Glossary:
A
Anomaly
An irregularity in a pipe due to damage or a defect in the pipe. Also used to describe unusual supply and demand movements.
API Gravity
A scale indicating how heavy or light a petroleum liquid is compared to water.
Degrees API gravity = (141.5 divided by specific gravity) minus 131.5. The API gravity of water is 10.0. Less dense liquid fluids have API gravities greater than 10.0.
Associated Gas
Gas occurring in combination with crude oil, as distinct from gas occurring separately or manufactured from crude oil.
B
Backwardation
A market situation in which market prices are expected to be lower in future months than today. (Opposite of contango.)
Barrel
A volumetric unit of measure for crude oil and petroleum products, derived by the original use of spent whiskey barrels to hold oil in the 1800s. One barrel equals 42 U.S. gallons, equivalent to 158.978 litres. Abbreviation: bbl
Barrel-Mile
A unit of measurement of pipeline shipment of product that signifies one barrel moved one mile.
Barrel Per Calendar Day (bpcd)
The amount of oil refinery input that can be processed under usual operating conditions. The amount is expressed in terms of capacity during a 24-hour period averaged over an entire year. It incorporates typical rate reductions for planned maintenance and other normal operating activities.
Barrels Per Stream Day (bpsd)
The average number of oil barrels of oil refinery input processed within a 24-hour period.
Batch
A shipment of a single product that is handled through the pipeline without mixing with preceding or following shipments.
Biodiesel
A fuel made from vegetable oils, recycled restaurant oils or animal fat. The oil or fat is typically processed into a methyl ester. It is low in sulfur, biodegradable and is derived from renewable products that can be blended directly with diesel fuel in various concentrations.
Blowout
An uncontrolled flow of gas, oil or other fluids from a well into the surface. A well may blow out when pressure deep in the reservoir exceeds the weight of the column of drilling fluid inside the well hole.
Blowout Preventer
A special assembly of heavy-duty valves installed on top of a well that can be closed to prevent high-pressure oil or gas from escaping (a blowout) from the well hole during drilling operations.
Booster Station
A pump station used to increase the pressure of oil received through a main pipeline to transmit it to the next station or terminal.
Borehole
The hole in the earth made by the drill; the uncased drill hole from the surface to the bottom of the well.
Brent Blend
Brent blend is a sweet crude oil used as a benchmark in oil pricing for oil production from Europe, Africa and the Middle East flowing West. Brent crude is sourced from the U.K. North Sea.
Butanes
Low boiling point hydrocarbons used for gasoline vapor pressure control.
C
Cleaning Pig
A tool used to clean or scrape residue from the inner walls of a pipeline. Also called a utility pig. (See Smart Pig.)
Coking
A refining process for thermally converting and upgrading heavy residual into lighter products and petroleum coke.
Cold Zone
Area safe for necessary personnel.
Common Carrier
Any transportation system available for use by the public for transporting cargo; almost all interstate pipelines are common carriers.
Condensate
A term used to describe light liquid hydrocarbons separated from crude oil after production and sold separately.
Contango
A market situation in which market prices are expected to be higher in future months than today. (The opposite of backwardation.)
Crack Spreads
The dollar-per-barrel value of a product or group of products versus the crude cost. Crack spreads are used as a proxy to estimate the gross margin for processing a barrel of crude oil in a refinery.
Cracking
A refining process under which heavy molecular weight hydrocarbons are broken up into light hydrocarbon molecules by the application of heat and pressure, with or without the use of catalysts.
Crude Oil
A mineral oil consisting of a mixture of hydrocarbons of natural origin, yellow to black in color, of variable specific gravity and viscosity. The basic raw mineral pumped from the earth. There are many different grades of crude, each containing various vapors, liquids and solids. This crude is processed at a refinery into many petroleum products, including gasoline, diesel, asphalt and jet fuel.
D
Dealer
A generic term referring to a retail service station or convenience store operator usually affiliated with a brand identity or program. A dealer typically leases the facility from a refiner or jobber.
Delineation Drilling
Another way to evaluate a newly discovered reservoir, which involves placing a number of wells in various parts of a reservoir to learn its extent and characteristics.
Directional Drilling
The technique of drilling at an angle from the vertical by deflecting the drill bit. Directional wells are often drilled to reach an oil- or gas-bearing reservoir where drilling cannot be done, such as beneath a shipping lane in the ocean. Directional drilling is being used increasingly to intersect reservoirs at angles that exposes more of the rock to the wellbore and increases the amount of oil or gas that flows into the well.
Downstream
A segment of the oil industry. Term is used to refer to all petroleum activities from the processing of refining crude oil into petroleum products to the distribution, marketing and shipping of the products. The opposite of downstream is upstream.
Drill Cuttings
Chips and small fragments of drilled rock dislodged by the drill bit. Cuttings are brought to the surface by the flow of the drilling mud as it is circulated.
Drill Pipe
Heavy, thick-walled, hollow steel pipe used in rotary drilling to turn the drill bit and to provide a conduit for the drilling mud. It connects the rig surface equipment with the drill bit and bottomhole assembly.
Drilling Mud
A special mixture of clay, water or refined oil and chemical additives pumped downhole through the drill pipe and drill bit. The mud cools the rapidly rotating bit, lubricates the drill pipe as it turns in the well bore, carries rock cuttings to the surface, serves as a plaster to prevent the wall of the borehole from crumbling or collapsing and provides the weight or hydrostatic head to prevent extraneous fluids from entering the well bore and control downhole pressures that may be encountered.
Drilling Rig
The machine used to drill a wellbore. In onshore operations, the rig includes virtually everything except living quarters. Major components of the rig include the mud tanks, mud pumps, the derrick or mast, drawworks, the rotary table or topdrive, the drillstring, power generation equipment and auxiliary equipment. Offshore, the rig includes the same components but not those of the vessel or drilling platform itself. The rig is sometimes referred to as the "drilling package," particularly offshore.
Drill ship
A self-propelled floating offshore drilling unit that is a ship constructed to permit a well to be drilled from it. While not as stable as a semisubmersible, drill ships are capable of drilling exploratory wells in deep, remote waters. They may have a ship hull, a catamaran hull or a trimaran hull.
Dry Gas
Natural gas from the well that is free of liquid hydrocarbons; gas that has been treated to remove all liquids making it suitable for shipping in a pipeline.
Dry Hole
A well drilled to a certain depth without finding commercially exploitable hydrocarbons.
E
Exchange Contract
A contractual agreement with another product supplier whereby we deliver a product at a given point in a given quantity for a given period of time and we receive a like product at a given point in a reciprocal quantity for the same period of time. At times, the exchange is not valued equally and one party owes the other money as well.
Exploration
The process of searching for minerals, such as oil and gas, before development and production. Exploration activities include geophysical surveys, drilling to locate an oil or gas reservoir, and the drilling of additional wells after a discovery to determine the boundaries of an underground reservoir. It enables an oil or gas company to determine whether to proceed with development and production.
F
Feedstock
Inputs to refining or gasoline blending, other than crude oil, includes butanes, gas oil and natural gasoline.
Field
A geographical area in which one or more oil or gas wells produce. A single field may include several reservoirs separated either horizontally or vertically.
Fossil Fuel
Any naturally occurring fuel of an organic nature formed by the decomposition of plants or animals; includes coal, natural gas and petroleum.
Fuel Oils
Oil that is heavy-distilled in the refining process. Frequently used for supplying energy to power stations and factories.
G
Gas Oil
A medium-distilled oil from the refining process. Often used in diesel fuel. Heavier than distillate and lighter than heavy fuel oil or asphalt. Cracked into gasoline and distillate-range products.
Gathering Lines
A small diameter pipeline used in gathering crude oil from the oil field to a common point for further movement to a trunk line.
Gravity
Specific gravity. The ratio between equal volumes of water and another liquid, where the weight of the water is given a value of 1. The specific gravity of oil is given as API Gravity.
H
High Pressure Pipelines
Pipe systems that operate at 600 psi to 2,000 psi and higher.
Hot Zone
Area where hazardous vapors and liquids are present.
Hydrocarbons
A class of compounds containing hydrogen and carbon formed by the decomposition of plant and animal remains. These compounds include coal, oil, natural gas and other substances occurring in rocks.
Hydrotreater
The purpose of this unit is to reduce the sulfur and nitrogen contents of the feedstock and improve the combustion characteristics of the transportation fuels. In addition to sulfur and nitrogen removal, hydrotreating reduces the amount of aromatic hydrocarbons that can give jet kerosene a poor smoke point and diesel fuel a poor cetane number.
Hypermarketer
A term referring to large retail stores and/or supermarkets which have a gasoline offering in their parking lots, perhaps as a loss leader. Also referred to as "big box" retailers.
I
IMP Rule
Integrity Management Plan Rule. Nickname for a rule published by the United States Office of Pipeline Safety entitled "Pipeline Integrity Management in High Consequence Areas." The rule requires that the integrity of pipeline systems be managed through testing, maintenance and evaluations of releases, third-party damage and other relevant data.
Independent Marketer
A retail petroleum "seller" or wholesaler who is not involved in the refining of petroleum products and therefore must purchase their supply of petroleum products from a refiner or other supplier.
Interface
The mixture which occurs in normal pipeline operations between batches of petroleum products or crude having different specifications. Also called "slop" or "transmix."
J
Jackup Rig
A mobile bottom-supported offshore drilling structure with columnar or open-truss legs that support the deck and hull. When positioned over the drilling site, the bottoms of the legs rest on the seafloor. A jackup rig is towed or propelled to a location with its legs up. Once the legs are firmly positioned on the bottom, the deck and hull height are adjusted and leveled. Also called self-elevating drilling unit.
Jobber
A business person who does not carry out refining operations but who supplies wholesale products to gasoline stations or stores. A jobber sometimes owns the stations which they supply.
Jobber (Brand)
Customers who enter into a Product Supply Agreement with Marathon Petroleum in which Marathon agrees to supply, and the customer agrees to purchase Marathon Branded motor fuels at Marathon terminals for use in stations where Marathon has given permission to use its name and trademarks. The service stations may be owned/operated directly by the jobber, leased by the jobber to another operator, or owned/operated by some third party. These locations are called "jobber-dealers." The jobber typically arranges his own scheduling and transportation of product.
L
Lessee Dealer (Brand)
Individuals who lease one of Marathon Petroleum's company-owned service stations in Ohio, Michigan, Indiana or Illinois. Each lessee dealer is an independent businessman, making decisions concerning the day-to-day operations of the station, including street pricing.
Light Products
The group of petroleum products with lower boiling temperatures, including gasoline and distillate fuels.
Line Section
A continuous run of pipe between locations.
Liquefied Natural Gas (LNG)
Natural gas liquefied either by refrigeration or by pressure.
Liquefied Petroleum Gas (LPG)
A mixture of butane, propane and other light hydrocarbons derived from refining crude oil. At normal temperature it is a gas but can be cooled or subjected to pressure to facilitate storage and transportation.
M
Manifold
An arrangement of piping valves to provide interconnecting links between a number of pumps, tanks and lines at a pump station.
MTBE
Methyl Tertiary Butyl Ether. An octane booster and oxygenate used for gasoline blending.
N
Natural Gas
Petroleum in gaseous form consisting of light hydrocarbons often found in association with oil. Methane is the most dominant component.
Natural Gasoline
Gasoline boiling range material co-produced with natural gas. Used for refinery feedstock and gasoline blending.
Net Present Value (NPV)
A sophisticated capital budgeting technique; found by subtracting a project's initial investment from the present value of the cash inflows discounted at a rate equal to the firm's cost of capital.
O
Octane Number
A rating that is the average of the motor octane and research octane of a fuel sample. It is used to indicate gasoline's anti-knock performance in motor vehicle engines. The higher the octane number, the higher the resistance to engine knock.
Operator
Term used to describe a company appointed by venture stakeholders to take primary responsibility for day-to-day operations for a specific plant or activity.
Outer Continental Shelf (OCS)
All submerged lands seaward and outside the area of United States lands beneath navigable waters. Lands beneath navigable waters are interpreted as extending from the coastline three nautical miles into the Atlantic Ocean, the Pacific Ocean, the Arctic Ocean and the Gulf of Mexico (excluding the coastal waters off Texas and western Florida).
Oxygenate
Oxygen-containing blend stocks favored for their octane and their clean burning quality. Includes MTBE and ethanol.
P
PADD
Petroleum Allocation for Defense District. A group of five geographic areas in the United States used in reference to petroleum distribution. Created in 1950 by the Petroleum Administration for Defense, these districts were originally defined during World War II for purposes of administering oil allocation.
Petrochemicals
Chemicals such as ethylene, propylene and benzene that are derived from petroleum.
Petroleum
A term applied to crude oil and oil products in all forms.
Pipeline System
All parts of the physical facilities through which commodities move, including line pipe, valves, pumping units, metering stations and tankage.
Polymerization
Refining process that uses low-temperature reforming to increase the octane value of gasoline.
Products
Refined substances made from crude oil: gasoline, fuel oil, butane and a host of various other petroleum products.
Products Terminal
A facility used primarily for the storage and/or marketing of petroleum products that would generally have a total bulk storage capacity of 50,000 barrels or more. It typically receives petroleum products by tanker, barge or pipeline and serves as a loading facility for trucks to transport products to stores, stations and smaller bulk distribution plants.
Proration
Also known as an allocation. A temporary limit on the amount of product customers can purchase at the terminal, usually based on contracts and used to protect inventories in time of shortage. May also refer to a limit on the amount of product that can be shipped on a pipeline during a specific period of time by a supplier.
PSI
Pounds per square inch. Common measure of pressure.
Pump Price
The self-serve price, including taxes, posted for either gasoline or diesel fuel at a station or store.
R
Rack
Refers to the loading area or point of sale from which trucks pick up products at a terminal to transport to other destinations.
Rack Pricing
Price to branded and unbranded customers for purchases of petroleum products at the terminal, typically with the customer arranging for and paying for transportation.
RBOB
Acronym for reformulated blendstocks for oxygen blending. RBOB combined with MTBE at some refineries makes what we call RFM (reformulated gasoline with MTBE). RBOB combined with ethanol at some terminals makes what we call RFE (reformulated gasoline with ethanol).
Refiner's Margin
Typically, the difference between the spot price of a light product, such as gasoline, and the price of crude oil.
Refining
The process of converting crude oil into usable fuel products.
Refining Margins
The difference in value between the products produced by a refinery and the value of the crude oil used to produce them. Refining margins will vary from refinery to refinery and depend on the price and characteristics of the crude used.
Reforming
Refinery process aimed at improving gasoline quality by changing chemical characteristics rather than breaking up molecules, as in cracking.
Reid Vapor Pressure (RVP)
This is the vapor pressure of gasoline under a closed vessel at 100 degrees Fahrenheit. Summer months require a lower RVP so that gasoline does not evaporate before it can combust in a gasoline engine. Winter months require a higher RVP so that gasoline does not vapor lock before it can combust in a gasoline engine.
Resale
The simultaneous purchase and sale of products or crude oil to improve profitability by capturing timing, location and/or grade differentials.
Reserves
Reserves consist of oil and gas in the reservoir considered producible under existing economic and operating conditions. Proved reserves include those now developed (P1) and not yet developed (P2). Reserves where technical uncertainties prevent their classification as proved are designated probable (P3) or possible (P4) reserves, depending upon likelihood of eventual production. Oil and gas currently not producible because of economic, political, environmental or technical conditions are considered contingent resources. As is true of reserves, contingent resources are classified as proved (P5), probable (P6), or possible (P7).
Reserves in Place
The amount of oil or gas physically contained in a reservoir; a place (usually totally underground) where oil or natural gas has collected naturally over millions of years. The "proved reserves" may only be 15 to 35 percent of the "reserves in place."
Retail Margin
The difference between the cost to acquire product at wholesale and the selling price of the product at street locations (store or station), exclusive of taxes.
Return On Capital Employed (ROCE)
ROCE is a measure of how productively a company manages its capital. It is the ratio of profit before interest and tax divided by the difference between total assets and current liabilities.
Right-Of-Way
A strip of land, usually from 50- to 80-feet wide, on which permission has been granted by landowners for the construction and/or maintenance of a pipeline.
ROCE
See Return On Capital Employed.
RVP
See Reid Vapor Pressure.
S
Sellers (Brand)
Own their single-site location, but use Marathon's capital investment dollars and the business consulting services of its marketing representatives. Like the Lessee Dealer, each Seller is an independent businessman, making their own day-to-day operating decisions. They operate in Ohio, Michigan, Indiana or Illinois.
Semisubmersible Rig
A floating offshore drilling unit that has pontoons and columns that when flooded cause the unit to submerge in the water to a predetermined depth. Living quarters, storage space, and so forth a reassembled on the deck. Semisubmersible rigs are either self-propelled or towed to a drilling site and either anchored or dynamically positioned over the site, or both. In shallow water, some semisubmersibles can be ballasted to rest on the seabed. Semisubmersibles are more stable than drill ships and ship-shaped barges and are used extensively to drill wildcat wells in rough waters such as the North Sea. Two types of semisubmersible rigs are the bottle-type semisubmersible and the column-stabilized semisubmersible.
Smart Pig
An internal inspection tool used in the pipeline industry to detect anomalies or irregularities on the inner walls of a pipeline.
SMYS
Specified minimum yield strength. Identifies the mill property of a pipe showing its strength.
Sour/Sweet Crude
Designation that describes the degree of a given crude's sulfur content. Sour refers to high sulfur and sweet to low sulfur.
Specific Gravity
The ratio of a liquid's density compared to water. A liquid with a specific gravity less than one is less dense than water.
Spot Price
The price for a one-time open market transaction for immediate delivery of a specific quantity of product at a specific location where the commodity is purchased "on the spot" at current market rates.
Subsea Well Completions
Subsea completions can range from a single well to multiple wells, drilled through large grid-like templates set on the sea floor. Production is tied back via flowlines to existing facilities, such as platforms, for processing, storage and transportation of oil and gas.
T
Tank Farm
A group of tanks connected to a pipeline through which oil is moved.
Throughput
A volumetric rate measuring the flow of crude or products through a system over time. It describes the total amount of raw materials processed by a refinery or other plant at given period.
Trunk Line
A main pipeline.
Turnaround
Period during which equipment is shut down for mechanical inspection and/or mechanical maintenance.
U
Upstream
The segment of the oil industry involved in the exploration and/or production of crude oil. The processes of exploring for oil, developing oil fields and producing oil from the fields. The opposite of upstream is downstream.
V
Volatile Organic Compounds (VOC)
VOC is most-commonly used when describing the summer gasoline season. This is the time of year when the United States Clean Air Act of 1990 requires reduced VOC emissions in gasoline in order to maintain air quality.
VRU
Vapor recovery unit. A VRU captures vapors from empty transport trucks that are pushed out the truck tank during the loading process. Some units actually recover the vapors, convert them to liquid state through various means and return the product to a tank within the terminal tank farm. Other units called vapor combustors burn the vapors in a flare.
W
Well
A hole drilled or bored into the earth, usually cased with metal pipe, for the production of gas or oil. A hole for injection under pressure of water or gas into a subsurface rock formation.
Well Completions
A generic term used to describe the assembly of downhole tubulars and equipment required to enable safe and efficient production from an oil or gas well. In completing a well, sections of steel pipe called casing are installed within the wellbore to prevent the wellbore from caving in. It keeps foreign matter out of the well and provides a solid basis for controlling well fluids. Cement is then pumped around the casing to secure it and serve as a shield for the wellbore and well fluids. Passageways for the oil and gas to enter the wellbore are perforated. A final string of pipe called production tubing is placed down the well.
West Texas Intermediate (WTI)
Refers to West Texas Intermediate crude oil. WTI is a type of sweet crude oil used as a benchmark in oil pricing and the underlying commodity of New York Mercantile Exchange's oil futures. The WTI spot price of crude is reported from Cushing, Oklahoma.
Workover
Operation on a shut-in or producing well to restore or increase its production.
WTI
See West Texas Intermediate.
