Glossary

Since the performance in global projects is about communication to co-ordinate global and local initiatives, it appeared imperative to create this glossary.

You will find words related to technology as well as commercial and contractual terms.

For each word you will find a definition as short and simple as possible and comments to make the best use of it.

With new technologies and new practices, new words or new understandings to come up at any time, feel free to comment. We expect to handle this section as a permanent  interactive learning session.

Many thanks in advance for your contribution

Depletion : Definition: Depletion refers to the decline of production of an oil or gas field. Depletion may also be used for accounting in a similar way as depreciation to allow an owner or operator to account for the reduction of a product\'s reserves. For tax purposes, there are two types of depletion; cost depletion and percentage depletion. Comments: The principle of the depletion was described by the Hubbert peak theory which was developed to make oil and gas production forecast based on previous production performances. The Hubbert peak theory came to the conclusion that the production curves of non-renewing resources approximate a bell curve. It means that as soon as the production has reached a peak, the decline will follow an exponential curve. The depletion may be related to different entities; a well, an oil and gas field, or the global oil and gas production. Well depletion A single well will typically decline according to a bell curve where it begins with a rapid drop that will slow down until full depletion. At this stage the wells are called marginal or stripper. This natural depletion of the well may be influenced by different technologies called enhanced oil recovery (EOR). EOR may use water or gas injection, chemical injection either to restore the pressure in the reservoir, either to facilitate the free flow of the oil and gas and increase the recovery rate. Oil and gas field depletion An oil and gas field is an aggregate of wells and these wells are normally deployed by the operating company along a field development plan which cover years if not decades. It means that new wells will enter in production while the first ones are maturing and then declining. From the field perspective the operator will schedule the new wells to compensate the old ones so that the field production will reach a plateau as fast as possible and sustain this plateau as long as possible. The level of this plateau is defined on upstream side by the size and capacity of the field and on the downstream side by the potential oil and gas treatment capacities required for that field. Then when all the possible wells will have been drilled the overall production of the field will start to drop from the plateau and decline. For the oil field the decline of the whole field is usually slower than a single well as it is unlikely that all aging wells should decline in the same time. For a natural gas field the decline will be close to the same as a well since the overall pressure drop in the reservoir will affect all the wells. The EOR technologies can also contribute to slow down the depletion process. Global field depletion On the last century the oil and gas production was issued from the fields easier to explore and cheaper to produce. Most of these fields such as in the North Sea are now maturing and depleting. In parallel the global energy consumption was fast increasing until the years 2000s to since stabilize because of the too high raw materials prices or economical recessions. The high energy prices has facilitated the development of new technologies to explore and produce resources that were considered so far as unaffordable such as tar sand, deep offshore, pre-salt, shale gas, shale oil or arctic fields. As a result of theses economical and technology evolutions, the new fields are balancing the production of the depleting ones so that the world production is currently running along a plateau more than following the famous peak oil theory. This peak oil theory is to replicate to the global oil and gas production the same bell curve as developed in the Hubbert peak theory for a single well. Another consequence of the economical and technology changes is to revise continuously the volume of proven reserves. These technological challenges to develop new fields in extreme conditions have a cost. In 2008, the International Energy Agency (IEA) which represent the consumers countries had estimated it to $ 360 billion per year the amount of capital expenditure to be invested in new fields in order to compensate the depletion of the old oil and gas fields.
Dichloroethane : Definition: the Dichloroethane is also called EDC as the acronym for Ethylene DiChloride, the common name given to the 1,2 Dichloroethane. As derivated from Ethylene it belongs to the first Olefin family. EDC is mostly produced by catalyzed reaction of the Ethylene and Chloride. Comments: EDC is a colorless liquid with a mild odor. It is toxic and extremely flammable. EDC is a good organic solvent but slightly soluble in water. About 95% of the EDC production is converted to Vinyl Chloride Monomer (VCM) for PVC production. Some is used as an organic solvent, as a fumigant, and in the chemical synthesis of various products.
Downstream : Definition: Downstream covers all the chain of transformations of the oil or gas after the transportation (Midstream). It begins with the refining and it continues with all the cracking operations of the petrochemical industry to produce all the chain of chemical products (Ethylene, Polyethylene, Propylene, Polypropylene, etc...) Comments: By comparison with the Upstream (Exploration & Production) and Midstream (Transportation), the Downstream activities require as many processes as many chemical products. Most of the time these processes refer to multiple licenses owned by different companies. The consequence is to make the Downstream projects much more complex because of the number of players to be involved. That is the reason why these projects are therefore called Petrochemical complex. If the Upstream investments are always moving ahead toward more and more extreme and remote locations, the \" Downstream\" market is all upside down where Europe is suffering from over capacity and very low profitability, while Middle East and Asia are investing heavily either to reduce their dependency to the barrel prices fluctuation, either to meet the demand from the emerging countries in benefiting from the low costs of the feed stock. Even in USA, the \"Downstream\" activity is turning up again to align refineries on coming environmental standards and in the chemical industry to enjoy the cheapness and sustainability of the shale gas. So depending where you stand the vision of the Downstream market may look very dark or very bright. But with China being in continuous trading deficit of petrochemical products until 2030 at least, the \"Downstream\" market should stay on high levels of capital expenditures.
Drilling charter : Definition: Drilling charter refers to the decision of an operator to lease or hire the drilling rigs instead of using its own ones. The service company renting its drilling rig to an operator is called the charterer. Comments: In the past each operating company used to have their own drilling rig for oil and gas onshore and offshore fields. The main reason was that this ownership of the drilling rig was giving the guaranty to the operating company to perform drilling campaign at any time. But the development of the exploration in more and more demanding environment such as deep or ultra deep offshore, complex reservoirs, arctic or harsh environment, have required drilling rigs to increase in size, operating capabilities and therefore in costs. In addition the drilling technologies have evolved to meet new safety and environmental requirements and use more and more sophisticated equipment calling for dedicated well trained and skilled crews. Then the costs have escalated together with the risks meaning that a field will request numerous drilling and testing operations before confirming the proven reserves of the oil or gas reservoir. Even if the exploration goes fine according to plan, the drilling operations will take a limited period of time, normally measured in months while the production phase will be calculated on years basis or even decades. In practice it means that the drilling rigs become more and more specialized to well pre-defined operating conditions which can be profitable if used in most optimized conditions fitting with the drilling rigs performances. In this context it appeared year after year more and more difficult for the major companies to own and operate their own drilling rigs which may represent a large asset in their balance sheet with poor return on capital employed (ROCE). For all these reasons, service companies or charterers have taken the risks to build and operate these drilling rigs to hire them to the operating companies This contractual agreement between the operating companies and the services companies is called drilling charter contract. The operating company commits to lease the drilling rig during a minimum period of time regardless of the results of the drilling operations The service company or charterers commits to provide the operator on time and at the requested location with a drilling rig which has the capabilities to drill in required conditions. Then it is up to the service company to decide to build a new drilling rig unit (new-built) or to convert an existing vessel or platform into a drilling rig (converted rig). The drilling charter contract is signed on a daily rate basis to be payed by the operating company to the charterer. This daily rate is also used to establish additional compensation to be paid by one of the party to the other in case of earlier termination or extension of the drilling charter contract and potential penalties or consequential damages if any. Depending on the size and the local operating conditions this drilling charter contract daily rate may fluctuate broadly between $130,000 to $800,000 per day. These drilling charters apply in the same way regardless if the drilling rig is a drillship, a semi-submersible platform or a jack-up.
Drillship : Definition: Drillship are ships designed to drill. Comments: These drillships are specially designed to perform drilling operations in deep-sea locations. A typical drillship will have, in addition to all of the equipment normally found on a large ocean ship, a drilling platform and derrick located on the middle of its deck. In addition, drillships contain a hole (or \'moonpool\'), extending right through the ship down through the hull, which allows for the drill string to extend through the boat down into the water. Drillships are often used to drill in very deep water, which can often be turbulent. Drillships use what is known as dynamic positioning systems. Drillships are equipped with electric motors on the underside of the ship’s hull, capable of propelling the ship in any direction. These motors are integrated into the ship’s computer system, which uses satellite positioning technology, in conjunction with sensors located on the drilling template, to ensure that the ship is directly above the drill site at all times. The use of drillships will be especially preferred on Semisubmersible drilling rigs in Arctic conditions where the vessels may have to leave the drilling position in emergency because of the icebergs. They are also used when the drilling position may change often as the vessel is self sufficient for transportation, it does not need any towing support.