The 1979 energy crisis was an event triggered by the Iranian Revolution that led to widespread panic about gasoline shortages in the U.S.

The 1979 energy crisis, the second of two oil price shocks in the '70s, resulted in a widespread panic about potential gasoline shortages, and far higher prices for both crude oil and refined products. The 1979 energy crisis, the second of two oil price shocks in the '70s, resulted in a widespread panic about potential gasoline shortages, and far higher prices for both crude oil and refined products. Another factor was unintended supply restriction after the Department of Energy (DOE) decided to make a handful of large U.S. refiners sell crude to smaller refiners who could not find a ready supply of oil. Turmoil in Iran, a major petroleum exporting country, caused the global supply of crude oil to decline significantly, triggering noteworthy shortages, and a surge in panic buying—within 12 months, the price per barrel of this widely used resource almost doubled to $39.50. In addition, the crisis prompted utility companies worldwide to seek out alternatives to crude oil generators, including nuclear power plants, and governments to spend billions on the research and development (R&D) of other fuel sources.

1979 Energy Crisis

3P oil reserves are the total amount of reserves that a company estimates having access to, calculated as the sum of all proven and unproven reserves.

U.S. Crude Oil, Natural Gas Proved Reserves, Year-end 2019

Natural Gas: Featured Analysis & Projections

3P oil reserves are the total amount of reserves that a company estimates having access to, calculated as the sum of all proven and unproven reserves. 3P oil reserves are the total amount of estimated reserves inclusive of all proven and unproven reserves that a company has access to. For example, if a company has a large amount of probable reserves and a relevant extraction technology improves, then those probable reserves are added to the proven reserves. For this reason, it is useful for investors to know a company’s proven, probable, and possible reserves rather than just the proven reserves.

3P Oil Reserves

In the oil and gas extraction industry, acidizing is a technique used to extend the useful life of an oil and gas well.

Acidizing: Treatment in Oil and Gas Operators

In the oil and gas extraction industry, acidizing is a technique used to extend the useful life of an oil and gas well. In the oil and gas extraction industry, acidizing is a technique used to extend the useful life of an oil and gas well. If the price of oil is not sufficiently high to justify the investment, a company may forego acidizing and simply move on to a younger well that can produce oil and gas more cheaply. In regions where underground shale deposits are not uniformly arranged–for example in regions with substantial tectonic activity, such as the state of California–acidizing may prove to be more effective at unlocking oil deposits than hydraulic fracturing. The acidizing process is less heavily regulated than other oil and gas extraction techniques.

Acidizing

The American Petroleum Institute (API) is a leading oil and gas industry trade association. 

The American Petroleum Institute (API) is a trade association representing the oil and gas industry. The institute also collects and distributes statistics on all aspects of oil and gas production, which is published in its _Weekly Statistical Bulletin_.
API conducts research ranging from economic analysis to toxicological testing. Through API Training, the institute provides training and materials to the oil and natural gas business on regulatory requirements and industry standards. The institute traces its origins to World War I, when the National Petroleum War Service Committee was formed to ensure the steady flow of oil supply lines to the armed forces. The American Petroleum Institute (API) is a trade association representing the oil and gas industry.

American Petroleum Institute

An area of mutual interest (AMI) refers to area of land in which multiple natural gas or oil companies holds exploration rights.

Litigation Issues in Area of Mutual Interest ('AMI') Agreements

Area of mutual interest (AMI) is a defined geographic location in which two or more oil or natural gas companies have a stake. An area of mutual interest (AMI) contract describes the geographic area contained in the AMI, the rights of each party (such as the percentage interest allocated to each company), the agreement's term, and how contract provisions are to be implemented. AMI agreements will also spell out the role of each party, their percentage ownership, and how contract provisions are to be implemented.
Area of mutual interest (AMI) contracts may also define how the parties in the agreement are allowed to explore for or extract oil and natural gas in the subject territory. An area of mutual interest (AMI) agreement is a pact between two or more oil or natural gas companies. AMI contracts are common tools for sharing risks of development, along with the associated ownership and profits, among companies who want to jointly explore for oil and gas in a specific area.

Area Of Mutual Interest (AMI)

A barrel of oil equivalent (BOE) is a term used to summarize the amount of energy that is equivalent to the energy found in a barrel of crude oil. 

How many gallons of oil does it take to make a gallon of gasoline?

A barrel of oil equivalent (BOE) is a term used to summarize the amount of energy that is equivalent to the amount of energy found in a barrel of crude oil. One Mcf of natural gas contains approximately one-sixth of the energy of a barrel of oil; therefore, 6,000 cubic feet of natural gas (6 Mcf) have the energy equivalent of one barrel of oil. Barrel of oil equivalent (BOE) is a way of standardizing natural gas and other energy resources to a barrel of oil's energy. A barrel of oil equivalent (BOE) is a term used to summarize the amount of energy that is equivalent to the amount of energy found in a barrel of crude oil. BOE can be compared with natural gas equivalent, which translates the energy in an amount of oil (or other energy product) into that of gas.

Barrel of Oil Equivalent (BOE)

Barrels per day (B/D) is a measure of oil output, represented by the number of barrels of oil produced in a single day. 

Frequently Asked Questions: How many gallons of gasoline and diesel fuel are made from one barrel of oil

Barrels per day (B/D) is a measure of oil output, represented by the number of barrels of oil produced in a single day. Other measurements of oil production include a million barrels per day (MMB/D), a thousand barrels per day (KBPD), and for other energy products, a barrel of oil equivalent (BOE).
The barrels-per-day (B/D) measure is commonly used in the oil spot markets, as prices are usually quoted in terms of dollars per barrel. Barrels per day (B/D) is a measure of oil output, represented by the number of barrels of oil produced in a single day. Countries or companies often don't produce oil at their full barrels per day (B/D) capacity as a means to control the price of oil. When the price of oil starts to fall, the world's oil-producing countries may make agreements with each other to limit production until the price of oil stabilizes and returns to a higher level.

Barrels Per Day (B/D)

Benchmark crude oil is petroleum that serves as a pricing reference, establishing standards for comparison for varieties of crude oil. 

FAQ: NYMEX Physically-Delivered Light Sweet Crude Oil Futures

Benchmark crude oil is the petroleum that serves as a pricing reference for other types of oil and oil-based securities. Production comes from oil fields across the United States, and most refining happens in the Midwest, and Gulf South states.
The WTI is the benchmark oil for North America and the New York Mercantile Exchange lists futures of WTI crude oil.
North Sea Brent Crude Benchmark crude oil is the petroleum that serves as a pricing reference for other types of oil and oil-based securities. Benchmark crude oil is the petroleum used as a pricing reference for other types of oil-based securities and oil itself. Benchmark crude oil primarily tracks these three main types of oil:
West Texas Intermediate (WTI) is classified as a light sweet crude with a sulfur content of 0.42% or less by weight.

Benchmark Crude Oil

Biodiesel is a type of fuel made from organic oils, such as vegetable oil. It is often seen as an environmentally-friendly alternative to petroleum.

Biodiesel is a type of combustible fuel made from organic oils, such as vegetable oil. According to the U.S. Department of Energy, biodiesel is a relatively efficient source of energy, with soybean biodiesel producing approximately 4.56 units of fossil fuel energy used throughout its life cycle.﻿﻿ Although biodiesel today is still far less widely used than conventional fuels, the price gap between traditional diesel and biodiesel is expected to narrow in the coming decades, due to the increased scarcity and regulations affecting petroleum-based products. On the other hand, critics of biodiesel argue that the adoption of alternative fuels based on agricultural products could contribute to food shortages by encouraging farmers to switch from more nutritional crops to those intended to be used only as a source of fuel. Although biodiesel can be seen as an alternative to traditional fuels such as gasoline and diesel, it can also be blended with traditional hydrocarbon-based fuels in order to reduce vehicle emissions. Once the resulting biomass is converted into liquid fuel, it can be used to supply a variety of energy needs, competing with traditional energy sources such as gasoline and crude oil.

Biodiesel Defined

Bitumen is a substance produced through the distillation of crude oil that is known for its waterproofing and adhesive properties.

Bitumen, also known as asphalt in the United States, is a substance produced through the distillation of crude oil that is known for its waterproofing and adhesive properties. Bitumen is produced as a byproduct during the distillation process for heavy crude; as such, refiner decisions to process heavy versus light crude plays is critical for bitumen prices. Bitumen is also a term used to refer to oil sands, or partially consolidated sandstone containing a naturally occurring mixture of sand, clay, and water, saturated with a dense and extremely viscous form of petroleum.
Bituminous sands are extremely abundant in Canada, especially in the province of Alberta, where rising oil prices have made it economical to extract petroleum from these sands on a large scale. The world's first Bitumen futures contracts debuted on the Shanghai Futures Exchange in October 2013, aimed at operators of refineries for crude oil, dealers in bitumen, and end-users of the product. Bitumen, also known as asphalt in the United States, is a substance produced through the distillation of crude oil that is known for its waterproofing and adhesive properties.

Bitumen

Barrels of oil equivalent per day (BOE/D) is a term that is used often in conjunction with the production or distribution of crude oil and natural gas.

Barrels of oil equivalent per day (BOE/D) is a term that is used often in conjunction with the production or distribution of crude oil and natural gas. Large oil producers are evaluated and refer to their production by the number of cubic feet of natural gas, and/or by the barrels of oil equivalent, they produce per day. Converting natural gas reserves to equivalent barrels is an easy to understand like-for-like metric that helps to determine the amount of debt a company has relative to its reserve base. This is an industry standard and a way that investors can compare the production and/or the reserves of two oil/gas companies.
​BOE/D is important to the financial community because it is used as a way to help determine the value of a company. Barrels of oil equivalent per day (BOE/D) is a term that is used often in conjunction with the production or distribution of crude oil and natural gas.

Barrels Of Oil Equivalent Per Day (BOE/D)

Brent blend is a type of sweet crude oil that is used as a benchmark for the prices of other crude oils.

Brent blend is the name of one of two internationally-recognized types of crude oil that are used as benchmarks for prices of crude oil. The other main crude oil benchmark used in world markets is West Texas Intermediate (WTI)
Brent blend is a blend of crude oil extracted from oilfields in the North Sea between the United Kingdom and Norway. Brent blend may also go simply by Brent oil and is the same as North Sea Brent Crude and London Brent. Brent blend is the benchmark for most of the crude oil from the Atlantic basin and is the benchmark used to price two-thirds of the crude oil traded internationally. Brent blend is more than half of the crude oil traded internationally, so it is a logical choice to be the benchmark for crude oil pricing.

Brent Blend

A Christmas tree is a piece of equipment that controls the flow on a well when it moves from drilling to production. 

A Christmas tree is a piece of equipment that provides flow control on a oil or gas well. Christmas trees are used in oil exploration and production in surface and underwater oil and gas wells. A Christmas tree is a piece of equipment that provides flow control on a oil or gas well. In the oil & gas industry, a Christmas tree is a piece of heavy equipment that controls the flow produced by a well. The valves that comprise some of the decorations on the Christmas tree are opened when the oil or gas well is ready to produce and the processing and storage facilities are ready to receive.

Christmas Tree (oil and gas)

An oil or gas drilling site that produces enough oil to be commercially viable is called a commercial well.

U.S. Oil and Gas Wells by Production Rate

Part 4. Examining Process, Chapter 41. Oil and Gas Industry, Section 1. Oil and Gas Handbook

Title 17: Commodities and Securities Exchanges, Subpart 229.1

A commercial well is any oil or gas drilling site that produces enough oil or gas to be commercially viable. A commercial well is an investor-funded oil or gas drilling site that produces enough oil or gas to be commercially viable. A commercial well is any oil or gas drilling site that produces enough oil or gas to be commercially viable. An exploratory well is a deep test hole drilled by oil and gas exploration companies to locate proven reserves of recoverable gas and oil, both onshore and offshore. The costs of dry development wells are usually capitalized as an asset on the balance sheet, whereas the costs associated with dry exploratory wells are immediately expensed on the income statement under International Financial Reporting Standards and United States Generally Accepted Accounting Principles.

Commercial Well

A crack is a trading strategy that is used in energy futures to establish a refining margin.

A crack, or crack spread, is a term used in the energy markets to represent the differences between crude oil and the prices of the wholesale petroleum products that derive from it, such as jet fuel, kerosene, home heating oil, and gasoline. Using the same futures prices and expiration dates for WTI crude oil and RBOB gasoline, the refiner could purchase three crude oil futures contracts and sell two RBOB gasoline futures contracts. The term crack is derived from the fluid catalytic cracking of crude oil, which is used to refine crude oil into petroleum products, such as gasoline and heating oil. Since refiners purchase crude oil to refine the commodity into a petroleum product, the refiner decides to purchase the May WTI crude oil futures while simultaneously selling the June RBOB gasoline futures. A crack, or crack spread, is a term used in the energy markets to represent the differences between crude oil and the prices of the wholesale petroleum products that derive from it, such as jet fuel, kerosene, home heating oil, and gasoline.

Crack

Cracking is a technique used in oil refineries whereby large hydrocarbon molecules are broken down into smaller and lighter components.

Cracking is a technique used in oil refineries whereby large and complex hydrocarbon molecules are broken down into smaller and lighter components that are more useful for commercial or consumer use. Depending on factors such as the production rate of different petroleum byproducts, the relative value of commodities such as heating oil and gasoline can fluctuate over time—creating speculative or hedging opportunities for commodities traders.
Following its extraction from a well, crude oil in its raw form contains a blend of large and complex hydrocarbon molecules. Although cracking is a common stage in the oil refinery process, some types of oil—such as light sweet crude oil—requires relatively limited treatment in order to be sold. Selling the crack spread means you expect the demand for refined products is weakening or the spread itself is tightening due to changes in oil pricing, so you sell the refined product futures and buy crude futures. Although dozens of products can be produced by refining crude oil, the ones most commonly traded on commodities markets are heating oil and gasoline.

Cracking

A crack spread is the spread created in commodity markets by purchasing oil futures and offsetting the position by selling gasoline and heating oil futures.

A crack spread refers to the overall pricing difference between a barrel of crude oil and the petroleum products refined from it. If the crack spread widens significantly, meaning the price of refined products is outpacing the price of oil, many investors see that as a sign that crude oil will eventually rise in price to tighten the spread back up to historical norms. Selling the crack spread means you expect that the demand for refined products is weakening or the spread itself is tightening due to changes in oil pricing, so you sell the refined product futures and buy crude futures. Essentially, refiners want a strong positive spread between the price of a barrel of oil and the price of its refined products; meaning a barrel of oil is significantly cheaper than the refined products. To find out if there is a positive crack spread, you take the price of a barrel of crude oil—in this case, WTI at $51.02/barrel, for example—and compare it to your chosen refined product.

Crack Spread

Crude oil is a naturally occurring, unrefined petroleum product composed of hydrocarbon deposits and other organic materials.

Development of the Pennsylvania Oil Industry

What countries are the top producers and consumers of oil

World's Top 10 Oil Producing Countries, 1965-2018

How much shale (tight) oil is produced in the United States

How External Factors Affect Domestic Economy: Nowcasting an Emerging Market

Understanding the Decline in the Price of Oil since June 2014

FORECASTING THE BRENT OIL PRICE ADDRESSING TIME-VARIATION IN FORECAST PERFORMANCE

Oil futures head for highest finish in more than 5 months

Crude oil is a naturally occurring petroleum product composed of hydrocarbon deposits and other organic materials. The price of the spot contract reflects the current market price for oil, whereas the futures price reflects the price buyers are willing to pay for oil on a delivery date set at some point in the future. The price of the spot contract reflects the current market price for oil, whereas the futures price reflects the price buyers are willing to pay for oil on a delivery date set at some point in the future. MarketWatch provides current oil price information, stories detailing oil's price path—including pre-market and closing bell commentary—and multiple feature articles. The site provides current oil price information, stories detailing oil's price path—including pre-market and closing bell commentary—and multiple feature articles.

Crude Oil  & Investing Examples

Crude oil stockpiles are reserves of unrefined petroleum, measured in numbers of barrels. Oil producers and governments use crude stockpiles to smooth out the impact of changes in supply and demand.

Crude oil stockpiles, also known as inventory, are reserves of unrefined petroleum measured in numbers of barrels. The Energy Information Agency (EIA) publishes data each week that shows the level of crude stockpiles in the U.S.—excluding oil held in the Strategic Petroleum Reserve (SPR).
The SPR is an emergency fuel storage of petroleum maintained underground in Louisiana and Texas by the United States Department of Energy (DOE) that is intended for emergency use in the event of a national energy crisis.
Crude stockpile data for the United States is published every week by the Energy Information Agency (EIA). These stockpiles are commercial stockpiles and are not part of the Global Strategic Petroleum Reserves (GSPR), which are crude oil inventories held by countries or private industries in preparation for future energy crises.
The IEA was founded in 1974 to help its 30 member countries manage crude stockpiles and enhance energy security in the wake of the Middle East oil crisis. Every month the International Energy Agency (IEA) publishes its oil market report where they disclose the crude stockpiles of OECD countries (The Organization for Economic Co-operation and Development (OECD) is comprised of 37 member countries). This data shows the level of crude stockpiles in the U.S., excluding oil held in the Strategic Petroleum Reserve (SPR).

Crude Stockpiles

A crush spread is an options trading strategy used in the soybean futures market. 

A crush spread is an options trading strategy used in the soybean futures market. Since a crush spread strategy exposes overinflated processing costs by increasing the costs of soybean oil and soybean meal futures relative to the costs of soybean futures, hedgers presumably could influence a crush spread by maintaining processing costs. A soybean crush spread is often used by traders to manage risk by combining separate soybean, soybean oil and soybean meal futures positions into a single position. The strategy may also be a reverse crush spread which consists of taking a short position on soybean futures and a long position on soybean oil and meal futures. A crush spread as a trading strategy involves taking a long position on soybean futures and a short position on soybean oil and meal futures.

Crush Spread

Day rate refers to the all in daily costs of renting a drilling rig. The operator of a drilling project pays a day rate to the drilling contractor who provides the rig, the drilling personnel and other incidentals.

Day rate refers to all in daily costs of renting a drilling rig. Day Rate \= Total Contract Value Number of Days in Contract \\text{Day Rate} = \\frac{\\text{Total Contract Value}}{\\text{Number of Days in Contract}} Day Rate\=Number of Days in ContractTotal Contract Value​
To calculate the day rate (oil drilling), divide the total value of the contract by the number of days in the contract. Due to the volatility and the varying strength of the correlation, investors and traders can flip between seeing day rates as a leading or a lagging indicator for oil prices and the health of the oil and gas industry as a whole. Day rate (oil drilling) is a metric that investors in the oil and gas industry watch to evaluate the overall health of the industry. In an environment of rising oil prices and high utilization, the day rates in a long-term contract will shoot up even faster than short term contracts as rig operators demand a premium for being locked in on a project.

Day Rate (Oil Drilling)

The decline curve is a method for estimating reserves and predicting oil and gas production based on expectations of how production slows over time.

The decline curve is a method for estimating reserves and predicting the rate of oil or gas production. The decline curve is a method used to determine estimated ultimate recovery (EUR) for an oil or gas reserve.
Primarily based on well conditions, three types of decline curves can apply to the future trend: exponential, hyperbolic and harmonic.
Knowing the decline curve can help a producer estimate the quantity of oil reserves that can come from a well over its lifetime, the present and future value of a well, and the rate at which assets should depreciate on a company’s books. In aggregate, the decline curve can also help determine the rate of production for a total reservoir or even multiple reservoirs.​​​​​​​
The decline curve is a method used to determine estimated ultimate recovery (EUR) for an oil or gas reserve. Underlying the decline curve equations is an expectation that well-production typically follows a three-part pattern.
1.  In the initial phase production phase, the flow of oil or gas remains relatively steady, as pressure stays nearly constant.
2. Calculating the decline curve involves a curve-fitting exercise to interpolate the future rate of production based on past production levels.

Decline Curve

A development well is drilled in a proven area for the production of oil or gas, in contrast to an exploratory well, which is drilled to find oil or gas.

Statement of Financial Accounting Standards No. 19. Financial Accounting and Reporting by Oil and Gas Producing Companies

U.S. Oil and Natural Gas Wells by Production Rate

While exploratory wells are designed to confirm reserves are accessible, development wells are drilled with various and different objectives, such as flowing production, artificial lift production, injection of water or gas, and to monitor the performance of a well. According to the Energy and Information Administration (EIA), the number of U.S. oil-producing wells increased from 729,000 in 2000 to a high of 1.03 million wells in 2014 and declined to 982,000 wells in 2018. The costs of dry development wells are usually capitalized as an asset on the balance sheet, whereas the costs associated with dry exploratory wells are an expense on the income statement, according to the International Financial Reporting Standards (IFRS) and the United States generally accepted accounting principles (GAAP). As a result, dry or unsuccessful development wells are rarer than dry exploratory wells.

Development Well

Directional drilling is a technique used by oil-extraction companies in order to access oil in underground reserves.

Table of Contents
What Is Directional Drilling? The main benefit of directional drilling is that it enables companies to exploit multiple oil reservoirs with a single well, thereby reducing the total cost of drilling while also limiting the environmental impact of drilling. In its early years, directional drilling involved using the same basic equipment as vertical wells, except the drilling itself was done at a non-vertical angle. Directional drilling is the practice of accessing an underground oil or gas reserve by drilling in a non-vertical direction. Directional drilling increases the efficiency of oil and gas extraction, and can also lessen the environmental impact of drilling.

Directional Drilling

Downstream operations are oil and gas functions that occur after the production phase to the point of sale. Read how downstream companies make money. 

Table of Contents
What Are Downstream Operations?
More on Downstream Operations
Types of Downstream Operations
Downstream vs. Upstream
Example of Downstream Operations Oil and gas operations can be divided into upstream, midstream, and downstream operations, with the refining process taking place either midstream or downstream and the distribution of oil and gas occurring in the downstream phase. Although an oversupply of crude oil and lower oil prices may hurt integrated and upstream oil companies, downstream companies benefit substantially. When crude oil prices fall sharply in a short period, petroleum products typically lag crude oil prices since there is a strong demand for refined petroleum products. An oversupply of crude oil in the upstream section (i.e., the oil companies) may benefit downstream companies.

Downstream

Drilling mud, also called drilling fluid, aids in the process of drilling a borehole into the earth for oil and gas extraction and core sampling. 

Management of Exploration, Development and Production Wastes: Factors Informing a Decision on the Need for Regulatory Action, April 2019

Review of State Oil and Natural Gas Exploration, Development, and Production (E&P) Solid Waste Management

Drilling mud, also called drilling fluid, aids in the process of drilling a borehole into the earth. As it circulates up from the drill bit, the drilling mud carries drill cuttings up to the surface, where the mud and the cuttings are separated. The U.S. Environmental Protection Agency classifies drilling muds as special waste, meaning that they are exempt from many federal regulations.﻿﻿ As a result, laws concerning the disposal of drilling muds vary by state. Throughout the drilling process, drilling mud is recirculated, which helps decrease waste by reusing as much mud as possible. There are three main types of drilling mud: water-based, oil-based and synthetic-based.

Drilling Mud

The EIA Petroleum Status Report is a weekly published report which details reserves and output for U.S. crude and crude-based products.

The EIA Petroleum Status Report is published every Wednesday by the Energy Information Administration (EIA), an agency within the U.S. Department of Energy. The EIA Petroleum Status Report details the existing U.S. stocks of crude oil, as well as the inventory levels of refined petroleum products such as gasoline, heating oil, and diesel fuel. The basis for production data come from the closing prices for the specific day indicated.
The Tables section of the report offers weekly supply estimates, Data within this section can be further broken down by geographic region, as prices in New England can differ meaningfully from those in Alaska, or the Lower Atlantic states. Also, the report details the per-gallon prices of West Texas Intermediate crude, regular unleaded gasoline, No. 2 heating oil, and propane. The main highlights section of the report breaks down crude-oil inputs to the refineries, the capacity utilization of those refineries, and the amount of new gasoline and distillate production.

EIA Petroleum Status Report

The Energy Information Administration (EIA) is a government agency responsible for collecting energy data, conducting analysis and making forecasts.

United States Code, Title 42 -- The Public Health and Welfare, Chapter 84 -- Department of Energy, Section 7101 -- Definitions

The Energy Information Administration (EIA) is a government agency formed in 1977. The origins of the Energy Information Administration (EIA) lie in the Federal Energy Administration Act of 1974, which created the Federal Energy Administration (FEA). The EIA's reports contain information regarding energy-related topics such as future energy inventories, demand, and prices. The Energy Information Administration publishes energy-related information and analysis on a regular basis. For example, this feature may focus on natural gas pipeline capacity in a specific region of the country or underline how changing energy efficiency and fuel economy standards affect energy consumption.

Energy Information Administration (EIA)

Enhanced oil recovery (EOR) is a process for extracting oil that has not already been retrieved through the primary or secondary recovery techniques.

Enhanced oil recovery (EOR), also known as “tertiary recovery,” is a process for extracting oil that has not already been retrieved through the primary or secondary oil recovery techniques. Enhanced oil recovery (EOR), also known as “tertiary recovery,” is a process for extracting oil that has not already been retrieved through the primary or secondary oil recovery techniques. Enhanced oil recovery (EOR) is the practice of extracting oil from a well that has already gone through the primary and secondary stages of oil recovery. Although the primary and secondary recovery techniques rely on the pressure differential between the surface and the underground well, enhanced oil recovery functions by altering the chemical composition of the oil itself in order to make it easier to extract. Enhanced oil recovery techniques are complex and expensive and therefore are employed only when the primary and secondary recovery techniques have exhausted their usefulness.

Enhanced Oil Recovery (EOR)

Estimated Ultimate Recovery (EUR) is a production term used in the oil and gas industry to describe the quantity of recoverable resource. 

Petroleum Reserves Definitions [1997 Archive]

Table of Contents
Estimated Ultimate Recovery
Understanding EUR 2.  Probable Reserves — The chance of actually getting the oil out is greater than 50%.
3.  Possible Reserves — The likelihood of recovering the oil is significant, but less than 50%.
Keep in mind that part of an oil field's probable and possible reserves are converted into proven reserves over time. EUR is made up of three levels of confidence is the amount of oil yet to be recovered: proven reserves; probable reserves; and possible reserves. This valuation exercise requires several inputs, like the cost of bringing the first barrel to production, the cost of capital, the long-term price of oil and the ultimate amount of oil that will be produced, or EUR. EUR is used by oil companies, as well as analysts and investors, to compute the NPV for oil exploration and drilling projects and the expected corporate profits associated with that.

Estimated Ultimate Recovery (EUR)

The EV/2P ratio is a ratio used to value oil and gas companies. It consists of the enterprise value (EV) divided by the proven and probable (2P) reserves. EV compared to proven and probable reserves is a metric that helps analysts understand how well a company's resources will support its growth.

The EV/2P ratio is a ratio used to value oil and gas companies. EV/2P \= Enterprise Value 2P Reserves where: 2P Reserves \= Total proven and probable reserves Enterprise Value \= MC \+ Total Debt − TC MC \= Market capitalization TC \= Total cash and cash equivalents \\begin{aligned} &\\text{EV/2P} = \\frac{ \\text{Enterprise Value} }{ \\text{2P Reserves} } \\\\ &\\textbf{where:} \\\\ &\\text{2P Reserves} = \\text{Total proven and probable reserves} \\\\ &\\text{Enterprise Value} = \\text{MC} + \\text{Total Debt} - \\text{TC} \\\\ &\\text{MC} = \\text{Market capitalization} \\\\ &\\text{TC} = \\text{Total cash and cash equivalents} \\\\ \\end{aligned} ​EV/2P\=2P ReservesEnterprise Value​where:2P Reserves\=Total proven and probable reservesEnterprise Value\=MC+Total Debt−TCMC\=Market capitalizationTC\=Total cash and cash equivalents​
2P reserves are the total of proven and probable reserves. It's important to compare a company's EV/2P ratio with those of similar companies and with the historical values of the ratio.
Let us assume that an oil company has an enterprise value of $2 billion and proven and probable reserves of 100 million barrels:
EV/2P \= $ 2  Billion $ 1 0 0  Million \= 2 0 \\begin{aligned} &\\text{EV/2P} = \\frac{ \\$2 \\text{ Billion} }{ \\$100 \\text{ Million} } = 20 \\\\ \\end{aligned} ​EV/2P\=$100 Million$2 Billion​\=20​ The EV/2P ratio on the other hand also uses enterprise value in its formula, but instead of using EBITDA, the ratio includes proven and probable (2P) reserves. The EV/2P ratio is important when judging the potential or possible growth of an oil company since proven and probable (2P) reserves are likely to be recovered.

EV/2P Ratio

An exploratory well is a deep test hole drilled by oil and gas exploration companies to locate reserves of recoverable gas and oil.

An exploratory well is a deep test hole drilled by oil and gas exploration companies to locate proven reserves of recoverable gas and oil, both onshore and offshore. Exploratory wells are deep test hole drilled by oil and gas exploration companies to locate proven reserves of recoverable gas and oil, both onshore and offshore. An exploratory well is a deep test hole drilled by oil and gas exploration companies to locate proven reserves of recoverable gas and oil, both onshore and offshore. The drop of conventional exploratory drilling was caused by a structural shift in the industry toward unconventional resources, such as U.S. shale oil and gas, and as a response to the collapse in oil and gas prices in 2014. Areas that might contain oil or gas reserves are first identified using seismic data before exploratory wells are used to gather more detailed geological data on rock and fluid properties as well as initial reservoir pressure and productivity.

Exploratory Well

FERC or the Federal Energy Regulatory Commission is a U.S. agency that regulates the interstate transmission of electricity, natural gas, and oil.

Public Law 95-91 - Aug. 4, 1977, 95th Congress

An Overview of the Federal Energy Regulatory Commission and Federal Regulation of Public Utilities

 "As Plain as Plain Can Be: FERC Rule 1000 in Plain Language."

Table of Contents
Expand Understanding the Federal Energy Regulatory Commission
FERC Background and Responsibilities
Criticism of FERC
Examples of FERC Regulatory Actions
FERC FAQs The Federal Energy Regulatory Commission (FERC) is an important regulator for the U.S. Energy industry, supervising infrastructure such as oil and natural gas pipelines, as well as electricity transmission. The Federal Energy Regulatory Commission (FERC) is an independent agency that regulates the interstate transmission of electricity, natural gas, and oil. The Federal Energy Regulatory Commission (FERC) is responsible for oversight of the energy industry, including power plants, transmission lines, pipelines, and other infrastructure.

Federal Energy Regulatory Commission (FERC)

Floating Production Storage and Offloading (FPSO) is an offshore vessel that produces and stores crude oil prior to tanker transport.

The Floating Production, Storage and Offloading (FPSO) Market 2015-2025: Prospects for New Build and Converted Vessels Following the Oil Price Fall

The World’s Last Major Onshore Oil Play?

2019 Worldwide Survey of Floating Production, Storage and Offloading (FPSO) Units

Today's Trends: Offshore Rig Construction Costs

The Engineering and Construction of Offshore Oil Platforms

Floating production storage and offloading (FPSO) refers to a floating vessel located near an offshore oil field, where oil is processed and stored until it can be transferred to a tanker for transporting and additional refining. Floating production storage and offloading (FPSO) refers to a floating vessel located near an offshore oil field, where oil is processed and stored until it can be transferred to a tanker for transporting and additional refining. Floating production storage and offloading (FPSO) is a term that references a floating vessel near an offshore oil field where oil is processed and stored until it can be transferred to a tanker. Demand for new-build and converted FPSO vessels has increased due to the declining rate of new onshore oil discoveries to historic low levels and also from technology that enables efficient deepwater oil exploration in unprecedented ocean depths. The demand for FPSOs has increased over time due to the declining rate of new onshore oil discoveries and improved technology allowing for easier access to deepwater oil reserves.

Floating Production Storage and Offloading (FPSO)

Fracking is a slang term for hydraulic fracturing. Fracturing shallow, hard rock wells to extract oil dates back to the 1860s.

Fracking is a slang term for hydraulic fracturing, which is the process of creating fractures in rocks and rock formations by injecting specialized fluid into cracks to force them to open further. Once the hydraulic pressure is removed from the well, the remnants of the fracking fluid hold the fractures open, making it easy to extract the oil and gas inside. Fracking is a slang term for hydraulic fracturing, which is the process of creating fractures in rocks and rock formations by injecting specialized fluid into cracks to force them to open further. Fracking is a slang term for hydraulic fracturing, which is the process of creating fractures in rocks and rock formations by injecting specialized fluid into cracks to force them to open further. Fracking is also a relatively costly way to extract oil, so its economic viability is threatened whenever oil prices fall too low.

Fracking Defined

Global strategic petroleum reserves (GSPR) are stocks of crude oil that have been set aside in order to alleviate future energy crises. 

History of SPR Releases—2005 HURRICANE KATRINA EXCHANGE

Trump to fill U.S. Strategic Petroleum Reserve 'to the very top

The global strategic petroleum reserves (GSPR) are stockpiles of crude oil maintained by nations and by private industries as a hedge against potential future energy crises. In the oil business, proven oil reserves are an estimate of the amount of crude oil that is available for extraction. An agreement among members of the International Energy Agency (IEA) requires that any country which does not export more reserves than it imports must maintain reserves equivalent to its average 90-day crude oil imports for the previous year. By definition, this oil is available for production, unlike proven oil reserves. In the event of a major disruption due to political upheaval or natural disaster, countries holding reserves could increase the available supply of oil by releasing some portion of their reserves.

Global Strategic Petroleum Reserves (GSPR)

In finance, the term "gross acres" refers to the amount of leased real estate that is held by a resource-extraction company.

In finance, the term "gross acres" refers to the amount of leased real estate held by a resource-extraction company. When an oil company's geologists believe a certain area of land holds possible oil reserves that could be extracted, an oil company will attempt to lease that land to identify the oil pockets. Determining the gross acres of a natural resource company allows investors and analysts to determine the size of a project, resource potential, and a company's exposure to a certain region or country. For example, if company A has far greater net acres in its overall portfolio despite generating similar profits as its competitors, then investors in company A may feel that its management is inefficient at utilizing its invested capital. By comparing the regional gross acres against the company's overall portfolio, investors can better assess the company's exposure to the political risks of that region.

Gross Acres

A Held By Production Clause is a provision in an oil or gas property lease that allows the lessee to operate the property beyond the initial lease term.

The Habendum Clause - 'Til Production Ceases Do Us Part

Held By Production Leases: When Are They Actually Held?

"Held by production" is a provision in an oil or natural gas property lease that allows the lessee, generally an energy company, to continue drilling activities on the property as long as it is economically producing a minimum amount of oil or gas. Held by production is a type of mineral rights lease for the oil company, where the oil company operating the production facilities on another owner's land has a right to access the minerals or reserves on that land beyond the originally agreed lease term. Held-by-production clauses allow miners for oil, gas and minerals extend their land leases after they expire as long as the mines are still productive.
held-by-production clauses are also called “habendum” clauses According to the Energy Mineral and Law Foundation, the use of held-by-production clauses increased dramatically after Range Resources, an independent natural gas company, began drilling extremely profitable horizontal, hydraulic fracturing wells in 2007 in Washington County, Pennsylvania.
When the industry became aware of Range’s successes with the new technique, other companies began leasing property for development at skyrocketing prices. The held-by-production provision enables energy companies to avoid renegotiating leases upon expiry of the initial (primary) term and allows them to operate under a secondary term for the entire economic life cycle of an oil or gas field.

Held-By-Production Clause

A horizontal well is an oil or gas well that is dug at an angle of at least eighty degrees to a vertical bore. 

Horizontally Drilled Wells Dominate U.S. Tight Formation Production

New Directional Drilling System Combines Improved Mud Motor, MWD Technologies

Directional Drilling: Everything You Ever Wanted to Know

Hydraulically Fractured Horizontal Wells Account for Most New Oil and Natural Gas Wells

A horizontal well is a type of directional drilling technique where an oil or gas well is dug at an angle of at least eighty degrees to a vertical wellbore. The emergence of horizontal wells has been facilitated by two components of the drilling apparatus:
1.  The mud motor is a pump mechanism that bores into the earth, powered by a supply of drilling fluid, known as mud. Horizontal drilling has become a valuable technique in recent years due to certain advantages over traditional vertical drilling. A horizontal well is a type of directional drilling technique where an oil or gas well is dug at an angle of at least eighty degrees to a vertical wellbore. As technology has developed, horizontal drilling has lowered costs and improved the efficiency of oil and natural gas extraction, especially in the U.S.

Horizontal Well

The Hubbert curve is a method for predicting the likely production rate of any finite resource over time.

The Hubbert curve is a method for predicting the likely production rate of any finite resource over time. It was first developed in 1956 to explain production rates of fossil fuels.
Today, the Hubbert curve is used across various resource sectors and has informed debate around the rate of change in global oil production rates.
The Hubbert curve was proposed by Marion King Hubbert in 1956 in a presentation to the American Petroleum Institute entitled “Nuclear Energy and the Fossil Fuels.” According to some industry analysts, the Hubbert peak for oil production in the United States was reached in the 1970s, although there is little consensus on when the peak for global oil production will be reached. By combining factors such as the natural reserves of the well, the probability of discovering oil in a given region and the speed at which oil can be extracted from the ground, Hubbert’s model was able to predict when a well would reach its level of maximum production. For instance, the Hubbert curve can be used to describe the entirety of global oil output as well as the regional production of areas such as Saudi Arabia or Texas.

Hubbert Curve

Hydraulic fracturing stimulates better flow in oil and gas plays by injecting a high-pressure liquid and sand mixture into the wellbore.

Guidelines for Voluntary Baseline Groundwater Quality Sampling in the Vicinity of Hydraulic Fracturing Operations

Modern Shale Gas Development in the United States: An Update

Oklahoma has had a surge of earthquakes since 2009. Are they due to fracking?

Hydraulic fracturing, commonly known as "fracking", is a process that injects high-pressure liquid into an oil- or gas-bearing rock formation to create fractures. Tight oil and gas reservoirs, including those embedded within shale formations such as the Bakken, Eagle Ford, Niobrara, and Pierre formations in North America, typically require a combination of horizontal drilling and hydraulic fracturing to produce efficiently. Hydraulic fracturing, or fracking, is a way to extract oil and gas reserves trapped deep underground in sedimentary rock formations. The water and chemicals crack and open the rock through high pressure, while the solid particles, called proppant, stay in place and keep the fractures open to stimulate a better flow of liquids or gases out of the well.
![fracking](data:image/gif;charset=utf-8;base64,R0lGODlhCAAIAPUAAIWFhYuHiIqHjo2Hi4mKhYyIh4iIiImTir6tkbyzkqarsa6yu7Cyr7GzrrKxr7OyrbWyrbSzrrazrreyrre0r8y/ncm+oMy+oczBpdDFqdLGrtvruuPdxeTdw+bcw+TcxeHcyOLdyePcyuHez+PczOfh0eHv1uXx2eXq5OXt4Obu4+fv5Onx5uvy6vP48oWFhYWFhYWFhYWFhYWFhYWFhYWFhYWFhYWFhYWFhYWFhYWFhYWFhYWFhYWFhYWFhYWFhSwAAAAACAAIAEUIRgBRuFhBcIWKFCRKiODAwMECDQYAHBhQIAABAR48dPjwAcGFDhtYtCho4kSIkyFAhBgRooIFDBkoNFCQQAKECBEmRHgQISAAOw==)
fracking. Hydraulic fracturing involves pumping fuel into a wellbore to create enough pressure to develop and expand cracks in hard rock formations.

Hydraulic Fracturing

A hydrocarbon is an organic chemical compound composed of hydrogen and carbon atoms. Discover why hydrocarbons are important to the modern economy.

Table of Contents
What Is a Hydrocarbon?
Understanding Hydrocarbons Because of the serious environmental cost of using hydrocarbons as a primary source of energy, attempts to move away from them towards alternative energy sources, such as solar, nuclear, wind, and geothermal power have increased significantly. These primarily include oil and gas companies that mine hydrocarbons and convert them into the energy sources that the world uses to power almost everything. To address the negative impact of hydrocarbon energy, there is a growing movement toward the use of renewable energy sources, such as solar, wind, and geothermal power. Because hydrocarbons are the largest energy source in the globe, some of the largest companies in the world are hydrocarbon companies.

Hydrocarbon

The initial production rate measures how many barrels of oil a day a new oil well produces, and is used as a proxy for an oil well’s future productivity.

The initial production (IP) rate measures how many barrels of crude oil a day a new oil well produces. The initial production rate is important because it is used to extrapolate a well’s total production, its peak production level, and the rate at which production will decline – using decline curve analysis to come up with a well's estimated ultimate recovery (EUR).
Without an estimated ultimate recovery, oil companies would not be able to make rational investment decisions. Given these rates of decline, some analysts argue that U.S. shale production could hit peak oil sooner than expected and that shale oil fields like the Bakken Shale and Eagle Ford Shale have already seen peak production rates. Oil wells typically have an initial production rate that is fairly small compared to peak production, because oil production follows a bell curve. After pressure builds, the rate of production increases up to the well's peak production, after which the flow of oil or gas declines rapidly as the quantity of recoverable assets and pressure in the wellbore decreases.

Initial Production Rate

The Institute of Petroleum (IP) was a professional organization in the United Kingdom. It merged with the Institute of Energy to form the Energy Institute (EI).

The Institute of Petroleum (IP) was a professional organization in the United Kingdom (UK). The EI provides learning and networking opportunities to support professional development, as well as professional recognition and technical and scientific knowledge resources on energy in many forms and applications. The Institute of Petroleum was a professional organization in the United Kingdom that merged with the Institute of Energy to form the Energy Institute. The EI is a registered charity, incorporated by Royal Charter in 2003.﻿﻿ It is licensed by the UK Engineering Council to offer Chartered, Incorporated and Engineering Technician status to engineers, the Science Council to award Chartered Scientist status, and also is licensed by the Society for the Environment to award Chartered Environmentalist status. In 2003, the Institute of Petroleum (IP) merged with the Institute of Energy to form the Energy Institute, or EI.

Institute of Petroleum (IP)

Intangible drilling costs (IDC) are the expenses to develop an oil or gas well that are not a part of the final operating well. 

The Tax Break-Down: Intangible Drilling Costs

Intangible drilling costs (IDC) are expenses related to developing an oil or gas well that are not a part of the final operating well. The U.S. has offered a tax deduction for intangible drilling costs since 1913 in order to attract investment capital to the high-risk business of oil and gas exploration. Since intangible drilling costs include all real and actual expenses except for the drilling equipment, the word intangible is something of a misnomer. A taxpayer who elects to deduct expenses for intangible drilling costs must declare the costs for the taxable year in which the expenses were paid or incurred. They include costs that are necessary in the drilling and preparation of wells for the production of oil and gas, such as survey work, ground clearing, drainage, wages, fuel, repairs, and supplies.

Intangible Drilling Costs (IDC)

An integrated oil and gas company is a business entity that engages in the exploration, production, refinement, and distribution of oil and gas.

Standard Oil's Monopoly: Topics in Chronicling America

An integrated oil and gas company is a business entity that engages in the exploration, production, refinement, and distribution of oil and gas, as opposed to companies that specialize in just one segment. An independent oil and gas company may thrive or wither on the rise or fall of oil and gas prices, while an integrated oil and gas company often has less concern about price volatility. The upstream activity involves oil and gas exploration and production, the midstream activity focuses on oil and gas transportation and storage, and the downstream activity deals with oil and gas refinement and marketing. For example, when crude oil production experiences diminished profitability from declining oil prices, refining operations at an integrated oil and gas company would likely see expanded profit margins because of the lower input costs, ensuring a certain level of locked-in profits. An integrated oil and gas company is a business entity that engages in the exploration, production, refinement, and distribution of oil and gas, as opposed to companies that specialize in just one segment.

Integrated Oil and Gas Company

The International Petroleum Investment Company (IPIC) is an investment organization that manages the wealth fund for Abu Dhabi, United Arab Emirates.

Mubadala Investment Company: A Global Champion for Economic Growth in Abu Dhabi

Investing for Abu Dhabi’s Economic Growth

Abu Dhabi Creates $125 Billion Fund by Merging Mubadala, IPIC

The International Petroleum Investment Company (IPIC) is a government-owned investment organization that manages the sovereign wealth fund for Abu Dhabi, United Arab Emirates (UAE). A strategic decision was then made by the President of the United Arab Emirates and Ruler of Abu Dhabi, Khalifa bin Zayed bin Sultan Al Nahyan, in 2017 to create a new company, Mubadala Investment Company, which would comprise of both the IPIC and Mubadala Development Company. The International Petroleum Investment Company (IPIC) is a government-owned investment organization that manages the sovereign wealth fund for Abu Dhabi, United Arab Emirates (UAE). The IPIC was created with the goal to use Abu Dhabi’s natural petroleum wealth—from oil resources discovered in the 1950s—to build up the economy and build critical infrastructure for the future of Abu Dhabi’s citizens. In 2016, the IPIC merged with Mubadala Development Company to create the Mubadala Investment Company.

International Petroleum Investment Company (IPIC)

The Keystone XL pipeline is a proposed extension of the Keystone pipeline system that will transport oil from Canada to refineries in the United States.

TransCanada Proposes Keystone Oil Pipeline Project

Presidential Permit—Authorizing TransCanada Keystone Pipeline, L.P., To Construct, Connect, Operate, and Maintain Pipeline Facilities at the International Boundary Between the United States and Canada

Executive Order on Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis

Statement by the President on the Keystone XL Pipeline

Memorandum on Construction of the Keystone XL Pipeline

The Keystone XL pipeline was to transport oil from Alberta, Canada, to refineries in the United States. For example, the National Resource Defense Council (NRDC) has filed lawsuits in 2017, 2019, and in July of 2020 to stop the construction of the pipeline.﻿﻿ According to the NRDC, tar sands oil is much thicker and more corrosive than typical crude oil and is more prone to leaks and spills through the pipeline. The third phase is the Houston Lateral pipeline, which will transport crude oil from the pipeline in Liberty County, Texas, to refineries and terminals in the Houston area. The Keystone Pipeline was proposed by TC Energy (formerly TransCanadian Corp.) in 2005 to transport new finds of hard-to-extract heavy oil from oil sands in Canada to U.S. refiners. The Keystone XL pipeline was to transport oil from Alberta, Canada, to refineries in the United States.

Keystone XL Pipeline

The Kyoto Protocol is an international agreement adopted in 1997 that aimed to reduce carbon dioxide emissions and the presence of greenhouse gases.

President Bush Discusses Global Climate Change

Statement by the President on the Paris Climate Agreement

On the U.S. Withdrawal From the Paris Agreement.

The Kyoto Protocol is an international agreement that aimed to reduce carbon dioxide (CO2) emissions and the presence of greenhouse gases (GHG) in the atmosphere. For these projects, developing countries earned carbon credits, which they could trade or sell to developed countries, allowing the developed nations a higher level of maximum carbon emissions for that period. The Kyoto Protocol is an international agreement that called for industrialized nations to reduce their greenhouse gas emissions significantly. The Kyoto Protocol mandated that industrialized nations cut their greenhouse gas emissions at a time when the threat of global warming was growing rapidly. The Kyoto Protocol is an international agreement that aimed to reduce carbon dioxide (CO2) emissions and the presence of greenhouse gases (GHG) in the atmosphere.

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