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

Farm-in-Agreement : Definition: Farm-in-Agreement is a contract signed between two companies, the Farmor and the Farmee, where the Farmor is the owner of the acreage and the Farmee is willing to perform the drilling and exploration in the acreage of the Farmor. The Farm-in-Agreement is very similar to the Farm-out-Agreement in the way that in both cases it involves a Farmor and a Farmee, but it is different by the context of applications and the goals of the respective parties. Comments on Farm-in-Agreement The two companies, the Farmor and the Farmee, may come to sign a Farm-in-Agreement in the specific context where both want to share costs and risks of drilling to increase capital expenditure in expecting higher gain in return. This situation usually happens when the owner of the acreage, the Farmor, discovers after few drilling and testing operations that the oil or gas field licensed in the acreage may contain more reserves than expected or will require more technologies. Thus the Farmor may take years to come to production and get the pay back of its capital expenditure. In this context, the added value of the Farmee is to provide cash and technology to speed up the oil and gas field development. The joint operation of the Farmor and the Farmee is expecte to leverage capital expenditure for both parties. A successful implementation of a Farm-in-Agreement is based on the two or three steps approach where the Farmor, who has the best expertise of the oil and gas field at the early stage of the development, remains the operator while the Farmee will provide support. Then the Farmee takes over the operations in respect with the technologies and resources that he mobilized to enhance exploration and production. Such Farm-in-Agreement may also be used when the rumor about the higher than expected reserves of the oil and gas fields start to spread around and to attract major companies willing to be part of it. These major companies will therefore offer a premium on the value of the acreage to take that role of Farmee and offering the opportunity to the Farmor to reduce risks and to boost its return on capital expenditure. Comments on Farm-out-Agreement Two companies, the Farmor and the Farmee will sign a Farming-out-Agreement in the specific context where the Farmor who owns the acreage appears to be unable to develop its oil and gas field either in the given time left by the expiring license, either due to budgetary constraints, either because of its lack of resources and know-how. In this context, the acreage owner may risk to lose his license and all the benefits of previous capital expenditures. The interest of this owner is then to look for another company to take the lead of the drilling operations. The acreage owner becomes the Farmor and the drilling company the Farmee. To reward the Farmee, the Farmor will accept a reduced acreage position in sharing interests but he will reduce or eliminate risk and improve financial performances as a percentage of capital expenditure.
Feasibility study : Definition: The Feasibility study is the first stage of a project during which the End User generally supported by an engineering company will investigate the most convenient technologies or processes to be used. This Feasibility study will also integrate all the corresponding costs aspects. The conclusions of the Feasibility study are barely a straight forward recommendation of go or no go but more a pragmatic list of conditions which can influence positively or negatively the execution of the project and to make it profitable over the years. Comment: The Feasibility study may also be called Pre-FEED. Normally, different scenarios of capacity are also considered during this stage in order to estimate the optimal financial performances in respect with the costs of the license, the construction costs and the local constraints which may be related to the site, the feeding resources, the market, the environment, etc… That is why we see many projects changing size or configuration during the execution phases following this Feasibility study.
FEED : Definition: This acronym FEED stands for the Front End Engineering and Design of a project. The FEED may also be called Basic Design or even Basic. This phase follows the Feasibility Study to describe in more details the different technical and financial options considered during the feasibility study. The FEED will define the process, the plot plan, the long lead items, most of the key requirements, and the preliminary vendors list. For the large projects involving multiple production units, it will also prepare the break-down of the different packages to be posted for bid to the engineering companies and contractors at the execution phase. Comment: The FEED is critical for all parties: - For the end users, it will condition the profitability of the project and how much flawless will be the future construction in the anticipating potential risks. - For the Engineering companies, it is crucial to impose their processes or licenses. In some cases, the engineering companies performing the FEED are not involved in the next phase of the execution, in some cases they are depending on the End User’s policy and on their own engineering companies’ strategy. Their respective decision must be made at the early days of the project announcement. - For the suppliers, the “FEED” is strategic to get qualified, to promote their solutions in the process and technical requirements and position themselves in the vendors’ lists.
Fertilizer : Definition: Fertilizer is any natural or manufactured plant nutrient that contains at least 5% of one or more of the three primary nutrients - nitrogen (N), phosphorous (P), or potassium (K) Industrially manufactured fertilizers are sometimes referred to as mineral fertilizers. Comments: There are several sources of fertilizers. The two most important are organic manure and mineral fertilizers. When manure and crop residues are used, mineral fertilizers supply the outstanding nutrient balance needed for good crop yields. In most parts of the world, the balance to be supplied by mineral fertilizers is substantial. Fertilizer production entails gathering raw materials from nature; treating them in order to purify them or increase their concentration; converting them into plant-available forms; and often combining them into products that contain more than one nutrient. The main sources of manufactured fertilizers are Nitrogen, Phosphate, Potash and Sulfur. Nitrogen 78% of the earth\'s atmosphere is nitrogen. However, the nitrogen we breathe is in a chemically inert form that plants (except legumes) cannot use. Large amounts of energy are required to convert this nitrogen to a form that can be used by plants. The production of ammonia from atmospheric nitrogen was made possible in the first part of the 20th century by the development of the Haber-Bosch process. It remains the only chemical breakthrough recognized by Nobel prices for chemistry, awarded to Fritz Haber in 1918 and Carl Bosch in 1931. The most important nitrogen-based fertilizers are urea and ammonium nitrate (ammonia) Phosphate Phosphorus, in the form of phosphate (a salt of phosphoric acid) is mined from naturally occurring mineral deposits (phosphate rock) that were once sediments at the bottom of ancient seas. Rock phosphate is the raw material used in the manufacture of most commercial phosphate fertilizers. Ground rock phosphate was ounce applied directly to acid soils. However, due to low availability of phosphorous, high transport costs, and low crop responses, very little rock phosphate is currently used in agriculture. Phosphate rock processing consists in the separation of phosphate from the mix of sand, clay and phosphate that makes up the matrix layer. Potash The potassium used in fertilizers is found in a salt form called potash. Potash deposits occur in beds of sediment derived from evaporated sea water. The largest deposit, in Saskatchewan, Canada is 2.7 to 23.5 meters (9 to 77.6 feet) thick and found at depths of 1000 to 10, 000 meters (3,200 to 10,000 feet). Mining methods are used to extract potash at greater depths. Conventional underground dry-shaft mining methods are used in mines as great as 1100 meters (3500 feet.). The ore is extracted from potash deposits by electrically operated mining machines and conveyed to the surface, where it is crushed. Using a flotation process, salt and clay particles are removed, the brine solution is dried, and the potash is sized by screening. The resultant coarse grade product is then ready for distribution. Fine particles remaining from the screening process are compacted into sheets that are crushed and screened to particle sizes suitable for blending. Sulphur Most of the sulphur used by the fertilizer industry is a by-product of other petrochemical processes. Natural gas treatment is one of the main source of sulfur production. All the following downstream operations will also require de-sulfurization units that will produce sulfur as a waste. Oil cracking in the refinery produces also more and more sulfur with the implementation of the new environmental standards requested to use low sulfur gasoline or diesel. The fertilizer industry helps ensure that farmers have the nutrients they need to grow enough crops to meet the world\'s requirements for food, feed, fibre and energy. The nutrients supplied by the industry supplement on-farm sources of nutrients such as manure and legumes. Nutrients in manufactured fertilizers are in forms that can be absorbed by plants. All of these nutrients exist in nature, but the quantities are not sufficient to meet the needs of our growing, urbanized population. The fertilizers may be mineral or organic, sourced from nitrogen, potash, phosphate or sulfur, they need at a certain point of transformation the support of chemical processes for optimal use.
FID : Definition: FID is in the Oil & Gas and Petrochemical industry the acronym of Final Investment Decision. Comments FID must not be confused with FEED which is another acronym commonly used also in the Oil & Gas and Petrochemical industry and stands for Front End Engineering and Design. Anyway both are in close connection since the FEED prepares the FID. The FEED tends to happen at the first half of a project, between the forefront conceptual study or feasibility study and the FID to trigger the project execution usually called engineering, procurement and construction (EPC) phase. The investment decision is part of the Capital Investment Decision (CID) as part of the long term corporate finance decisions based on key criteria to manage company\'s assets and capital structure. The Oil & Gas and Petrochemical companies use to evaluate permanently a large broad band of projects in term of: - Return on capital employed - Risks, which is an important factor in the Oil & Gas and Petrochemical industry - Financing structure - Synergies between upstream and downstream in respect with company\'s strategy in this area and access to resources. The evaluation of these criteria, and thus the investment decision, will start with the feasibility study or conceptual study. If the feasibility study is rated positive, the evaluation will continue by the FEED. Normally a FEED is delivering positive conclusions, it is very rare that a FEED leads to negative conclusions. Anyway a positive evaluation in conclusion of the FEED does not means that the FID will come systematically because all the projects of the company are ranked according to the criteria above and only the best projects of the list may go one. Many Oil & Gas and Petrochemical projects may be highly profitable but the risk level might be also high, therefore these projects may have hard to move forward to FID until a local drastic change allows to damp the risks. Then the Capital Investment Decision (CID) is based on: - Investment decision - Financing decision - Dividend decision In practice it means that the FID will be made only when the company has completed the financing and defined its dividend strategy for the year to come. Since the FID is attached to the financing which may have an impact on the debts level of the company and to the dividend, the FID will be made by the Board of the company based on the proposal of the Executive Committee. The FID may be postponed until the Board and the Executive Committee are aligned. This point takes a particular importance in large project driven by a joint venture between two or more partners. The joint venture may have its own Executive Committee, while decisions are made the Board of the different partners. The company named as operator leads the Executive Committee of the joint venture, while the Boards remained attached to the individual partners. When made, the FID triggers the project execution and in practice the EPC phase. If the FID may have met some delays for whatever reasons, the EPC is always expected to be completed in the shortest lead time to production and commercial operations.
Flaring : Definition: Flaring refers to the operation of sending to the flare for the atmospheric combustion the gases and sometimes the liquids which could not be processed in the cycle of production. Comments: Flaring takes part of all the oil & gas and petrochemical processes, upstream and downstream, in order to control over-pressures which may come from wells, valves, compressors or any source within the pumping or transformation operations. Whenever industrial plant equipment items are over-pressured, the pressure relief valves provided as essential safety devices on the equipment automatically release gases and sometimes liquids. Those pressure relief valves are required by industrial design codes and standards as well as by law. The released gases and liquids are routed through large piping systems called flare headers to a vertical elevated flare. The released gases are burned as they exit the flare stacks. The size and brightness of the resulting flame depends upon the flammable material\'s flow rate in terms of joules or BTU per hour. Most industrial plant flares have a vapor-liquid separator (also known as a knockout drum) upstream of the flare to remove any large amounts of liquid that may accompany the relieved gases. In order to keep the flare system functional, a small amount of gas is continuously burned, like a pilot light, so that the system is always ready for its primary purpose as an over-pressure safety system. On the upstream activities it is mainly used to burn the associated gas when this gas cannot be collected or marketized. On the downstream processes it is more used as a safety device to regulate the whole refinery or petrochemical complex. In both cases, flaring has a strong impact on the environment in producing massive CO² emissions. In addition flaring is reflecting the inefficiency of the whole process. Therefore all the operating companies are investing capital expenditure for gas flare recovery on existing facilities and to design the greenfield plants to minimize flaring, reduce their carbon footprint and improve overall performances.
FPSO : Definition: FPSO is the acronym of Floating Production Storage and Offloading. A FPSO unit is a floating vessel used in the oil and gas industry to treat the oil and gas and condensates offshore before their transportation to the land by pipeline or shuttle vessels. Comments: The FPSO is a multi-functions vessel for the processing of the oil and gas and condensates and storage before being offloaded to transportation vessels or into pipelines to the shore. FPSOs are preferred in frontier offshore regions or in deep offshore fields as they are easy to install, and do not require a local pipeline infrastructure to export oil There are two types of FPSO: - Converted tanker made of the conversion of an oil tanker - Purpose-built FPSO or new-built FPSO designed and constructed to fit with the requirements of the oil and gas field from process perspective as well as from the geographical offshore constraints. Usually for the small fields the converted oil taker offer a cheaper and quicker solution, while giant offshore fields like Total Pazflor or Girassol, require dedicated built on purpose FPSO. Compared with classical offshore platforms, the FPSO can support more weight for processing capabilities and storage. A vessel used only to store oil (without processing it) is referred to as a floating storage and offloading vessel (FSO). Originally, these FSO were used in addition to the offshore platforms to store the oil and gas processed on the platforms. With the FPSO, all the functions have been transferred from the platforms to the vessels with significant reduction of the capital expenditure.
FSO : Definition: FSO is the acronym of Floating Storage and Offloading used to describe the offshore operation between the oil and gas processing and the export to the shore by pipeline or shuttle tankers. Comments: Originally, all the offshore platforms used to sit on the seabed, but as exploration and production moved to deeper waters and more distant locations in the 1970s, floating production systems were developed. These floating units are preferred in frontier offshore regions as they are easy to install, and do not require a local pipeline infrastructure to export oil or gas. This can provide an economically attractive solution for smaller oil fields which can be exhausted in a few years and do not justify the expense of installing a pipeline. Furthermore, once the field is depleted, the FSO can be moved to a new location. In the early days, the FSO were easy to produce from decommissioned oil tankers. They were stripped down and tuned to the specific needs of the oil, gas or condensates to be stored and offloaded. Then they were connected to a permanent mooring point. Today, there are two main types of FSOs, those built as converted tanker, and those that are purpose-built The FSO design will depend on the area of operation. In benign waters the FSO may have a simple box shape or it may be a converted tanker. By definition a FSO has no production capabilities, os it cannot be used alone, but it needs to be integrated in a more complex floating production system where near by offshore platform are drilling and processing the oil and gas. The decision to split the production units from the storage and offloading facilities may be due to the large size of the equipment or the complexity of the process that prevent them to be installed on the same floating unit.
Future of Manufacturing : Definition Future of Manufacturing refers to all the technologies such as industrial digitalization or internet of the things (IoT) to interconnect all the industrial processes required to design, produce and deliver goods, equipment or entire systems to a client in mobilizing optimized resources wherever they could be located and regardless where they stand in the supply chain. Comments Supported by developed countries to relocated home industrial activities, the Future of Manufacturing concepts are being developed under different names: – Creative Economy in South Korea - Future of Manufacturing in UK - Industrie 4.0 in Germany - Industrie (or Usine) du Futur in France - Industry Renaissance in USA - Smart Automation in China All entities that may be involved at design, planning, production, delivery or services will be able to run in parallel and to interact together online through collaborative platforms in order to save time and costs while exceeding client expectations in term of performances, price and delivery time. Future of Manufacturing technologies were originally developed by the discret industry such as automotive but is now expanding in other sectors such as aerospace and process industries such as Oil & Gas and Petrochemical. These technologies are based on Cyber Physical Systems (CPS) principles developed for industrial digitalization and related big data environment by the mean of internet of the things (IoT) technologies.