenheit, it is now defined in relationship to a fixed number of Joules
(1055.056 to three decimal points). The most common multiple is one million Btu, normally
abbreviated to MMBtu and U.S. dollars/MMBtu is perhaps the most frequently used unit for
comparing gas prices on a common basis. See also Therm.
Btu British Thermal Unit.
Cal Calorie. Formerly the SI unit of energy, now no longer part of the system but still extensively
used in Europe. The calorie was nominally the amount of heat required to raise 1 gram of water
by 1C at 1 standard atmosphere and starting from 14.5C, but is now defined arbitrarily as:
4.1868 J. The most common multiple used is the Megacalorie (Mcal).
Cf Cubic feet. Measure of gas volume, referring to the amount of gas needed to fill a volume of
one cubic foot at 14.73 pounds per square inch absolute pressure and 600F.
cm Cubic metres. Note however that cm is also the official abbreviation for centimetre.
Deca Therm Also deka therm. A term sometimes used in the U.S. in lieu of one million Btu.
Gauge Pressure The amount of pressure shown by a gauge, i.e. the amount by which the
pressure exceeds atmospheric pressure. See also Absolute Pressure.
GJ GigaJoule. One GigaJoule is approximately equal to 9.478 MMBtu. One million Btu equals
1.055 GJ.
GW GigaWatt.
GWh GigaWatts per hour.
J Joule - The unit of energy in the SI system and the unit approved by the International Gas
Union for the expression of heat in the gas industry. Its definition is one Newton metre. In
practice the industry has been reluctant to embrace the Joule for commercial purposes and it is
only current in Australia and New Zealand. For practical purposes the multiples most in use are
the MegaJoule (MJ) and the GigaJoule (GJ), although Petajoule (PJ) is also seen. For quick
calculations 1 GigaJoule is very close in value to 1 MMBtu.
Kelvin Measurement of temperature equivalent to 1/273.16 of the interval between absolute
zero and the triple point of water. The official unit of the SI system. The Kelvin is identical to 1
degree Celsius, which is the term most often used in practice, but the scale is different
(0C=273.16 K). Note incidentally that the Kelvin is itself the unit of measurement and
references to 1 degree Kelvin are incorrect.
km Kilometres.
kW KiloWatt = One thousand Watts.
kWh KiloWatt hour - Together with its multiples, rapidly becoming the most used unit for energy
in gas, although its use is not strictly in accordance with the SI system or with IGU preferences.
Since 1 Joule = 1 Watt per second, the conversion factor 1 kWh = 3.6 MJ is exact.
Long ton 2240 lb. The most usual form of non-metric ton.
Mcal Megacalorie.
Mcf Thousand cubic feet.
Mcm Thousand cubic metres.
Milliard Synonymous with US billion - 109.
MJ MegaJoule.
MM Widely used in the gas industry to mean a million (106), although this usage is incorrect,
according to the SI convention. Similarly M is often used to represent a thousand (103). When
the lower case letters m and mm are used, these usually denote a thousand and a million
respectively. In everything else M is correctly used to mean Million as in MWh.
MMbbl Million barrels.
MMBtu Million British Thermal Units.
MMcf Million cubic feet.
MMcm Million cubic metres.
MMscf Million standard cubic feet See scf.
MMscm Million standard cubic metres.
Mt Million tonnes.
Mtoe Million tonnes of oil equivalent.
Mtpa Million tonnes per annum, a widely used unit of volume in the LNG industry.
MW MegaWatt - one million Watts.
MWh MegaWatt hour.
ncm Normal Cubic Metre - A cubic metre measured at 0 C and 1013 mbar dry. The most used
metric unit for measuring the volume of gas. It differs from the Standard cubic metre (scm) in
the temperature at which the measurement is made. The Normal cubic metre thus contains
about 5% more heat content than the Standard cubic metre.
PJ PetaJoule - Standard unit in the Australian gas industry, equivalent to 1 million (106) GJ and
therefore roughly equal to 1 million MMBtu. It is therefore close to 1 Bcf or some 30 million
cubic metres.
ppm Parts per million.
Pressure The force exerted by one body on another, measured as force over area e.g. newtons
per square metre.
Psi Pounds per Square Inch common US/English unit of pressure, 14.5psi = 1 bar.
scf Standard cubic foot - The conditions for measuring the scf are in fact very close to, but not
identical with, those for the standard cubic metre (scm). Despite its name, there is no single
accepted standard for the standard cubic foot but the one most used is 60F and 30 in Hg, dry.
scm Standard Cubic Metre - A cubic metre measured at 15C and 1013.25 mbar, dry. The unit
of volume recommended by the IGU but not in normal use. See also ncm.
Short ton 2000 lb. Used in the US.
SI Multiples The SI system uses the following prefixes for multiples of the base units: 103 kilo
(k), 106 mega (M), 109 giga (G), 1012 tera (T), 1015 peta (P), 1018exa (E).
tce Ton of coal equivalent - Like the barrel of oil equivalent (boe) a measure of general energy
requirement but now largely supplanted by the boe. Generally taken to have a value of
approximately 27 MMBtu.
Tcf Trillion (1012) cubic feet.
Tcm Trillion (1012) cubic metres.
Therm 100,000 British Thermal Units is still occasionally used as a unit for pricing gas,
particularly in the UK.
Thermie A term virtually identical to 1 Megacalorie but having 15C as its base, used primarily
in Spain.
TJ TeraJoules.
toe Tonnes of oil equivalent - A metric measure used to quantify general energy requirements
for practical purposes, an alternative to the barrel of oil equivalent , usually taken as
representing 10,000 kilocalories net.
Ton (t) A term covering a variety of measures: The metric tonne (1000 kg); The long ton (2240
lbs); The short ton (2000 lbs). The metric tonne is the one increasingly used.
W Watt - The basic unit of electrical power, defined as one joule per second.
Water Drive In a porous rock, as gas is withdrawn from the reservoir, water expands into the
region formerly occupied by the gas as pressure is released. This often has the result of
trapping gas so that it cannot be produced, thus reducing recovery from the reservoir. Water
drive is not a problem with a Depletion Drive Reservoir. See also Reservoir.
Water Gauge A measure often used to express the pressure of gas in distribution systems,
using water instead of mercury. Distribution systems normally operate at about 300mm (12
inches) water gauge (i.e. 300mm above atmospheric pressure). For comparison, atmospheric
pressure is a little above 10metres of water. See also Gauge Pressure.
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