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The Millennium Exploration Glossary of Oil and Gas Terms is intended to be an informal reference tool for understanding oil and gas industry terminology. It is not intended to be a definitive or exhaustive reference, nor should it be relied upon or used in the development of contracts, investment decisions or reporting.

Acreage

Land leased for oil and gas exploration and/or land for which Millennium Exploration owns the mineral rights.

Anticline

A convex-upward formation of rock layers, which may form a trap for hydrocarbons.

Barrel of Oil Equivalent

A measure used to aggregate oil and gas resources for production, with one BOE being approximately equal to 6,000 cubic feet of natural gas.

Basin

A large, natural depression on the Earth’s surface, in which specimins brought by water accumulate.

Borehole

A hole in the earth made by a drilling rig.

British Thermal Unit (BTU)

The heat required to raise the temperature of a one-pound mass of water by one degree Fahrenheit.

Casing

Thick-walled steel pipe placed in wells to isolate formation fluids (such as fresh water) and to prevent borehole collapse.

Coal Bed Methane (CBM)

Natural gas extracted from coal beds.

Completion

The process of making a well ready to produce natural gas or oil.  Completion involves installing permanent equipment, such as a wellhead, and often includes hydraulic fracturing.

Condensate

Mixture of hydrocarbons which as in a gaseous state under reservoir conditions, and when produced, become liquids at the temperature and pressure is reduced.

Conventional Resources

Discrete accumulations of hydrocarbons contained in rocks with relatively high matrix permeability, which normally have relatively high recovery factors.

Developed Acreage

The number of acres that are allocated to assignable to productive wells or wells capable of production.

Developed Reserves

Reserves that can be expected to be recovered through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well and, if extraction is by means other than a well, through installed equipment and infrastructure operational at the time of the reserves estimate.

Development Well

A well drilled within the proved area of an oil or gas reservoir to the depth of a stratigraphic horizon known to be productive.

Directional Drilling

The application of special tools and techniques to drill a wellbore at a predetermined angle.  Horizontal drilling is a form of directional drilling where the wellbore is ultimately drilled at  + / – 90 degrees to the vertical direction.

Drilling Rig

The machine used to drill a wellbore.

Dry Gas

Dry gas is almost pure methane and occurs in the absence of liquid hydrocarbons or by processing natural gas to remove liquid hydrocarbons and impurities.

Dry Hole

A well incapable of economically producing saleable hydrocarbons in suffucuent quantities to justify commercial exploitation.

E & P

Exploration and Production.

Economically Producible

A resource that generates revenue that exceeds or is reasonably expected to exceed, the costs of the operation.

Enhanced Oil Recovery

One or more of a variety of processes that seek to improve recovery of hydrocarbon from a reservoir after the primary production phase.

Environmental Assessment

A study that can be required to assess the potential direct, indirect, and cumulative environmental impacts of a project.

Estimated Ultimate Recovery

The sum of reserves remaining as of a given date and cumulative production as of that date.

Exploratory Well

A well drilled to find a new field or a new reservoir in a field previously found the be productive of oil or gas in another reservoir.

Farm In

The acquisition of part or all of an oil, natural gas, or mineral interest from a third party.

Farm Out

The assignment of part or all of an oil, natural gas, or mineral interest to a third party.

Field

An area consisting of a single hydrocarbon reservoir or multiple geologically related reservoirs all grouped or related to the same individual geological structure or stratigraphic condition.

Flaring

The burning of natural gas for safety reasons or when there is no way to transport the gas to the market to use the gas for other beneficial purposes (such as EOR or reservoir pressure maintenance).  The practice of flaring is being steadily reduced as pipelines are completed and in response to environmental concerns.

Formation

A rock layer which has distinct characteristics (e.g. rock type, geologic age).

Fossil Fuel

A fuel source (such as oil, condensate, natural gas liquids, or coal) formed in the earth from plant or animal remains.

Heavy Oil

Crude oil with an API gravity less than 20 degrees.  Heavy oil generally does not flow easily due to its elevated viscosity.

Horizontal Drilling

A drilling technique whereby a well is progressively turned from vertical to horizontal so as to allow for greater exposure to an oil or natural gas reservoir.  Horizontal laterals can be more than a mile long.  In general, longer exposure lengths allow for more oil and natural gas to be recovered from a well and often can reduce the number of wells required to develop a field, thereby minimizing surface disturbance.  Horizontal drilling technology as been extensively used since the 1980s and is appropriate for many, but not all, developments.

Hydraulic Fracturing

Hydraulic fracturing (also referred to as frac’ing or fracking) is an essential completion technique in use since the 1940s that facilitates production of oil and natural gas trapped in low-permeability reservoir rocks.  The process involves pumping fluid at high pressure into the target formation, thereby creating small fractures in the rock that enable hydrocarbons to flow into the wellbore.

Hydraulic Fracturing Fluids

Mixture of water and proppant along with minor amounts of chemical additives used to hydraulically fracture low permeability formations.  Water and sand typically compromise 99.5% of the mixture.

Hydrocarbons

An organic compound containing only carbon and hydrogen and often occurring in nature as petroleum, natural gas, coal and bitumens or in refined products such as gasoline and jet fuel.

Improved Oil Recovery

Term used to describe methods employed to improve the flow of hydrocarbons from the reservoir to the wellbore or to recover more oil or natural gas.  Enhanced oil recovery would be one form of IOR.

Infill Wells

Wells drilled into the same reservoir as know producing wells so that oil or natural gas does not have to travel as far through the formation, thereby helping to improve or accelerate recovery.

Jack-up Rig

An offshore rig with retractable steel legs that are placed on the ocean floor to raise the rig above the water line.

Joint Operating Agreement

An agreement governing the rights and obligations of co-owners in a field or undeveloped acreage, which defines, amongst other things, how costs and revenues are to be shared among the parties and who is the operator.

Lease

A legal document executed between a mineral owner and a company or individual that conveys the right to explore for and develop hydrocarbons and/or other products for a specific period of time over a given area.

Liquefied Natural Gas

Natural gas that has been converted to a liquid by refrigerating it to -260 degrees Fahrenheit.  Liquefying natural gas reduces the fuel volume by 600 times, enabling it to be shipped economically from distant producing areas to markets.

Natural Gas

Naturally occurring hydrocarbon gases found in porous rock formations.  Its principal component is usually methane.  Non-hydrocarbon gases, such as carbon dioxide and hydrogen sulfide can sometimes be present in natural gas.

Natural Gas Liquids

A general term for highly volatile liquid products separated from natural gas in a gas processing plant.  NGLs include ethane, propane, butane, and condensate.

Net Acres

The percentage that a company owns in an acreage position with multiple owners.  For example, a company that has a 50% interest in a lease covering 10,000 acres owns 5,000 net acres.

Oil Sands

Geologic formation comprised predominately of sand grains and bitumen, a highly viscous form of crude oil.

Operator

The entity responsible for managing operations in a field or undeveloped acreage position.

Permeability

The permeability of a rock is the measure of the resistance to the flow of liquid through the rock.  High permeability means fluid passes through the rock easily.

Play

An areas in which hydrocarbon accumulations or prospects with similar characteristics occur, such as the Lower Tertiary plan in the deepwater Gulf of Mexico or the Marcellus play in the eastern United States.

Porosity

The measure of a rock’s ability to slow a fluid.  Porosity is normally expressed as a percentage of the total rock which is taken up by pore space.

Possible Reserves

Additional reserves that are less certain to be recovered than probable reserves,

Probably Reserves

Additional reserves that are less certain the be recovered than proven reserves, but which, together with proved reserves, are as likely as not to be recovered.

Produced Water

Water produced in connection with oil and natural gas exploration and development activities.

Productive Well

A well that is capable of producing hydrocarbons in sufficient quantities to justify commercial exploitation.

Proppant

Sand, or man-made, sand-sized particles pumped into a formation during a hydraulic fracturing treatment to keep fractures open so that oil and natural gas can flow through the fractures to the wellbore.

Proved Developed Reserves

Proved reserves that can be expected to be recovered through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well.

Proven Reserves

Proved oil and gas reserves are those quantities of oil and gas which, by analysis of geosciences and engineering date, can be estimated with reasonable certainty to be economically producible as defined by the US Securities and Exchange Commission regulations and the Millennium Exploration Policy for Reserves Estimation, Accounting and Reporting.

Recompletion

The process of entering an existing wellbore and performing work designed to establish production from a new zone.

Reserves

Estimated remaining quantities of oil and gas related substances anticipated to be economically producible, as of a given date, by application of development projects to know accumulations.  In addition, there must exist, or there must be a reasonable expectation that there will exist, the legal right to produce or a revenue interest in production, installed means of delivering oil and gas related substances to market and all permits and financing required to implement the project.

Reservoir

A porous and permeable underground formation containing a natural accumulation of producible il and/or gas that is confined by impermeable rock or water barriers and is individual and separate to other reservoirs.

Resources

Quantities of oil and gas estimated to exist in naturally occurring accumulations.  A portion of the resources may be estimated to be recoverable, and another portion may be considered to be unrecoverable.  Resources include both discovered and undiscovered accumulations.

Shale

A very fine-grained sedimentary rock that is formed by the consolidation of clay, mud, or silt and that usually has a finely stratified or laminated structure.  Certain shale formations, such as the Eagle Ford and the Barnett, contain large amounts of oil and natural gas.

Sour Gas

Sour gas is a natural gas or other gas containing significant amounts of hydrogen sulfide.

Spacing

The distance between wells producing from the same reservoir.  Spacing is often expressed in terms of acres and is often established by regulatory agencies.

Steam-Assisted Gravity Drainage

A process used to recover butimen that is too deep to mine.  A pair of horizontal wells is drilled from a central well pad.  In a plant nearby, steam generators heat water and transform it into steam.  The steam then travels through above-ground pipelines to the wells.  It enters the ground via the steam injection well and heats the bitumen to a temperature at which it can flow by gravity into the producing well.  The resulting bitumen and condensed steam emulsion is then piped from the producing well to the plant, where it is separated and treated.  The water is recycled for generating new steam.

Sweet Gas

Natural gas that contains little or no hydrogen sulfide.

Tight Gas

Natural gas produced from relatively impermeable rock.  Getting tight gas out usually required enhances technology applications like hydraulic fracturing.  The term is generally used for reservoirs other than shale.

Unconventional Reservoirs

Reservoirs with permeability so low (generals less than 0.1 millidarcy) that horizontal hydraulically fractured stimulated wells or other advanced completion techniques must be utilized to extract hydrocarbons at commercial rates.  Shale reservoirs such as the Eagle Ford and Barnett, as well as tight reservoirs like the Bakken and Three Fork, both are examples of unconventional reservoirs.

Undeveloped Acreage

Acreage on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of oil and gas regardless of whether or not the acreage contains proved reserves.

Unit

The joining interests in a reservoir or field to provide for development and operations without regard to separate properly interests.  Also, the area covered by a unitization agreement.

Waterflood

An improved oil recovery technique that involves injecting water into a producing reservoir to enhance movement of oil to producing wells.

Wellbore

The hole drilled by a drilling rig to explore for or developed oil and/or natural gas.  Also referred to as a well, or borehole.

Wet gas

Produced gas that contains natural gas liquids.

Working Interest

The right granted to the lessee of a property to explore for, produce and own oil, gas, or other minerals.  The working interest owners bear the exploration, development, and operating costs.