Drilling Terminology

Acre-foot – In the U.S., the thickness of a pay zone is measured in feet, and the area of the reservoir is measured in acres. An acre-foot is a volume of reservoir rock that is one acre in area and one foot thick.

Back-in – A type of interest in a well or property that becomes effective at a specified time in the future, or on the occurrence of a specified future event.

Behind pipe – If a well drills through several pay zones and is completed in the deepest productive reservoir, casing is set all the way down to the producing zone. Viewed from (a perspective) inside the borehole, reserves in the shallower pay zones up the hole are behind the casing.

Bottom-hole pressure – The pressure of the reservoir or formation at the bottom of the hole. A decline in pressure indicates some depletion of the reservoir.

Cable drilling – A method of well-drilling that employs a reciprocating, rather than a rotary, motion to penetrate rock. In the nineteenth century, until Drake’s time, power was supplied by men. Drake used a steam-powered cable rig. Today, cable rigs are powered by gasoline or diesel engines.

Carried Interest – A fractional working interest in an oil and gas lease that comes about through an arrangement between co-owners of a working interest.

Casing Pipe – used in oil wells to reinforce the borehole. Sometimes several casings are used, one inside the other. The outer casing, called the “surface pipe,’ shuts out water and serves as a foundation for subsequent drilling.

Cement squeeze – Forcing cement into the perforations, large cracks, and fissures in the wall of a borehole to seal them off.

Choke – An orifice installed in a pipeline at the well surface to control the rate of flow.

Completed well – A well made ready to produce oil or natural gas. Completion involves cleaning out the well, running steel casing and tubing into the hole, adding permanent surface control equipment, and perforating the casing so oil or gas can flow into the well and be brought to the surface.

Condensate – Liquid hydrocarbons separated from natural gas, usually by cooling.

Directional drilling – Drilling at an angle, instead of on the perpendicular, by using a whipstock to bend the pipe until it is going in the desired direction. Directional drilling is used to develop offshore leases, where it is very costly and sometimes impossible to prepare separate sites for every well; to reach oil beneath a building or some other location which cannot be drilled directly; or to control damage or as a last resort when a well has cratered. It is much more expensive than conventional drilling procedures.

Drill string – Also called drill pipe or drill stem. Thirty-foot lengths of steel tubing screwed together to form a pipe connecting the drill bit to the drilling rig. The sting is rotated to drill the hole and also serves as a conduit for drilling mud.

Drilling mud – A mixture of clay, water, chemical additives, and weighting materials that flushes rock cuttings from a well, lubricates and cools the drill bit, maintains the required pressure at the bottom of the well, prevents the wall of the borehole from crumbing or collapsing, and prevents other fluids from entering the well bore.

Drilling rig – The surface equipment used to drill for oil or gas, consisting chiefly of a derrick, a winch for lifting and lowering drill pipe, a rotary table to turn the drill pipe, and engines to drive the winch and rotary table.

Drillstem test – A test through the drill pipe prior to completion to determine if oil or gas is present in a formation.

Dry hole – A well that either produces no oil or gas or yields too little to make it economic to produce.

Dry natural gas – Natural gas containing few or no natural gas liquids (liquid petroleum mixed with gas).

Dual completion – Completing a well that draws from two or more separate producing formations at different depths. This is done by inserting multiple strings of tubing into the well casing and inserting packers to seal off all formations except the one to be produced by a particular string.

Economic interest – An interest in oil and gas in the ground. It entitles the owner to a deduction from gross income derived from production of that oil and gas as specified in Federal income tax regulations.

Economic interest – An interest in oil and gas in the ground. It entitles the owner to a deduction from gross income derived from production of that oil and gas as specified in Federal income tax regulations.

Exploration – The search for oil and gas. Exploration operations include: aerial surveys, geophysical surveys, geological studies, core testing and the drilling of test wells.

Fault – A break in the continuity of stratified rocks or even basement rocks. Faults are significant to oilmen because they can form traps for oil when the rock fractures, they can break oil reservoirs into noncommunicating sections, they help produce oil accumulations, and they form traps on their own.

Flaring – The burning of gas vented through a pipe or stack at a refinery, or a method of disposing of gas while a well is being drilled. Flaring is regulated by state agencies. Venting (letting gas escape unburned) is generally prohibited.

Flooding – One of the methods of enhanced oil recovery. Water flooding or gas flooding might be considered secondary recovery methods.

Formation – A geological term that describes a succession of strata similar enough to form a distinctive geological unit useful for mapping or description.

Fracturing – A well stimulation technique in which fluids are pumped into a formation under extremely high pressure to create or enlarge fractures for oil and gas to flow through. Proppants such as sand are injected with the liquid to hold the fractures open.

Front-end costs – Costs that are paid out of initial investment in a venture, first, before the venture activities actually begin.

Gas cap – The gas that exists in a free state above the oil in a reservoir.

Geophones – The sound-detecting instruments used to measure sound waves created by explosions set off during seismic exploration work.

Horizontal drilling – The newer and developing technology that makes it possible to drill a well from the surface, vertically down to a certain level, and then to turn at a right angle, and continue drilling horizontally within a specified reservoir, or an interval of a reservoir.

Hydrostatic head – The height of a column of liquid. The difference in height between two points in a body of liquid.

Independent producer

  1. A person or corporation that produces oil for the market, who has no pipeline system or refining.
  2. An oil entrepreneur who secures financial backing and drills his own wells

Infill drilling – Wells drilled to fill in between established producing wells to increase production.

Intangible drilling costs – Expenditures, deductible for federal income tax purposes, incurred by an operator for labor, fuel, repairs, hauling, and supplies used in drilling and completing a well for production.

Investment Tax Credit (ITC) – A credit against income taxes, usually computed as a percent of the cost of investment in certain types of assets.

Joint venture – A large-scale project in which two or more parties (usually oil companies) cooperate. One supplies funds and the other actually carries out the project. Each participant retains control over his share, including liability and the right to sell.

Lease (Oil and Gas) – A contract by which the owner of the mineral rights to a property conveys to another party, the exclusive right to explore for and develop minerals on the property, during a specified period of time.

Lease or Sublease – Any transaction in which the owner of operating rights in a property assigns all or a portion of these rights to any other party.

Limestone – Sedimentary rock largely consisting of calcite. On a world-wide scale, limestone reservoirs probably contain more oil and gas reserves than all other types of reservoir rock combined.

Logs – Records made from data-gathering devices lowered into the wellbore. The devices transmit signals to the surface which are then recorded on film and used to make the record describing the formation’s porosity, fluid saturation, and lithology. The filing of a log is required by the federal government if the drill site is on federal land.

Lost circulation – A serious condition that occurs when drilling mud pumped into the well does not return to the surface, but goes into the porous formation, crevices, or caverns instead.

Mud – A fluid mixture of clay, chemicals, and weighting materials suspended in fresh water, salt water, or diesel oil.

Multiple completion – Completion of a well in more than one producing formation. The tubing of each production zone extends up to the Christmas tree to be piped to separate tankage.

Natural gas – A mixture of hydrocarbon compounds and small amounts of various nonhydrocarbons (such as carbon dioxide, helium, hydrogen sulfide, and nitrogen) existing in the gaseous phase or in solution with crude oil in natural underground reservoirs.

Offering memorandum – A legal document provided to potential investors in a venture describing the terms under which the investment is being offered.

Offset well – A well drilled near the discovery well. Also a well drilled to prevent oil and gas from draining from one tract of land to another where a well is being drilled or is already producing.

Oil run

  1. The production of oil during a specified period of time.
  2. A tank of oil gauged, tested, and put on a pipeline.

Operator – The individual or company responsible for the drilling, completion and production operations of a well, and the physical maintenance of the leased property.

Packer – A flexible rubber sleeve that is part of a special joint of pipe.

Pay zones – The term to describe the reservoir that is producing oil and gas within a given wellbore. Pay zones (or oil reservoirs) can vary in thickness from one foot to several hundred feet.

Payout – The amount of time it takes to recover the capital investment made on a well or drilling program.

Perforating gun – An instrument lowered at the end of a wireline into a cased well. It contains explosive charges that can be electronically detonated from the surface.

Petroleum engineer – A term including three areas of specialization:

  1. Drilling engineers specialize in the drilling, workover, and completion operations,
  2. Production engineers specialize in studying a well’s characteristics and using various chemical and mechanical procedures to maximize the recovery from the well,
  3. Reservoir engineers design and execute the planned development of a reservoir. Many U.S. universities offer BS, MS, and Ph.D. degrees in petroleum engineering.

Petroleum geologist – A geologist who specializes in the exploration for, and production of, petroleum.

Pinch out – The disappearance of a porous, permeable formation between two layers of impervious rock over a horizontal distance.

Pipeline – A tube or system of tubes used for the transportation of oil or gas. Types of oil pipelines include: lead lines, form pumping well to a storage tank; flow lines, from flowing well to a storage tank; lease lines, extending from the wells to lease tanks; gathering lines, extending from lease tanks to a central accumulation point; feeder lines, extending from leases to trunk lines; and trunk lines, extending from a producing area to refineries or terminals.

Porosity – A measure of the number and size of the spaces between each particle in a rock. Porosity affects the amount of liquid and gases, such as natural gas and crude oil, that a given reservoir can contain.

Private Placement Offering – A securities (investment) offering not intended for the general public. By meeting certain criteria, such an offering may qualify for exemptions from registration with the Securities and Exchange Commission of the Federal government.

Prospect – A lease or group of leases on which an operator intends to drill.

Proved developed reserves – Estimates of what is recoverable from existing wells with existing facilities from open, producing payzones.

Pumping well – A well that does not flow naturally and requires a pump to bring product to the surface.

Re-entry – A well was abandoned, but subsequent drilling and production in the area suggests that a potential pay zone in the well was missed or passed over.

Reserve – That portion of the identified resource from which a usable mineral and energy commodity can be economically and legally extracted at the time of determination.

Reservoir – A porous, permeable sedimentary rock formation containing quantities of oil and/or gas enclosed or surrounded by layers of less permeable or impervious rock. Also called a “horizon.”

Reservoir pressure – The pressure at the face of the producing formation when the well is shut-in. It equals the shut in pressure at the wellhead plus the weight of the column of oil in the hole.

Retained Interest – A fractional interest reserved by the owner of a whole interest when the balance of the whole interest is transferred to another party.

Rotary drilling – A method of well-drilling that employs a rotating bit and drilling mud to cut through rock formations.

Run ticket – A record of the oil run from a lease tank into a connecting pipeline. An invoice for oil delivered.

Sandstone – Rock composed mainly of sand-sized particles or fragments of the mineral quartz.

Seismic exploration – A method of prospecting for oil or gas by sending shock waves into the earth. Different rocks transmit, reflect, or refract sound waves at different speeds, so when vibrations at the surface send sound waves into the earth in all directions, they reflect to the surface at a distance and angle from the sound source that indicates the depth of the interface. These reflections are recorded and analyzed to map underground formations.

Seismograph – A device that records natural or manmade vibrations from the earth. Geologists read what it has recorded to evaluate the oil potential of underground formations.

Separator – A pressure vessel used to separate well fluids into gases and liquids.

Salt Water Disposal Well – A well drilled in a known oil or natural gas field to inject liquids that enhance recovery or dispose of salt water.

Set casing – To cement casing in the well hole, usually in preparation for producing a commercial well.

Shut-in -To stop a producing oil and gas well from producing.

Shut-in pressure -The pressure at the wellhead when valves are closed.

Spot market – A short-term contract (typically 30 days) for the sale or purchase of a specified quantity of oil or gas at a specified price.

Squeeze – The procedure of pumping a slurry of cement into a particular space in the borehole (often the annulus between the borehole and the casing), so that the cement will solidify to form a seal.

Stipper oil well – An oil well capable of producing no more than 10 barrels of oil per day.

Structure – Subsurface folds or fractures of strata that form a reservoir capable of holding oil or gas.

Submersible pump – A bottom-hole pump for use in an oil well when a large volume of fluid is to be lifted.

Subscription – The manner by which an investor participates in a limited partnership through investment.

Swab -A hollow rubber cylinder with a flap (check valve) on the bottom surface. It is lowered below the fluid level in the well. This opens the check valve allowing fluid into the cylinder. The check valve flap closes as the swab is pulled back up, lifting oil to the surface.

Sweet crude – Crude oil with low sulfur content which is less corrosive, burns cleaner, and requires less processing to yield valuable products.

Take-or-pay contract – A (long-term) contract between a gas producer and a gas purchaser, such as a pipeline transmission company.

Tank bottoms – A mixture of oil, water, and other foreign matter that collects in the bottoms of stock tanks and large crude storage tanks and must be cleaned or pumped out on a regular basis.

TCF – Trillion cubic feet.

Tertiary recovery – The recovery of oil that involves complex and very expensive methods such as the injection of steam, chemicals, gases, or heat, as compared to primary recovery, which involves depleting a naturally flowing reservoir, or secondary recovery, which usually involves repressuring or waterflooding.

Trap – A natural configuration of layers of rock where non-porous or impermeable rocks acts as a barrier, blocking the natural upward flow of hydrocarbons.

Tubing – Small diameter pipe, threaded at both ends, that is lowered into a completed well. Oil and gas are produced through a string of tubing.

Turnkey – A drilling contract that calls for a drilling contractor to drill a well, for a fixed price, to a specified depth. The purpose of drilling a well by turnkey contract may be related to the timing of Federal income tax deductions. For income tax purposes, expenses are deductible from gross income as they are incurred. When a turnkey contract is entered into toward the end of the current tax year, the drilling costs may be pre-paid at that time. The idea is to give a working interest owner (or investor) in the well, the opportunity to deduct the intangible drilling costs from his gross income in the current tax year.

Water drive – The most efficient driving mechanism to force oil and gas out of the reservoir.

Water-drive reservoir – A reservoir in which the pressure that forces the oil to the surface is exerted by edge or bottom water in the field.

Waterflooding – A secondary recovery method in which water is injected into a reservoir to force additional oil into the wells.

Well program – The procedure for drilling, casing, and completing a well.

Wellbore – Physically, wellbore refers to a borehole, in other words a completed well.

Wellhead – A device on the surface used to hold the tubing in the well. The wellhead is the originating point of the producing well at the top of the ground.

West Texas Intermediate – Refers to a grade of crude oil produced in the Permian and Midland basin areas of west Texas. The price paid for crude oil varies according to quality.

Wet – A reservoir rock is said to be “wet” when it contains water but no hydrocarbons.

Wet gas – Natural gas containing liquid hydrocarbons – commonly condensate.

Working interest – An interest created by the execution of an oil and gas lease.

Workover – To clean out or work on a well to restore or increase production.

Workover rig – The rig used when oilmen try to restore or increase a well’s production.

Write-off – In common usage: a reduction in taxable income that results when allowable deductions are subtracted from gross income.

Zone – A specific interval of rock strata containing one or more reservoirs, used interchangeably with “formation.”

Zone isolation – Sealing off a producing formation while a hole is being deepened. A special sealant is injected into the formation, where it hardens long enough for the hole to be drilled. Afterward, the substance again turns to liquid, unblocking the formation.