General Oil and Gas Terminology

Sources relied upon:

  1. Barron's Dictionary of Finance & Investment Terms, CFTC Glossary, Energy Information Administration, IMF Terminology Database, Merriam-Webster Dictionary; NYMEX's Glossary of Terms, OPEC, Oxford English Dictionary, Schlumberger's Oilfield Glossary, The Street, The United Nations.
  2. I need to know An Introduction to the Oil Industry & OPEC

Developed by the American Petroleum Institute (API), it measures how heavy or light petroleum liquids are—its relative density—when compared to water.


When the API gravity is greater than 31, the petroleum is considered lighter than water; when it is less than 31, it is heavier than water.

In the oil industry, benchmarks are used to establish the appropriate price of crude oil and are needed due to the existence of so many different varieties and grades of crude.

By referring to a specific crude oil as a benchmark, traders can determine the price and value of other kinds of crude.


The most widely accepted benchmarks in the industry are:

  • Brent Crude; used to price most of the world's crudes
  • Dubai Crude; Dubai is used to price regional crudes from the Gulf
  • West Texas Intermediate (WTI); used to price oil in the US
  • The OPEC Reference Basket (ORB) of Member Country crudes.

Bitumen is a black, viscous sticky organic liquid composed primarily of condensed chemical compounds. It is usually a by-product or residue that is left after the fractional distillation of crude oil and is the one with the highest boiling point.

This is a specialized station where crude oil received from one main pipeline is pressurized so that it can then be sent to the next destination or terminal for further transportation or refining.

Any chemical substance that accelerates the rate of a reaction without being used up itself in the process. In the oil refining processes, chemical catalysts speed up cracking. Catalysts include bauxite, zeolite and silica-alumina.

In the oil and gas industry, a Christmas tree is an assembly of valves, dials and other fittings that help control the level of oil, gas and/or water at an oil or gas well. It has the very rough appearance of a green Christmas tree with red decorations.

Coke is the product of a refining process known as 'coking' that uses heat and pressure to decompose (or 'coke ') heavy crude oil (or residual oil).


It produces a mix of lighter oils that can then be blended or processed into other products. Petroleum 'coke' can even be used as a fuel or as an input in other industrial processes.

This is a refinery process where heavier, more complex forms of hydrocarbons are broken down (or 'cracked ') into lighter and simpler forms by breaking the bonds between carbon molecules.

Cracking can be done by:

  • Applying heat (thermal cracking),
  • Application of a chemical catalyst (catalytic cracking)
  • With catalysts and hydrogen (hydro-cracking)

Crude oil is a mixture of hydrocarbons that exist in liquid form in natural underground reservoirs and which remain liquid at atmospheric pressure after passing through surface separating facilities.

In the refining process, when crude oil is compressed and heated, it produces (or yields) different substances (distillates) at successively high temperature levels.

In the refining process, when crude oil is compressed and heated, it produces (or yields) different substances (distillates) at successively high temperature levels.

This refers simply to the different products that can be separated or refined from crude oil.

Geoscientists are experts who look at and study the physical aspects of the Earth in order to better understand the composition of its rocks, underground water.

Grades refer to a way of classifying the many varieties of crude oil that exist around the world. The commonly accepted grades are:

  • Light / HeavyHeavy crude has a low API Gravity and a high proportion of heavy hydrocarbon fractions; Light crude has high API Gravity but a low proportion of light hydrocarbon fractions. Both heavy and light crudes can also be classified as sour or sweet.
  • Sour / Sweet — These are terms used to denote a given crude oil's sulphur content.
    • Sour Crude has a high sulphur content (0.5% by weight and above);
    • Sweet Crude has a low sulphur content (less than 0.5%). Either kind of crude can also be further classified as heavy or light.

Sour Crude has a high sulphur content (0.5% by weight and above);

Sweet Crude has a low sulphur content (less than 0.5%). Either kind of crude can also be further classified as heavy or light.

Any organic compound that is made up of only hydrogen and carbon atoms is considered a hydrocarbon. Crude oil is a kind of liquid hydrocarbon.

An intergovernmental organization is an organization set up by and composed of several governments from any region of the world who share a common interest. They work collectively and collaboratively to achieve their common objective and to carry out projects and plans that benefit the organization.

These are countries that produce and export oil but which are not members of OPEC.

Energy sources which exist in nature in finite quantities are considered non-renewable sources of energy. These include coal, natural gas, nuclear energy and petroleum.

Renewable energies, on the other hand, are those energies that are continuously available, such as wind and solar energies.

This is the condition of allowing substances like water to flow into or out of an object. When a rock is porous and allows oil to accumulate in it or flow out of it easily, it is considered highly permeable.

Anything that has to do with vibrations or tremors in an object or a body. This is most often used when describing vibrations in the Earth, which can be naturally occurring (as in earthquakes).


In oil exploration, seismic technology sends sound waves that cause underground vibrations, bounce back to the measuring tools and are then measured and analyzed for signs of oil deposits.

A country or nation that has complete political authority over its own decisions and actions is considered sovereign.

This refers to any number of individuals or groups that have an interest (or a 'stake') in some event or process.

These are the two major sectors of the oil industry.


The upstream generally refers to the exploration and production aspects of the business and pertains to all the activities and equipment located in both the production train and above the surface by the wellhead.


The downstream, in turn, denotes the commercialization of petroleum products, referring to operations after the production phase — that is, oil refining and retailing, and the distribution of refined products.

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