Access Access is a system under which market players are allowed to use capacity in a pipeline, network, gas store or other gas facility. Access is central to the implementation of gas market liberalisation and contrasts, therefore, with the traditional model where the owners of transportation systems, stores etc own all the gas flowing through their equipment and act as exclusive merchants for it. See also Common Carriage, Limited Access, Negotiated Access, Third Party Access.
Acid Gas Acid Gas is Natural Gas containing a proportion of gases such as Carbon Dioxide or Hydrogen Sulphide which, when combined with moisture, form acidic compounds.
Advance Make Good Alternative name for Carry Forward.
Annual Contract Quantity The Annual Contract Quantity (ACQ) is the volume of gas which the Seller must deliver and the Buyer must take in a given contract year. It may be expressed as a discreet number or as a multiple of the Daily Contract Quantity. In practice, many contracts are written in forms which allow the Buyer to take considerably below the stated ACQ. See also Downward Quantity Tolerance.
Annual Delivery Programme The Annual Delivery Programme (ADP) is a schedule of gas volumes to be delivered on certain dates or within certain periods in a forthcoming contract year in a long term contract. In practice this will often take the form of a detailed schedule covering the first few months, with looser numbers for the remainder of the year which are then firmed up at times laid down in the contract.
Aquifer An Aquifer is a body of porous rock saturated with water. Gas fields are usually underlain by an aquifer which often provides pressure known as Water Drive to assist gas production. Underground storage of gas can be achieved by pumping gas down into aquifers below impermeable cap rocks thus effectively making a gas reservoir. See also Reservoir, Underground Storage.
Associated Gas Associated Gas is gas which coexists with oil in a predominantly oil field. It may be Cap Gas or Solution Gas, the behaviour and treatment of which are different. Associated gas will normally be sold as “sellers’ nomination” gas, i.e. the seller nominates the volumes of gas available. In traditional gas markets such gas would command a lower price than Non Associated Gas.
Autogeneration Autogeneration is the generation of electricity by an industrial concern primarily to meet the needs of its own operations See also Combined Heat and Power.
Backhauling Backhauling is the transportation of gas apparently in the reverse direction to the main flow of the pipeline. This is usually achieved by swap arrangements rather than by physical movements. Also known as Reverse Flow.
Balancing Agreement Balancing Agreements are used to define procedures for the use of capacity in pipelines or production from a gas field:
1) Pipelines: A balancing agreement for a pipeline is an agreement between a pipeline owner and other users of the pipeline on the procedures to be adopted to ensure that gas volumes input to and removed from the pipeline are equal over a given period of time. Pipelines commonly require daily balancing, but some require balancing over shorter periods, down to an hour, especially where there is a heavy power generation load on the pipeline. Others may allow longer periods e.g. 3 days up to monthly. Monthly balancing is only appropriate where third party loads are very small (a few percent) in relation to the main user’s loads.
2) Reserves: A balancing agreement for reserves is an agreement between the owners of a gas field who are marketing their shares of the gas independently of each other. Since each buyer may have a different demand pattern, the owners agree between themselves that they will not withdraw reserves at a rate which will cause imbalance in the ownership of the remaining reserves to exceed certain agreed tolerances. The agreement also defines the remedies that are to be taken should these tolerances be exceeded. The purpose is to ensure that the ownership share of the remaining reserves remains constant for all practical purposes.
Base Gas Base Gas is an alternative name for Cushion Gas.
Beach Price Beach price is a term, mainly used in the UK, to define the price at which offshore gas is transferred by the producer at the exit from the onshore treatment plant, at which point ownership is transferred before onward transmission or use.
Blast Furnace Gas Gas produced as a by product from the use of coke in traditional blast furnaces. This gas was of low Calorific Value (roughly a quarter to a third that of natural gas) but was used mixed with Manufactured Gas in the days before natural gas.
Block A block is a geographical area defined in a Concession agreement, often prefixed by “Exploration”, “Development” or “Production”. Often defined in terms of latitude and longitude, but may also be defined by reference to a local grid system, for example in the Gulf of Mexico.
Blowdown A method of producing a gas/condensate Reservoir by letting the reservoir pressure fall as gas is produced over time without re-injecting any gas. With this method of production some Condensate may condense within the reservoir, where its recovery is no longer a practical proposition.
Boil Off Gas (BOG) Boil off is a term used in LNG projects. However well insulated LNG storage tanks may be, the LNG is always at its boiling point, and small quantities will continue to boil off. In liquefaction plants a small volume of boil off gas is required to ensure that the plant flare is operational. Boil off not needed for this purpose will normally be used in the plant’s own low pressure fuel system. On LNG tankers driven by steam turbines the gas is normally used as a fuel to drive the ships.
Booster Station An alternative name for a Compressor Station.
Border Price The price at which gas is sold at the border between two countries. Typically based on customs or other official import/export data. Frequently used, especially in Europe, as a point of reference in gas contracts.
Bundled The provision of various services, such as transportation, storage etc. in a compulsory package which the buyer must accept in total, without being able to choose which elements it requires. See also Unbundling.
Butane A member of the alkane group of Hydrocarbons with four carbon atoms in its molecule (C4H10, often abbreviated to C4 in non technical usage). Butane is a colourless, flammable gas at normal temperature and pressure but is easily liquefied by pressure for storage and transportation. There are two isomeric forms, normal and iso-butane. At atmospheric pressure iso-butane liquefies at –1200C and normal butane at -100C.
C&F Cost and Freight.
Calorific Value (CV) Calorific Value is the quantity of heat produced by the complete combustion of a fuel. This can be measured dry or saturated with water vapour; and net or gross. See also Gross Calorific Value, Net Calorific Value.
Cap 1. A clause in a supply contract under which the buyer is assured that he will not have to pay more than a given maximum price. This type of contract is analogous to a call option. 2. In a Supply Contract where the buyer has flexibility in the volume it can request, the maximum to which it is entitled either over a period (e.g. a year) or over the life of the contract.
Cap Gas Gas found in a Gas Cap in association with oil but not commingled with it.
Capacity Charge A capacity charge is the payment made for reserving capacity in a pipeline, a gas store or other piece of infrastructure. Often used interchangeably with Demand Charge.
Carbon Trading A systematic procedure for exchanging permits to produce carbon emissions. See EU ETS.
Carry Forward A provision within a long term Take or Pay Contract under which a Buyer which takes more than its Annual Contract Quantity in any year is allowed, under conditions defined in the contract, to offset this against undertake in subsequent years which might otherwise have incurred some form of sanction, such as Take or Pay. Sometimes known as Advance Make Good.
Casing Head Petroleum Spirit (CHPS) An alternative name for Condensates and especially for those dropping out at or close to the well head. Mainly used in North America.
CBM Coal Bed Methane.
CIF Cost, Insurance and Freight. See Delivered.
City Gas City gas is a term used in some parts of the world, for instance Egypt, India, Japan, Korea, to refer to gas distributed to customers through a local distribution system, downstream of the City Gate. Such customers will be a mixture of residential, commercial and industrial depending on particular local circumstances but will, typically, exclude power generators. In the past city gas may have been gas manufactured from coal and oil but is now predominantly natural gas. See also Town Gas.
City Gate The point at which a local distribution system, often based on one town or city, accepts gas from a transmission company or system. A transfer price at this point is called a City Gate Price.
Coal Bed Methane (CBM) Coal bed methane is methane that is or can be recovered from coal seams. Also known as Coal Seam Gas. CBM is recovered by drilling wells into suitable coal seams and then reducing pressure in the rock, usually by pumping out water, which may be saline and present environmental issues, until the methane can be desorbed from the coal. CBM, unlike conventional natural gas, is not trapped beneath a Seal but is adsorbed into the coal. It can therefore occur in coal deposits which are laterally very extensive. Production rates are typically much less than for conventional gas. Depletion rates are typically quite slow and wells may produce for many years. CBM may also be produced as a safety measure before coal is mined to reduce the incidence of potentially explosive gas mixtures during mining operations. See Coal Mine Methane.
Coal Gas Coal Gas is gas manufactured by the destructive distillation of bituminous coal. The chief components are hydrogen (more than 50%), methane (10% to 30%) carbon monoxide and higher hydrocarbons. The water vapour in coal gas kept old pipe joints tight, thus minimising loss of gas. If natural gas is introduced into the same pipes without remedial action substantial losses may occur. The carbon monoxide is of course poisonous. Inhaling coal gas was a favoured way of committing suicide in cities with coal gas distribution.
Coal Mine Methane (CMM) Methane recovered from coal mines, either while active or after abandonment, which can be used in local power generation or heat production. It is rarely available in sufficient quantity to justify processing to pipeline quality for delivery into a pipeline system. See: Coal Bed Methane.
Coal Seam Gas See Coal Bed Methane.
Cogeneration Alternative name for Combined Heat and Power.
COI Confirmation of Intent See Memorandum of Intent.
Coke Oven Gas Coke oven gas is produced as a by-product of the coking of coal and was at one time a main ingredient of Manufactured Gas.
Combined Cycle Gas Turbine A Combined Cycle Gas Turbine (CCGT) is a type of electricity generation plant in which the heat generated from combustion of the gases is used twice. First, the gas is burned to drive a Gas Turbine. Then the hot exhaust gases pass through a heat exchanger to raise steam for a secondary steam turbine unit. Combined cycle plants have a thermal efficiency approximately 50% greater than a normal simple or open turbine.
Combined Heat and Power (CHP) Combined Heat and Power (CHP) is the use of a single unified system to supply both the heat and power requirements of a project, minimising the waste of heat. The power is produced through Gas Turbines or another prime mover. The exhaust heat is harnessed for requirements other than electricity generation. Also known as Cogeneration and Total Energy.
Common Carriage Common Carriage is a term often used interchangeably with Open Access and Third Party Access but which is in fact more specific. In a common carriage system all applicants for capacity (for instance in a pipeline or store) are given access on equal terms. If the total volume requested exceeds available capacity, the usage of all parties is reduced pro rata: capacity is rationed among users. Under Open Access, if applicants seek more capacity than is available, capacity is apportioned on a first come, first served basis or a pay-to-book system which allows capacity to be contracted for and traded just like renting and subletting space in a building. A pipeline or store owner who wishes also to use some capacity for itself must, under Open Access, do so through an arm’s-length affiliate whose commercial relations with the capacity provider are transparently identical to those of other users. Open Access is required on US interstate pipelines, where it is known as Contract Carriage. In Europe the term Open Access is sometimes used loosely as synonymous with Third Party Access, to define the right of “third parties” to use the pipeline or equipment of another company. In its general form it encompasses Open Access, Common Carriage, Negotiated Access and Regulated Access. One aspect of “Third Party Access” is that it does not in itself imply any solution to the issue of discrimination between the parties using the facilities. See also Limited Access.
Compressed Natural Gas (CNG) CNG is natural gas compressed into gas cylinders, chiefly used as an alternative for liquid fuels in road vehicles. CNG remains a gas irrespective of the amount of pressure. Not to be confused with Liquefied Petroleum Gas.
Compressor Station Gas loses pressure as it travels long distances through pipelines. To ensure an even flow, and an adequate pressure at the point of off-take, it must be recompressed at compressor stations, typically located every 60 km to 100 km along onshore transmission pipelines. Offshore and in remote areas, it may be convenient and preferable to maintain higher pressures and allow greater distances between compressor stations. On large pipelines compressors are normally driven by gas turbines. Smaller pipelines may use diesel engines.
Concession A license awarded either by a Government or State Oil company. It defines an area, often referred to as a Block, granted to a company or group of companies for the exploration, production or transportation of oil and/or gas under specified terms and conditions and for a fixed period. Concession areas are frequently initially awarded for exploration. If this is successful then a smaller area is defined, within the exploration block, to be a production block. May also be applied to permits to construct pipelines, power stations etc.
Condensate Condensate is a natural gas liquid with low vapour pressure, produced from a reservoir with high pressure and temperature. Condensate will separate naturally in a pipeline or separation plant through the normal process of condensation. Can refer to any mixture of relatively light Hydrocarbons which remain liquid at normal temperature and pressure. There will be some propane and butane dissolved in it. Unlike Crude Oil, it contains little or none of the heavy hydrocarbons which constitute heavy fuel oil. There are three main sources of condensate: a) The liquid hydrocarbons which are produced from a gas/condensate reservoir. These may be only slightly distinguishable from a light stabilised crude oil. b) The liquid hydrocarbons which are recovered at the surface from non-associated gas. c) The liquid hydrocarbons which are separated out when raw gas is treated. This condensate typically consists of C5 to C8.
Confirmation of Intent (COI) See Memorandum of Intent.
Connection Charge Sometimes used as a synonym for Standing Charge but more correctly defined as an amount to be paid by the customer in a lump sum or by instalments for a connection to the supplier’s system.
Contract Carriage An alternative term for Common Carriage used in the US.
Contractor A term having a specific meaning in a Production Sharing Agreement. The Contractor is the company (usually a producing company) which undertakes to explore and/or produce for the host government in return for defined volumes of the gas or oil produced.
Convergence A loosely defined term which refers to the increasing use of natural gas in the generation of electricity. Where generation becomes wholly or largely dependent on natural gas, the interests of the gas supplier and the power generator converge, and the possibility arises of switching gas between generation and direct supply, depending on the price available for each outlet. Prices converge when there is no benefit in switching.
Cost and Freight (C&F) See Delivered.
Cost Gas Cost gas is the gas which a Contractor acquires under a Production Sharing Agreement to cover the costs of its operations under the contract. Normally the Contractor operates at its own risk and, if no hydrocarbons are discovered, the costs are entirely for its account. See also Profit Gas.
Cost, Insurance and Freight (CIF) See Delivered.
Crude Oil A mixture of Hydrocarbons that exists as a liquid in natural underground reservoirs and remains liquid at atmospheric pressure after passing through surface separating facilities. Crude is the raw material which is refined into gasoline, heating oil, jet fuel, propane, petrochemicals, and other products.
Cryogenics The process of producing, maintaining and utilising very low temperatures (below -46ºC / - 50ºF). Relevant in the LNG business.
Cushion Gas Cushion Gas is gas left in a gas store to provide the pressure needed to produce stored gas, but which itself remains un-produced. It is typically of the order of 50% of the total stored volume for an Aquifer and depleted fields, but less for other types of storage. When the store is initially established Cushion Gas, unless it is un-produced reserves left in a partly depleted field, may be a large part of the capital cost. Cushion Gas may finally be used when the store is decommissioned. Also known as Base Gas.
Daily Contract Quantity (DCQ) The amount of gas which a Buyer nominally undertakes to purchase and a Seller undertakes to deliver in a defined 24 hour period. Although featuring in many contracts, in practice this expression is of little meaning in itself. It may serve as a means of expressing the Annual Contract Quantity if the latter is expressed as a number of days multiplied by the DCQ. It may also define the rate at which the Seller must be able to supply gas. See also: “Daily Delivery Rate”.
Daily Delivery Rate The Daily Delivery Rate (DDR) is the rate at which the Seller’s facilities must be capable of delivering gas, expressed as a volume of gas per day, or as a multiple of the Daily Contract Quantity. Also known as the Maximum Daily Quantity.
Dedication Contract A Dedication Contract is the correct term for a Depletion Contract, under which the entire production from a gas field is bought and sold.
Degree Day A degree day is a measure of average temperature over a day, and is usually related to a temperature threshold. For instance, an actual average temperature of 5°C on a day is 2 degree days warmer than an expected average temperature of 3°C. Can also be used to measure cumulative cold weather over a period. Thus if the Seasonal Normal temperature for a month is 18°C and the average actual temperature through the month is expected to be 8°C, the month will be 10 x 30 = 300 degree days colder than normal.
Delivered A term used mainly in LNG shipping contracts for an arrangement under which the seller is responsible for arranging and paying for the shipping of the gas, and title passes at the port of delivery. Generally, the seller’s risks are greater in a delivered transaction because the buyer only pays for the landed quality/quantity, and the Boil Off Gas is the seller’s responsibility. The seller is responsible for clearance through customs and payment of all duties unless the contract provides otherwise. An alternative name for a Delivered contract is Ex Ship. Very similar to Delivered is Cost, Insurance and Freight (CIF). This is an arrangement under which the Seller arranges and pays for shipping and insurance, as for a Delivered contract, but risk and title are transferred from the seller to the buyer in a manner defined in the agreement (e.g. on shipment or on delivery of the bill of lading to the buyer). CIF and Delivered are frequently, but erroneously, treated as if they were identical because the costs to the seller are the same. Under a CIF contract, however, the seller can avoid being in possession of the cargo within the jurisdiction of the buyer country’s government. This may be important for fiscal or legal reasons. The third arrangement frequently met in the shipping of LNG is Free on Board, (FOB), which is used to denote deliveries where the buyer arranges for the shipping and there is a delivery and change of title at the time the cargo is loaded into the ship at the loading port.
Demand Charge A monthly or annual fee paid by a Buyer for a nominated, reserved peak or for the actual peak volume of gas taken in an hour or day in a given period. Thus a typical expression might be Dollars per thousand cubic feet of peak hourly capacity per month. Often used interchangeably with Capacity Charge although it can be argued that in strict logic Demand Charge should apply to a gas sale and Capacity Charge to a transportation arrangement.
Depletion Contract A depletion contract is a production sales contract in which the sale volumes are essentially governed by the performance characteristics of the particular gas field. A build-up pattern, an expected Plateau and a method for determining decline volumes will be defined initially, but may be amended as the production capabilities of the field are better understood through operating experience. The buyer thus assumes a large share of the production risks. See also Dedication Contract and Supply Contract.
Depletion Drive Reservoir A gas Reservoir from which gas is recovered by expansion as the gas pressure falls with the production of gas originally in place. The reservoir can therefore be treated as if it were a closed tank. Recovery factors of up to 90% of the gas in place can be achieved. In such reservoirs there is no Water Drive.
Deregulation Deregulation is the reduction in the role of regulatory bodies usually associated with an increase in open competition, and achieved by the simplification of the regulatory framework. Deregulation should not be confused with Liberalisation which may require the introduction of transparent regulatory processes.
Dew Point The temperatures below which either hydrocarbons (hydrocarbon dew point) or water (water dew point) will start to condense out of a given gas stream. Condensation reduces the accuracy of metering and creates the nuisance of liquid slugs in pipelines, which will need to be cleared out periodically by passing a Pig though the pipeline. In addition, water may react with carbon dioxide or hydrogen sulphide in the gas stream to form acids, and with methane itself, under appropriate conditions, to form Hydrates. Therefore, at the Treatment stage, water is normally removed from the gas stream to reduce the Dew Point to somewhere around -10°C at standard pipeline pressures.
Distribution The final phase in the transportation of gas (and electricity) and its sale to end consumers through medium-sized pipelines and small diameter low pressure Reticulation grids.
Diversity Factor The ratio of the sum of the individual maximum demands of several consumers or loads, to their simultaneous maximum demand. Usually less than 1 to reflect that not all customers are expected to take their maximum demands simultaneously. See also Load Factor.
Downstream Those activities in the gas chain closest to final customers. See Upstream.
Downward Quantity Tolerance (DQT) The Downward Quantity Tolerance (DQT) is the amount by which a buyer may fall short of its full Annual Contract Quantity in a Take or Pay gas sales contract without incurring sanctions. If there is no provision requiring the buyer to take supplementary volumes in subsequent years to make good for the deficiency, the Annual Contract Quantity becomes in effect the ACQ minus the DQT. See also Make Good and Make Up.
Dry Gas An alternative name for Lean Gas. It does not mean free of water, though in some cases it may be.
Dry Gas Field A reservoir which will yield dry/lean gas and very small quantities of Condensate; typically less than 10 barrels per million cubic feet. This is equivalent to 350 barrels/MMcm or 60 cubic metres oil/MMcm gas assuming 0.159 barrels/cubic metre.
Dry Hole: A borehole that cannot produce commercial volumes of oil or gas. Conventionally the term Well is restricted to a borehole that can produce oil or gas.
Efficiency Efficiency, or Heat Efficiency, is the ratio of energy output to energy input in a process. One of the most frequently encountered uses of this ratio in the gas industry is in the use of gas for power generation, where the electricity send out is expressed as a percentage of the gas consumed, measured on the basis of a common unit e.g. kWh. Care needs to be taken to distinguish between net and gross efficiency. See also Gross Calorific Value, Net Calorific Value.
Entry-Exit An Entry-Exit System is one where a gas shipper is charged an entry price for putting gas into a transmission or distribution network at a defined entry point, and an exit price for removing the gas at a defined exit point. The prices can reflect congestion at entry and exit points, but are the same for any user. The system may be contrasted with point to point systems, where transportation charges depend on the actual or theoretical distance travelled by each consignment of gas. Entry-Exit is strongly favoured by the EU as a means of promoting gas liberalisation.
ERGEG The European Regulators' Group for Electricity and Gas. ERGEG is the European Commission's formal advisory group of energy regulators. ERGEG was established by the European Commission, in November 2003, to assist the Commission in creating a single-EU market for electricity and gas. ERGEG's members are the heads of the national energy regulatory authorities in the EU Member States.
Ethane Ethane (C2H6, often abbreviated to C2 in non technical usage) is one of the main constituent elements of natural gas along with methane. Boils at -84.4ºC. At normal temperatures it is a dry, colourless and odourless gas. A feedstock for ethylene production.
Ethylene Also known as Ethene. A colourless gas (C2H4) produced by cracking Hydrocarbons such as Ethane or naphtha and used as a feedstock for petrochemicals, such as fibres and many plastics. Boils at -103.7ºC.
Excess Gas Excess Gas is either: a) Gas taken at a rate in excess of the Daily Delivery Rate at a premium price; or b) Gas taken in excess of the Annual Contract Quantity. Depending on the terms of the contract and the status of deliveries such gas may qualify as Carry Forward, Make Good or Make Up gas.
Federal Energy Regulatory Commission (FERC) A US federal government agency whose responsibilities include regulating the interstate gas industry. Has no jurisdiction over gas pipeline and supply where the trade is entirely within individual states.
Feedstock Hydrocarbons used as raw material in an industrial process, not as a fuel. The principal uses of natural gas as a feedstock are in the manufacture of ammonia and ammonia-based fertilisers and methanol. A potential major market is the use of gas to make synthetic oil products such as motor gasoline and middle distillates (see Gas to Liquid). May also be used to denote the feedstock used to produce electricity, but statistical summaries of gas consumption normally distinguish this use from chemical feedstock uses. See also Middle Distillate Synthesis.
Field Appraisal The process of quantifying reserve levels and production potential of a newly discovered petroleum (oil and/or gas) reservoir, usually by drilling one or more delineation or appraisal wells.
Firm Gas Gas which a supplier commits to supply to a purchaser under terms defined in the contract, without interruption. See also: Interruptible Gas.
Fischer-Tropsch Process A chemical process to convert Synthesis Gas to paraffins by polymerization. Originally developed in the early 20th Century to make gasoline from coal. Recent research has identified catalysts which greatly increase the efficiency of the process by creating very long waxy products, which can then be turned into very high quality liquid fuels by conventional cracking. See Middle Distillate Synthesis.
Flaring The process of burning unwanted natural gas or oil. In the case of gas, usually occurs when it is associated with oil and cannot be economically exploited or re-injected. Now less prevalent, as governments seek to profit from the increased value of gas and reduce the advert environmental impact of burning hudrocarbons.
Flow Meter A type of Meter used to measure gas flows.
FLNG Floating LNG
Floating LNG Floating LNG (FLNG) is the use of purpose built or converted ships to enable regasification of LNG (and liquefaction) to be carried out offshore. FLNG has the advantage that LNG production and importation can start more quickly than could happen onshore, where lead times are often lengthened by the local approval process. It also enables the processes to move location to satisfy short term demand.
FOB Free on Board. Term used in LNG contracts. See Delivered.
Force Majeure A contractual term used to define circumstances in which a party to a contract is not obliged to carry out its obligations because of major events outside its control. Force Majeure can mean very different things, depending upon the law under which the contract is written and the provisions of the clause, which can vary widely. Examples of force majeure could be war, extreme weather, industrial action.
Forward Trading Buying and selling gas (and other commodities) to be delivered at a later date, not under a long term contract. See Futures.
Free on Board (FOB) Term used in LNG contracts. See Delivered.
Fuel Cell Equipment used to generate electric energy directly from the reaction of hydrogen and oxygen in the presence of a catalyst, without combustion. Natural gas can be used as a feedstock from which to obtain the hydrogen. Carbon dioxide will then be produced in the reformation process.
Futures A future is a contract to buy or sell a specified quantity of gas (or any other commodity) for a specified price on a pre-arranged date. The contract is usually of standard form and can itself be traded at an exchange such as NYMEX or the IPE.
Gas:Oil Ratio: The gas:oil ratio is the relationship between the volume of gas produced at atmospheric pressure and the volume of oil produced in a given field. This volume will normally vary considerably over the life of the field. May be expressed as a simple volumetric ratio e.g. 500:1 or as cu ft/Barrel. See also Solution Gas.
Gas and Electricity Markets Authority (GEMA) The body which determines strategy and takes major policy decisions for Great Britain’s gas and electricity regulation. Day to day management of policy, resources and operational issues is carried out by the Office of Gas and Electricity Markets (OFGEM).
Gas Cap In a field where oil is saturated with gas, so that it can dissolve no more, some gas will collect at the top of the reservoir, where it is known as cap gas, and forms a gas cap. Cap Gas overlies the oil and thus provides additional pressure for oil production, but will therefore often be produced only after all the oil has been produced and will then be treated as Non Associated Gas. Unlike Solution Gas, it is not commingled with the oil.
Gas Condensate Field A field consisting of one or more reservoirs containing a mixture of gases at reservoir temperature and pressure, but which at normal temperature and pressure separates out into natural gas and Condensates. A gas condensate field is richer in liquids than a Dry Gas field but there is no precise point at which one becomes the other. Sometimes a reservoir will be produced primarily to obtain the condensate; the gas may be re-injected, used as a secondary product, e.g. for LNG production or, particularly in areas remote from the market, flared. The liquid in a gas condensate field is often more valuable than the gas. See also “Gas Cycling”.
Gas Condensate Ratio The ratio of gas to condensate in a gas/condensate reservoir, usually expressed in practice as the ratio of Condensate to gas. Typical units are barrels of condensate per million cubic feet of gas.
Gas Cycling or Re-Cycling A process in which produced gas is re-injected into the reservoir after removal of the condensate. This is to maintain the reservoir pressure and prevent Condensate from “condensing” in the reservoir and then becoming difficult to recover. This contrasts with Blowing Down the gas condensate field.
Gas Gathering System A gas gathering system is a network of pipelines from a number of fields, collecting gas and bringing it to a central point, often a processing system or the inlet to a major transportation pipeline. Sometimes built where individual fields are not big enough to justify investment in separate pipelines and processing plant.
Gas Grid A gas grid or network is a connected set of pipelines for the transmission and distribution of gas in a region or country to industrial, commercial and domestic users. See Reticulation.
Gas Holder Over ground structure used to hold gas for within-day Peak Shaving purposes in urban areas. Gas holders are relics of the manufactured gas era and are steadily disappearing, their function being largely usurped by Line Pack.
Gas Liquefaction The conversion of natural gas into LNG.
Gas Processing The separation of oil and gas, and the removal of impurities and natural gas liquids from natural gas to meet the delivery Specification of a gas transportation pipeline.
Gas to Liquid Gas to Liquid GTL processes convert natural gas into Synthetic Gasoline or Middle Distillates, using the Fischer Tropsch synthesis method. Increasingly relevant where gas is found in fields remote from markets such that delivery by pipeline is likely to be uneconomic.
Gas Turbine A turbine propelled by the expansion of compressed air, heated by the combustion of a fuel such as natural gas or gas oil. Widely used for power generation. See Combined Cycle Gas Turbine.
GHV Gross Heating Value. See Gross Calorific Value.
GNL The French language acronym for LNG, stands for Gaz Natural Liquifié.
Grid Alternative name for Network. See Reticulation.
Gross Calorific Value (GCV) The heat generated by the complete combustion of a unit volume of gas in oxygen, including the heat which would be recovered by condensing the water vapour formed. The preferred value for expressing gas calorific quality in gas contracts. Also known as Gross Heating Value, Higher Calorific Value (HCV) or Higher Heating Value (HHV). See also Net Calorific Value.
Gross Heating Value (GHV) Alternative name for Gross Calorific Value.
GTL Gas To Liquid.
HCV Higher Calorific Value. See Gross Calorific Value.
Heads of Agreement A non-binding statement of the main elements of a proposed agreement. See Memorandum of Intent (MOI).
Henry Hub Henry Hub is the largest centralized point for natural gas spot and futures trading in the United States. The New York Mercantile Exchange (NYMEX) uses Henry Hub as the notional point of delivery for its natural gas futures contract. NYMEX deliveries at Henry Hub are treated in the same way as cash-market transactions. Many natural gas marketers also use Henry Hub as their physical contract delivery point or their price benchmark for spot trades of natural gas. Henry Hub is owned and operated by Sabine Pipe Line, LLC, which is a wholly owned subsidiary of ChevronTexaco. Henry Hub is based on the physical interconnection of nine interstate and four intrastate pipelines in Louisiana.
Hexane A colourless gas (C9H14) naturally occurring in gas fields and normally left as part of the Condensate stream after separation. Boils at -69ºC.
HHV Higher Heating Value. See Gross Calorific Value.
Higher Calorific Value (HCV) See Gross Calorific Value.
Higher Heating Value (HHV) See “Gross Calorific Value”
High Sulphur Fuel Oil (HSFO) The bottom of the oil barrel. The lowest priced oil product now, for environmental reasons, often banned or only allowed to be used where rigorous control of emissions is practiced. In some countries with developing gas-to-oil competition it may represent the marker for power station fuel.
Hub A term, met most frequently in the U.S., but also now used in Europe, for a geographical point at which several pipelines meet, storage is often available, and opportunities for gas trading can be exploited. There are many hubs in the U.S., of which the most important is Henry Hub. In Europe the largest hub is the National Balancing Point in the UK.
Hydrates Ice-like solids in which methane molecules are held within the molecular spaces of the water molecule. Can form in pipelines and wells under certain conditions of near freezing temperatures and high pressures. Their formation is averted by ensuring that water vapour levels in the gas are kept below specified levels. See also Treatment, Dew Point. Hydrates are found naturally beneath the ocean at depths greater than 300m in many areas, where they are estimated to have locked up many trillions of cubic metres of methane. There is speculation that these hydrates may provide a commercial resource in the future. Hydrates have also been proposed as a means of transporting natural gas by sea, possibly competing with LNG.
Impurities At the wellhead, natural gas will probably contain methane and various heavier fractions. It may also contain a number of non-hydrocarbons, some or all of which will need to be removed. There may also be substances introduced into the well as a result of drilling operations, such as inhibitors, mud etc. The principal harmful impurities in the gas itself are likely to be carbon dioxide and sulphur compounds, notably hydrogen sulphide, which can create corrosion in the pipelines in the presence of water and can seriously damage chemical plant units built of aluminium. Hydrogen Sulphide is also extremely toxic. Excessive water vapour can lead to the formation of acids and Hydrates. Some impurities, such as sulphur or helium, can be recovered economically as by-products if in sufficient concentration in the gas. Other impurities, such as inert gases and nitrogen cause no directly harmful effects but dilute the Calorific Value of the gas and mean that pipeline capacity is being wasted. Whether or not they should be removed is simply a question of economics. See also Treatment, Natural Gas Liquids, Condensates.
Independent Power Plant (IPP) An IPP is an electric power generation plant owned and operated independently of the major national or regional entity, producing electricity for an industrial complex and/or for sale to the electricity grid.
Inert Gas: A chemically inert gas, resistant to chemical reactions with other substances.
Integrated Gasification Combined Cycle (IGCC) A means of generating electricity from coal and other low grade hydrocarbons by gasifying them at the electricity generation site thereby gaining some of the efficiency of Combined Cycle Gas Turbine generation. While the chemical & engineering principles are well understood it has yet to be demonstrated as a commercial proposition.
International Energy Agency A Paris-based organisation which co-ordinates the energy policies of its member countries. The IEA also compiles detailed energy statistics and country reports, including countries outside the organisation itself. An autonomous wing of the Organisation for Economic Co-operation and Development (OECD).
International Gas Union The International Gas Union (IGU) was founded in 1931. A worldwide non-profit organisation of national gas industry associations whose objective is to promote the technical and economic progress of the gas industry. Organises the triennial World Gas Conference.
International Petroleum Exchange The IPEis an energy futures and options exchange based in London. Gasoil futures have been traded since 1981, Brent crude futures from 1988, and natural gas futures since 1997. Absorbed into ICE, the InterContinental Exchange in 2005. See also New York Mercantile Exchange.
Interruptible Gas Gas made available under agreements permitting the supplier to terminate, or interrupt deliveries, usually for a limited number of days in a specific period. Usually sold at a reduced price and used to boost sales/transportation in slack seasons (normally the summer). Important in load balancing because (by reducing gas demand) it is an alternative to using stored gas. The converse of Interruptible Gas is Firm Gas.
Joint And Several A contract term relating to responsibilities under a contract, usually for payment, often misunderstood. Where, for example, there are several buyers in one contract, a joint responsibility does not mean an equal or pro rata responsibility. It means that if one buyer defaults on its liabilities the other buyers will be liable to make good that default. Where responsibilities are several, each party is responsible only for its own default.
Letter of Intent (LOI) See Memorandum of Intent.
Liberalisation A term often confused with Deregulation but often meaning quite the reverse. Liberalisation is the process of freeing a market from what are perceived as undue monopolistic forces, to achieve which a high degree of regulation may be required, at least in early years.
Limited Access Limited Access refers to a gas distribution system in which the host pipeline owner moves its own merchant gas under different rules to those applying to outsiders contracting for spare capacity. The system applies to local distribution companies and intrastate pipelines in the US and is analogous to but not identical with Negotiated Access. See also Common Carriage.
Limited Recourse Financing See Project Financing.
Line Pack Line pack is a procedure for allowing more gas to enter a pipeline than is being withdrawn, thus increasing the pressure, “packing” more gas into the system, and effectively creating storage. The “packed” gas can subsequently be withdrawn when needed. A useful method of meeting short term (hourly or diurnal) peak demand requirements. In some areas, where there is a particularly high peak demand, a series of additional pipeline loops may be laid near the entry to a network to provide additional line pack. Such systems are effectively a modern version of the traditional Gas Holder.
Liquefaction The conversion of natural gas into LNG.
Liquefied Natural Gas See LNG.
Liquefied Petroleum Gas Liquefied Petroleum Gas (LPG) is Propane, Butane, or propane-butane mixtures which have been liquefied through pressure, mild refrigeration, or a combination of both. Usually a derivative of refinery operations but often stripped out of natural gas streams, if rich enough. Conventionally sold in steel containers as Bottle Gas. Not to be confused with LNG.
LNG (Liquefied Natural Gas) LNG is Natural Gas which has been cooled to a temperature, around the boiling point of methane (-162ºC), at which it liquefies, thus reducing its volume by a factor of around 600. The exact boiling of any gas mixture and the reduction in volume will depend on its composition. The process of Liquefaction is carried out in a liquefaction plant. Mostly these are very large scale plants built for projects transporting gas by sea, but in many countries small LNG plants have been built to liquefy gas during the seasons of low demand to provide Peak Shaving when required. LNG Plants consist of one or more LNG Trains, each of which is an independent gas liquefaction unit. It is more cost effective to add a train to an existing LNG plant, than to build a new LNG plant, because infrastructure built for early trains, such as ship terminals and other utilities, may be capable of being used or expanded for new LNG trains. The term Train is sometimes extended loosely to embrace the relevant shipping, storage and other facilities required to bring the resultant LNG to market. Liquefied gas is transported and stored as a boiling liquid under slight positive pressure until required for use, when it is warmed and allowed to re-gasify. In the case of Peak Shaving, the gas will normally be regasified at the plant itself or possibly transported for short distances by road, but large scale transportation is by sea, in specially designed insulated LNG vessels and delivered to LNG terminals, which have the requisite facilities for storage and regasification - the process by which LNG is warmed, usually through a heat exchanger, in order to become once more gaseous before emission into the Gas Grid.
LNG Plant See LNG (Liquefied Natural Gas).
LNG Storage See LNG (Liquefied Natural Gas).
LNG Terminal See LNG (Liquefied Natural Gas).
LNG Train See LNG (Liquefied Natural Gas).
LNG Vessels See LNG (Liquefied Natural Gas)
Load Duration Curve A visual and statistical expression of a number of (daily) demands over a long period, most often a year. Demands are normally ordered with the highest to the left and the lowest to the right, so that the horizontal scale bears no relation to calendar timing. Can be used, among other things, to measure volumes of demand (or supply) above a given threshold. The area beneath the curve and between horizontal thresholds represents the volume required to supply a particular market segment. The approach is used in both electricity and gas industries.
Load Factor A measure of utilization for plant, or of the relationship between average and peak demand or supply, as determined by the formula: Average x 100 / Peak. For supply and demand calculations average and peak most often refer to daily demand within a year, but any other periods are possible. The resulting figure is usually expressed as a percentage but, where the period covered is a year, the percentage is sometimes multiplied by 8760, so that the load factor is expressed as a number of hours. Thus a 50% Load Factor can also be expressed as 4380 hours. See also Swing.
LOI Letter of Intent. See Memorandum of Intent.
Lower Heating Value (LHV) Alternative name for Net Calorific Value.
Lower Calorific Value (LCV) Alternative name for Net Calorific Value.
Low Sulphur Fuel Oil (LSFO) Fuel oil with a low sulphur content. Usually less dense than High Sulphur Fuel Oil. In new markets with gas-to-oil competition this often represents the marker fuel for large segments of the industrial market.
Madrid Forum The Madrid Fotum, otherwise known as the European Gas Regulatory Forum, set up to discuss issues regarding the creation of a true internal European gas market. The participants include national regulatory authorities, Member State governments, the European Commission, transmission system operators, gas suppliers and traders, consumers, network users, and gas exchanges.
Make Good Make Good Gas is gas which a buyer must take in a later year because it has failed to take its full Annual Contract Quantity obligation in an earlier year, but has not used its full Downward Quantity Tolerance. It must nevertheless take excess gas in subsequent years to make good its deficiency, before it is entitled to claim any Make Up Gas to which it is entitled through shortfalls greater than the Downward Quantity Tolerance.
Make Up Make Up Gas is gas for which a buyer has paid under Take or Pay obligations but not taken, and may have rights to receive in subsequent years for no further charge or at reduced prices after it has taken gas in excess of an agreed threshold volume. This is commonly the Annual Contract Quantity but may, for example, be ACQ minus Downward Quantity Tolerance. Make up gas should not be confused with Make Good Gas.
Maximum Daily Quantity (MDQ) An alternative name for Daily Delivery Rate.
Maximum Daily Rate (MDR) An alternative name for Daily Delivery Rate.
MDQ Maximum Daily Quantity. See Daily Delivery Rate.
Memorandum of Intent (MOI) Also known as Confirmation of Intent and Letter of Intent. A half way house to the signing of a full contract. Its legal status is rather unclear and its value lies largely in how it is viewed by the parties concerned. It will normally be a fairly brief document setting out the principal framework of the contract and specifying a date by which it is expected that a full contract will be completed. An MOI will often have a relatively brief validity, but in some cases they have served to govern active operations over a period of years. Also known as a Memorandum of Understanding (MoU) and Heads of Agreement (HoA).
Memorandum of Understanding (MOU) See Memorandum of Intent.
Mercaptans Chemical compounds of sulphur used as Odorants.
Merchant Pipeline A pipeline system which itself buys and sells part or all of the gas it transports, in contrast to a pipeline which simply carries gas on behalf of others. See also Open Access, Negotiated Access, Common Carriage.
Meter Measuring devise, usually located at a point where ownership is transferred, for example at the entry to a customer’s premises, city gate, national border or gas processing plant. Note that to determine the energy content of the gas it will be necessary to monitor the composition & hence calorific value of the gas. This is done at high pressure meter stations but not normally downstream of a city gate. Depending on the size of flow, meters may be: Flow meters, measuring gas throughput using a rotor which is made to revolve by the gas flowing through them; Ultrasound meters, more sophisticated, based on the principle that sound waves travel faster with than against the flow. By measuring the difference in travelling time between the two sets of measurements the gas flow rate can be measured to an accuracy of more than 0.5%; Orifice plate meters, older, and less accurate than other meters. Calculate flow rates by measuring the drop in pressure over a pierced obstructing plate placed in the pipeline. See also Telemetry.
Methane A colourless, odourless flammable gas, lighter than air under normal conditions (CH4, often abbreviated to C1 in non technical usage). Methane is the first member in the alkane (paraffin) series and is the chief constituent of Natural Gas. At atmospheric pressure, it liquefies at -162ºC.
Methanol Methyl alcohol, produced from natural gas via Synthesis Gas. Used as a chemical in the resin and paint industry and in the manufacture of Methyl Tertiary Butyl Ether, (MTBE) and acetic acid, but also of interest as a possible total or partial substitute for motor gasoline in cars. Very toxic.
Middle Distillate Synthesis (MDS) A chemical process using the Fischer-Tropsch synthesis method for making synthetic middle distillates (principally naphtha, kerosene and gas oil) from natural gas.
Midstream Those activities in the gas chain concerned with moving gas between the source and local distribution. See Upstream.
MoU Memorandum of Understanding. See Memorandum of Intent.
National Balancing Point (NBP) The NBP is an imaginary (notional, or virtual) point at which all gas that has paid the entry charge to enter the UK National Transmission System is deemed to be located. The point at which most UK gas trading takes place, and the largest gas hub in Europe. See Entry Exit.
Natural Gas Natural gas (NG) is a mixture of generally gaseous hydrocarbons occurring naturally in underground structures. Natural gas consists mainly of Methane and variable proportions of Ethane, Propane and Butane. There will usually be some condensate and/or oil associated with the gas. More specifically, the term is also used to mean treated natural gas which is supplied to industrial, commercial and domestic users and meeting a specified quality.
Natural Gas Liquids (NGLs) Heavier hydrocarbons found in natural gas production streams and extracted for disposal separately. Within defined limits ethane, propane and butane may be left in the gas to enrich the Calorific Value. Whether to extract them or not is largely a commercial decision. Heavier fractions which are liquids at normal temperatures and pressures will be removed. The terms Natural Gas Liquids and Condensates are in practice used virtually interchangeably. Rather confusingly, there is no agreement on whether the term NGLs includes or excludes LPGs and both usages are current.
Natural Gas Vehicle (NGV) A motorised vehicle powered by natural gas. See Compressed Natural Gas.
Negotiated Access Negotiated Access is a restricted form of Third Party Access, which excludes the requirement for the access terms to be transparent or applied equally to all applicants. It has been proposed in the European Union as a compromise by opponents of Open Access. Sometimes abbreviated to nTPA. Broadly defines access by one party to another party’s facilities through negotiation, the result of which is, by implication, confidential, and not necessarily consistent with negotiations between the facility owner and other parties. See also Access, and Limited Access.
Net Calorific Value, (NCV) The heat generated by the complete combustion of a unit volume of gas in oxygen, excluding the heat which would be recovered by condensing the water vapour formed. Net Calorific Value is usually seen as a measure of the effective heat produced rather than the total heat in the gas. Also known as Lower Calorific Value or Lower Heating Value. For natural gas, typically 10% lower than the GHV or HHV. See also Gross Calorific Value.
Net Heating Value (NHV) See Net Calorific Value.
Netback The price or value of a gas, at e.g. the border or the wellhead, calculated by deducting the costs associated with getting it from that point to the eventual point of sale from its competitive value at that point of sale. Used to estimate the comparative value of selling gas to various markets, and the worth of producing gas at all.
NetworkL Alternative name for a Gas Grid.
Network Code A detailed contractual regime governing access to a gas grid. Network Codes exist or are being developed in several countries, especially in Europe. In North America the rules of the system are referred to as “The Tariff”. In particular, the contractual regime for the gas grid in Great Britain operated by National Grid. It is continually amended through rules approved by the GB energy regulator, (Ofgem). See also Tariff and Rates.
New York Mercantile Exchange (Nymex) The world’s largest physical commodity futures exchange. Has existed for 130 years and pioneered the development of energy futures and options contracts in the 1970s.
NGLs Natural Gas Liquids.
NHV Net Heating Value, an alternative name for Net Calorific Value.
Non Associated Gas Non-Associated is gas found in a reservoir which contains no crude oil, and can therefore be produced in patterns best suited to its own operational and market requirements. See also Associated Gas.
Non Recourse Financing See Project Financing.
nTPA Negotiated Third Party Access. See Negotiated Access.
Odorants Strong smelling chemicals injected into natural gas, which otherwise is odourless, in order to make its presence more easily detectable. See Mercaptans.
Odorisation The process of giving odourless natural gas a smell for safety reasons by injecting small quantities of organic sulphur compounds, such as Mercaptans, typically at the rate of 30 ppm. Usually carried out at the city gate or at the exit from the high pressure transmission system.
OFGEM Office of Gas and Electricity Markets, (OFGEM) The regulator for the gas and electricity industries in Great Britain. Governed by the Gas and Electricity Markets Authority. Its powers are provided by the Gas Act 1986, the Electricity Act 1989 and the Utilities Act 2000. Successor organisation to OFGAS and OFFER, the former separate Gas and Electricity Regulators.
OFGAS Office of Gas and Electricity Markets (OFGEM).
Oil Gasification The conversion of oil or naphtha into gas to be used as a fuel. See also Manufactured Gas.
On the day Commodity Market (OCM) System of within-day gas trading introduced into Great Britain in 1999. A screen-based system designed to allow shippers, traders and the system operator (then Transco, now National Grid) to resolve within-day demand and supply imbalances in an orderly fashion.
Open Access A system offering all applicants access to specified infrastructure. See Common Carriage.
Open Cycle Gas Turbine (OCGT) A gas turbine, often derived from aero-engines, used for peak generation of electricity. Also used in conjunction with a steam turbine in a combined cycle power plant. When only the gas turbine is used it may be termed “single cycle”.
Open Season A procedure for demonstrating to a regulator that capacity is offered on a transparent basis. It is used principally where pipelines are required by regulation to offer only transportation services, for example in North America and the Southern Cone of South America. It is also being used elsewhere as a means of gathering information about potential interest in a pipeline , LNG, storage etc project to help the sponsors decide how and when to size the project.
Orifice Plate Meter A type of gas Meter.
Peak Day The day in the year on which the demand for gas is highest. In temperate areas this is normally a cold day in mid winter. In warmer areas it may occur midsummer, when there is a high air conditioning load met either directly by gas or by gas-fired power. A crucial indicator in planning and sizing gas infrastructure.
Peak Load The maximum load produced or consumed by a unit in a stated period of time. In some tariff systems it is an important component of the tariff design, since it defines the capacity that is booked in the gas delivery system and must be paid whether or not used.
Peak Shaving Peak shaving is a means of reducing the Peak Load on the gas transportation and supply system by supplying some gas from sources at or close to the point of ultimate consumption, thus improving the average Load Factor. Peak shaving may be daily or seasonal and will be handled in a variety of ways: - Underground storage, peak shaving LNG plants, Line Pack, Gas Holders, propane-air plant and, occasionally, special peak shaving supply contracts. A non-storage alternative to peak shaving is to interrupt Interruptible Gas supplies.
Permeability A measure of the ease with which liquids or gas flow through a reservoir rock. Compare this with Porosity. Gas will flow more easily than oil, and so can be recovered from rocks with lower permeability. Permeability is measured in Darcies. Gas reservoirs may have permeabilities of only a few millidarcies.
Pig Equipment used to clean or flush out liquids and other accumulated and unwanted items from the inside of an oil or gas pipeline. It is inserted into the pipeline and carried along by the flow of oil or gas. An “intelligent pig” includes measuring and sensing equipment which can be used to inspect a pipeline internally, which is useful after it has been buried underground
Pipeline A tube for the transportation of crude oil or natural gas between two points, either offshore or onshore.
Plateau In long term gas contracts the period of years for which the Annual Contract Quantity remains flat. The Plateau will normally be preceded by a build up period, during which the volumes increase and, in the case of a Depletion Contract will be followed by a period of decline until further production is no longer economic.
Porosity The proportion of a rock volume (expressed as a percentage) that is occupied by the voids between mineral grains. Used to help estimate the volume of hydrocarbons in a field. Compare this with Permeability.
Possible Reserves One of several definitions of gas reserves. See Proven Reserves.
Primary Energy The gross amount of energy used, measured in the quantities of the original fuel produced (e.g. crude oil) before conversion to other forms (e.g. refined petroleum products or electricity). Thus hydroelectric power and nuclear power are Primary, but power from generating stations consuming fossil fuels is not.
Probable Reserves One of several definitions of gas reserves. See Proven Reserves.
Production Sharing Agreement (PSA) An agreement between an international producing company and a host government or state oil company under which the international company acts as risk-taking contractor investing in exploration and/or production facilities in return for the right to export or sell a quantity of gas or oil that may be produced from the Concession or Block. Sometimes known as a Production Sharing Contract. The terms are interchangeable and the use of one or the other depends on the country.
Production Sharing Contract (PSC) An alternative name for a Production Sharing Agreement.
Profit Gas Frequently used to signify the gas received by a Contractor in a Production Sharing Agreement to provide the profit in the operation. Normally the Contractor will receive Cost Gas to cover its costs and, after other minor provisions, the remaining gas will be split with the host government in agreed proportions. In some countries profit gas is also subject to income tax, in other jurisdictions the State Oil Company is assumed to pay the income tax liability of the contractor. The proportion of profit gas is adjusted depending on local practice. May be used to signify the totality of gas remaining after Cost Gas, Royalty and similar items, including therefore both the Government’s and the Contractor’s shares.
Project Financing A method of financing in which the lender makes loans directly to a project and may claim repayment only out of that project. In theory, the lender has no recourse to the project sponsor’s other assets (non-recourse financing) but in practice this is rare. More commonly the extent of the sponsor’s liability is strictly defined (limited recourse financing).
Propane A member of the alkane (paraffin) group of hydrocarbons with three carbon atoms in its molecule ( C3H8, often abbreviated to C3 in non technical usage). A frequent component of natural gas, also sold as a form of Bottled Gas. Liquefies at -42ºC.
Proven Reserves Those quantities of petroleum which, by analysis of geological and engineering data, can be estimated with reasonable certainty to be commercially recoverable, from a given date forward, from known reservoirs and under current economic conditions, operating methods, and government regulations. Proven (proved) reserves can be categorised as developed or undeveloped. Where probabilistic methods have been used to estimate reserves, proven reserves are those with a better than 90% chance of being economically recoverable. Sometimes abbreviated as P90. Reserves with a greater than 50% chance but less than 90% chance are defined as Probable, or P50. Reserves with a greater than 10% chance but less than 50% chance are Possible or P10. Reserves may be classified as proved, if facilities to process and transport them to market are operational at the time of the estimate or there is a reasonable expectation that such facilities will be installed. “Reasonable expectation” is usually taken to mean that a developer has taken the decision to build the necessary facilities and the development plan has been approved by the relevant authorities. Thus large resources, such as those known to exist in North Alaska, are not classified as “proven” because there is no route to market. Different countries have adopted many different definitions of reserves, but gas contracts often refer to the Society of Petroleum Engineers (SPE) definitions. These and similar definitions from the World Petroleum Council were harmonised in 1997.
PSC Production Sharing Contract. See Production Sharing Agreement.
Public Service Obligation A Public Service Obligation (PSO) is a requirement imposed by government on a company or companies to provide services which might not otherwise be profitable but are judged to be in the public interest. These could, for instance, include supplying gas to small or poor consumers, ensuring that appliances and other infrastructure is operating efficiently and safely, and ensuring that there are sufficient back-up gas supplies to cover emergency interruptions in supply.
Public Utility Commission (PUC) State commissions in the USA responsible for regulating gas, and other utilities that operate within the boundaries of the state. See Regulation.
Rates North American term for the charges for the use of pipeline and storage capacity, referred to in other parts of the English-speaking world as Tariff. The North American definition of Tariff is more nearly equivalent to Network Code.
Recovery Factor The percentage of gas or oil in place in the reservoir which can be economically recovered. Gas Recovery factors may be around 60-70% in reservoirs with water drive from an Aquifer and up to 90% in Depletion Drive Reservoirs.
Regasification The reconversion of LNG into gas suitable for pipeline transportation. See LNG.
(1) A mechanical device for controlling the pressure of gas within acceptable limits. Typically installed when has enters a low pressure distribution system for final use by small customers.
(2) The person or body appointed to oversee the operation of the regulated parts of a gas industry. See Regulation.
Regulation Regulation is a substitute for free market operation typically, in the gas industry, where all or part of the operations are carried out by institutional or natural monopolies. Provides a temporary or permanent counterweight to the economic power of the monopoly. Often exercised politically by government departments, but in many countries independent regulation is thought preferable. In any case the rules governing regulation will normally have been laid down explicitly by government legislation. Regulation can be economic – restricting the revenue and profits of operators - or legal – policing legislation. Regulators are normally closely involved in the setting up of liberalised market systems, when they may use their central position to interpret and rule on the applicability of legislation either ex-ante or ex-post. See Common Carriage.
Renewable Energy An energy form, the supply of which is partly or wholly regenerated in the course of the annual solar cycle. Thus solar and wind energy, hydropower and fuels of vegetable origin are regarded as renewable; mineral fuels and nuclear power are not.
Reservoir A reservoir is an accumulation of oil and/or gas in a permeable and porous rock such as sandstone. A petroleum reservoir normally contains three fluids (oil, gas and water), which separate into distinct sections, owing to their varying specific gravities. Gas occupies the upper part of the reservoir as it is the lightest, oil the middle section, while water occupies the lower section. See also Permeability, Porosity, Gas Cap, Aquifer, Solution Gas, Proven Reserves.
Reticulation A reticulation network is a small diameter, low pressure gas system serving residential and commercial customers. (From the Latin word reta, meaning net). See also Distribution.
Retrograde Condensate A gas condensate which, in the reservoir, is close to the Dew Point of the fluid. A small reduction in pressure, by production of the field, leads to the condensation of higher hydrocarbons in the reservoir, causing a lower Recovery Factor.
Reverse Flow An alternative term for Backhauling.
Rich Gas Rich gas is gas with relatively large quantities of heavier fractions in its composition (typically up to about 15%) and thus of high Calorific Value. Also known as Wet Gas. The converse of Lean Gas. See also Natural Gas Liquids, Condensates.
Royalty A tax on production volumes, often paid in kind, which is levied as a percentage of production. It is therefore not related to the profitability of the production project, merely to the volume of gas (or oil) produced.
R:P Ratio The Reserves: Production Ratio is the number of years that current reserves would last at current production levels. Thus reserves of 100 divided by consumption of 20/year gives an R:P ratio of 5, and implies a life of 5 years for the reserve.
RPI-X A regulatory formula by which a regulated monopoly is allowed to increase its prices each year by the retail price index (RPI) minus a defined amount or percentage x (x is a variable). Gives consumers falling real prices and forces the utility to reduce costs if it is to maintain its level of profitability.
Sales Gas Raw gas, after processing to remove LPG, condensate and carbon dioxide. Sales gas usually consists mainly of methane and ethane and is odorised. See Odorisation.
Salt Cavity Storage The storage of gas in caverns leached out in gas-tight salt strata. Such caverns may be generated during the recovery of salt for commercial purposes, or may be purpose-built for gas storage.
Seal The layer of rock overlying a gas field which prevents the gas escaping from the reservoir. It is therefore of low Permeability. Salt and fine clays can provide good seal.
Seasonal Normal The average (or normal) result for the time of year. Thus Seasonal Normal Temperature (SNT) is the average temperature on a calendar day, where the average has been measured over a suitably long period. Likewise Seasonal Normal Demand, Seasonal Normal Weather. SNT is an important factor in developing forecasts of gas usage. See Weather Correction.
Security of Supply Security of supply is a term with several meanings including: the provision of adequate infrastructure to cope with annual and peak demand; the provision of sufficient gas to meet annual and peak demand; ensuring that a country or area does not rely exclusively on one, or very few sources of supply.
Seismic Survey A technique for establishing the presence of underground geological strata using sound waves. There are two main techniques - reflection or refraction. In the oil and gas industry by far the most common is reflection. In a reflection survey sound waves are sent into the ground and the echoes from boundaries between rock with different properties of density and sound velocity are recorded. The sound waves recorded at the surface can then be used to create maps of the rock layers in the subsurface to reduce the risk of drilling dry holes. A reflection seismic survey may be either 2D, in which the reflections are recorded along a line or 3D, in which the lines are very closely spaced to deliver a three dimensional view of the subsurface. A refraction seismic survey is a different technology in which the sound waves are refracted along rock boundaries rather than reflected from them.
Slug Catcher Plant installed in a gas pipeline system or gas processing plant to catch “slugs” of liquid. Usually this takes the form of a long section of pipe, inside which the pressure is allowed to drop by a controlled amount. See also Pig.
SNT Seasonal Normal Temperature.
Solution Gas Solution Gas, unlike Cap Gas is Associated Gas dissolved in oil. Produced inevitably with the oil and separated from it at the well-head. Solution Gas production is thus a function of oil production and of the Gas/Oil Ratio, which changes over the life of the field. It is therefore an unreliable gas supply and difficult to market, unless the buyer or seller have large alternative sources. Has in the past largely been flared or vented but this is becoming less acceptable, largely for environmental reasons, although is still not uncommon in remoter areas. Separation is often carried out in two or three stages to maintain the gas pressure for pipelining as far as possible. Gas from the final stage separator is at low pressure and is normally used in the field or on the platform during production. The gas may be re-injected into the reservoir if it will not break through into the oil wells.
Sour Gas Gas containing a high level of Carbon Dioxide or Hydrogen Sulphide, which are corrosive in the presence of water. They may therefore require drying or removal to preserve the pipeline. The converse of Sweet Gas.
Spark Spread The spark spread represents the difference between the cost of fuel and the price of electric power produced. A positive spread indicates that the price of the power is higher than that of the fuel, and the spread is profitable. The spread can be calculated for any input fuel, such as natural gas, coal, or heating oil.
Standing Charge Tariff term for a fixed charge, typically per quarter or per year, irrespective of the amount of gas actually taken. Synonymous with Connection Charge but to be distinguished from Demand Charge.
Storage For natural gas storage facilities fall into several categories. Seasonal storage comprises depleted gas fields; Aquifers; Salt Cavity Storage; mined caverns; and disused mines. Peak storage includes Gas Holders, Line Pack, lengths of pipeline buried specifically for storage use, and LNG storage used either for base-load or peak-shaving duties, depending on the market. Increasingly used in liberalised markets to enable gas to be trade at any time of the year for reasons not related to peak demand. See also Peak Shaving.
Straddle Plant A gas processing plant that “straddles” a gas transportation pipeline to remove NGLs from the gas stream. Because it is often more economic to transport Rich Gas a straddle plant is required to process the plant to final sales specification. The alternative location of a gas processing plant is close to the producing field. NGLs are then transported as liquids away from the field area either by separate pipeline or other means.
Supply Contract A contract under which the seller undertakes to supply gas in guaranteed volumes over a fixed period of time. A Supply Contract is therefore in sharp contrast to a Depletion Contract as the seller assumes the volume risks. Whilst certain fields may be envisaged in the contract, the seller will normally have the right to substitute other suitable gas if necessary.
(1) Arrangements under which gas destined for a market is delivered elsewhere, and substitute gas is supplied to the final market. For instance, Nigerian LNG contracted to Italy is delivered to France, and other gas contracted to France is delivered to Italy.
(2) In trading, the exchange of a fixed price for a floating price for a future delivery.
Sweet Gas Gas containing little or no Carbon Dioxide or Hydrogen Sulphide. Converse of Sour Gas.
Swing The inverse of Load Factor, defined as: Peak volume transported (sold) / Average volume transported (sold) Expressed as a percentage. Thus a load factor of 60% is a swing of 167%. Often used to describe the flexibility of supplies over a year.
Syngas Synthesis Gas.
Synthesis Gas Also known as Syngas, Synthesis Gas is a mixture of carbon monoxide and hydrogen produced from methane or other hydrocarbons and steam and used to produce various chemicals, notably methanol. It is also the basis for the Fischer Tropsch process. See also: Middle Distillate Synthesis.
Take or Pay Take or Pay (TOP) is a common provision in gas contracts under which, if the Buyer’s annual purchased volume is less than the Annual Contract Quantity minus any shortfall in the Seller’s deliveries, minus any Downward Quantity Tolerance, the Buyer pays for such a shortfall as if the gas had been received. The Buyer may have the right in subsequent years to take the gas paid for but not received, either free or for an amount to reflect changes in indexed prices. See also Make Up Gas.
Tariff A schedule of rates or charges offered by a common carrier or utility. Tariffs are commonly available for all parts of the gas industry where third party access is enforced or offered, for example for gas transmission in pipelines, for the use of gas stores, for gas sales to residential customers.
Telemetry A technique used in the gas industry for recording information at a distance from the Meter or other recording device, typically by radio transmission of the data.
Temperature/ Demand Analysis The statistical analysis of the causal relationships between weather (and other) factors and the demand for gas. An essential prelude to forecasting demand. See Seasonal Normal and Weather Correction.
Temperature Correction The process of adjusting actual gas usage to what it would have been at Seasonal Normal Temperatures, to allow comparisons to be made between results for different time periods, typically years. See weather correction.
Title Transfer Title transfer is the transfer of which ownership of gas from the seller to the buyer. Typically this may occur somewhere between the well head and entry into the transmission system, at national border crossings, at the City Gate etc. In the world of traded gas, possible points of transfer become more numerous. A special case is the transfer of LNG at some specified point on the high seas. See Delivered.
TOP Take or Pay.
Total Energy An alternative name, now obsolete, for Combined Heat and Power.
Town Gas Manufactured Gas piped to consumers from a gas plant.
Trading Volume The number of contracts that change hands during a specified period of time. See also Churning.
Train An LNG production unit. See LNG.
Transmission The transportation of large quantities of gas at high pressures, often through national or regional transmission systems. The gas is then transferred into local distribution systems for supply to customers at lower pressures.
Transmission Company The company responsible for operating a transportation system. In liberalised markets there is increasing pressure for such companies to be restricted to offering capacity in pipelines for sale, and to be barred from selling gas itself. The companies are also commonly known as Transmission System Operators (TSOs) a title which reinforces their restricted role. See Unbundling.
TSO Transmission System Operator. See Transmission Company.
Transparency A general term meaning open publication of information. In the gas industry it is generally used in relation to costs, prices and capacity, where information has traditionally been considered commercially confidential. Costs and prices generally reflect a number of elements, such as production, transportation, storage, service. Transparency generally involves separating out or Unbundling these elements, usually as a result of regulatory requirements. A further step towards transparency involves the publication of the methodology used to calculate the different elements of costs and prices.
Transporter A gas pipeline company transporting gas belonging to other companies. Also the operator of LNG vessels. See Transmission Company.
Trap A configuration of reservoir and seal rocks that can confine gas (or oil) which are lighter than water normally contained in the reservoir rock. Structural traps are formed by a closed structure of Reservoir rock overlain by a sealing formation (the Seal). May also be formed by stratigraphic changes within a reservoir rock in which case it is known as a stratigraphic trap.
Treatment Any gas purification process, but most generally applied to the treatment of gas immediately after production, to bring it to acceptable standard for the market in question and/or to extract valuable components for separate sale. This may involve the removal of LPGs and will certainly involve stripping out Condensates, Carbon Dioxide and Hydrogen Sulphide and other sulphur compounds (see also Acid Gas) mercury and excessive water which may be in the raw gas. Other impurities are occasionally encountered. Whether other inert gases such as nitrogen, helium etc are extracted will be a matter for economic evaluation.
Ultra-Sound Meter See Meter.
Unbundling Unbundling is a term with several meanings for the gas industry but more accurately, and originally, it was used to denote the separation of different services and the charges associated with them. Originally used in the US in restructuring the telephone industry , it was adopted in the gas industry to denote the separation of gas sales from transportation and storage services. This is still the most usual meaning of the term, particularly in North America, where large customers are now free to purchase gas and services separately. However the European Commission uses the term Unbundling to mean the financial disaggregation of different functions within integrated companies, such as transmission and marketing. Where companies perform multiple functions, the Commission has sought to require separate accounting for the functions. Its aim is therefore much more related towards Transparency and eliminating the potential for anti-competitive cross subsidisation activities.
Underground Storage The storage of gas, for strategic or peak shaving reasons, in underground reservoirs. Depleted gas fields are often suitable. Other possibilities include depleted oil fields, Aquifers and Salt Cavity Storage. In the context of LNG, underground storage refers to normal LNG storage tanks which are, however, buried to provide greater safety in the event of leakages.
Unitisation Agreement When a gas field extends over two or more production licences or leases with different ownership, most countries require that the field owners “unitise” their holdings i.e. decide how the reserves and production of the total field will be shared between the licensees, thus enabling the efficient depletion of the reserves. The Unitisation Agreement normally provides for the appointment of a field operator, a method of determining the reserves underlying each licence or lease and the frequency of reserve re-determination.
Upstream Upstream, Midstream and Downstream are imprecisely defined terms used to separate activities along the gas and oil chain into homogenous groups. Upstream typically refers to exploration, development & production of oil & gas. Sometimes also defined to embrace Midstream, which typically covers transmission (as opposed to distribution) LNG shipping etc. Downstream typically refers to activities associated with delivery to final consumers, such as distribution systems and connections to customer premises.
Valley Gas Interruptible Gas supplied during the slack months, usually summer.
Water Drive In a porous rock, as gas is withdrawn from the reservoir, water expands into the region formerly occupied by the gas as pressure is released. This often has the result of trapping volumes of gas so that they cannot be produced, thus reducing the recovery of gas. Not a problem with a Depletion Drive Reservoir. See Aquifer.
Water Gauge A measure often used to express the pressure of gas in distribution systems, using water instead of mercury. The gauge records how far up a gradated tube gas will lift a column of water. Distribution systems normally operate at about 300mm (12 inches) water gauge (i.e. 300mm above atmospheric pressure). For comparison, atmospheric pressure is a little above 10 metres of water.
Weather correction A procedure for estimating what customer demand would have been in Seasonal Normal weather conditions. Thus in a cold year seasonal normal demand will be lower than actual demand and vice versa.
Well A hole drilled into the ground, mostly by rotary rigs, in which a drill bit, which actually cuts the rock, is turned on the end of a drill string, made up of lengths of hollow steel pipe which are added to the string as the bit drills deeper into the ground. Wells have various descriptions depending on the stage of the production process at which they are drilled. Exploration wells are drilled to discover if gas (or oil) can be found; Evaluation or appraisal wells are drilled to obtain more information about a previous discovery; Development wells are drilled to produce gas from a field which is being developed, and are called Producing wells when the field enters commercial production.
Wheeling Physically redirecting gas from one pipeline system to another at a Hub as opposed to changing the title by swap arrangements.
Working Gas In a gas store, the total volume of gas present less Cushion Gas, In other words the gas available for normal working. Hence working gas capacity - the total capacity of a storage facility minus cushion gas.
GLOSSARY OF UNITS
Absolute Pressure The sum of Atmospheric Pressure and Gauge Pressure i.e. pressure by reference to a vacuum
Atmosphere: A measure of pressure, now largely superseded by the Bar to which it is nearly identical. Originally equal to 760 mmHg it has now been redefined as 101,325 pascals and consequently 1 atmosphere = 1.01325 bars.
Bar The most used unit for expressing gas pressure. It is equal to 100,000 pascals (N/m2), which is the official SI unit. 1 Bar is approximately atmospheric pressure.
bbl A US barrel, 1 barrel = 0.159 cubic metres = 42 U.S. gallons (approx=35 imperial gallons). The abbreviation is also sometimes written as B or b.
bbl/day Barrels per day. Usually used to quantify a refiner’s output capacity or an oilfield’s rate of flow.
Bcm Billion cubic metres – (i.e milliard or 109 cubic metres).
Billion In the US 109. Although elsewhere billion often signifies 1012, the Natural Gas industry has generally adopted the US usage.
Boe Barrels of oil equivalent - a frequently used number to quantify general energy requirements for practical purposes. One boe is usually taken as representing 5.8 MMBtu gross.
British thermal unit A unit of heat still widely used in the gas industry, notably in North America and in LNG. Originally defined as the amount of heat required to raise the temperature of one lb of water from 60° to 61° Fahrenheit, it is now defined in relationship to a fixed number of Joules (1055.056 to three decimal points). The most common multiple is one million Btu, normally abbreviated to MMBtu and U.S. dollars/MMBtu is perhaps the most frequently used unit for comparing gas prices on a common basis. See also Therm.
Cal Calorie. Formerly the SI unit of energy, now no longer part of the system but still extensively used in Europe. The calorie was nominally the amount of heat required to raise 1 gram of water by 1°C at 1 standard atmosphere and starting from 14.5°C, but is now defined arbitrarily as: 4.1868 J. The most common multiple used is the Megacalorie (Mcal).
Cf Cubic feet. Measure of gas volume, referring to the amount of gas needed to fill a volume of one cubic foot at 14.73 pounds per square inch absolute pressure and 600F.
cm Cubic metres. Note however that cm is also the official abbreviation for centimetre.
Deca Therm Also deka therm. A term sometimes used in the U.S. in lieu of one million Btu.
Gauge Pressure The amount of pressure shown by a gauge, i.e. the amount by which the pressure exceeds atmospheric pressure. See also Absolute Pressure.
GJ GigaJoule. One GigaJoule is approximately equal to 9.478 MMBtu. One million Btu equals 1.055 GJ.
GWh GigaWatts per hour.
J Joule - The unit of energy in the SI system and the unit approved by the International Gas Union for the expression of heat in the gas industry. Its definition is one Newton metre. In practice the industry has been reluctant to embrace the Joule for commercial purposes and it is only current in Australia and New Zealand. For practical purposes the multiples most in use are the MegaJoule (MJ) and the GigaJoule (GJ), although Petajoule (PJ) is also seen. For quick calculations 1 GigaJoule is very close in value to 1 MMBtu.
Kelvin Measurement of temperature equivalent to 1/273.16 of the interval between absolute zero and the triple point of water. The official unit of the SI system. The Kelvin is identical to 1 degree Celsius, which is the term most often used in practice, but the scale is different (0ºC=273.16 K). Note incidentally that the Kelvin is itself the unit of measurement and references to 1 degree Kelvin are incorrect.
kW KiloWatt = One thousand Watts.
kWh KiloWatt hour - Together with its multiples, rapidly becoming the most used unit for energy in gas, although its use is not strictly in accordance with the SI system or with IGU preferences. Since 1 Joule = 1 Watt per second, the conversion factor 1 kWh = 3.6 MJ is exact.
Long ton 2240 lb. The most usual form of non-metric ton.
Mcf Thousand cubic feet.
Mcm Thousand cubic metres.
Milliard Synonymous with US billion - 109.
MM Widely used in the gas industry to mean a million (106), although this usage is incorrect, according to the SI convention. Similarly M is often used to represent a thousand (103). When the lower case letters m and mm are used, these usually denote a thousand and a million respectively. In everything else M is correctly used to mean Million as in MWh.
MMbbl Million barrels.
MMBtu Million British Thermal Units.
MMcf Million cubic feet.
MMcm Million cubic metres.
MMscf Million standard cubic feet See scf.
MMscm Million standard cubic metres.
Mt Million tonnes.
Mtoe Million tonnes of oil equivalent.
Mtpa Million tonnes per annum, a widely used unit of volume in the LNG industry.
MW MegaWatt - one million Watts.
MWh MegaWatt hour.
ncm Normal Cubic Metre - A cubic metre measured at 0° C and 1013 mbar dry. The most used metric unit for measuring the volume of gas. It differs from the Standard cubic metre (scm) in the temperature at which the measurement is made. The Normal cubic metre thus contains about 5% more heat content than the Standard cubic metre.
PJ PetaJoule - Standard unit in the Australian gas industry, equivalent to 1 million (106) GJ and therefore roughly equal to 1 million MMBtu. It is therefore close to 1 Bcf or some 30 million cubic metres.
ppm Parts per million.
Pressure The force exerted by one body on another, measured as force over area e.g. newtons per square metre.
Psi Pounds per Square Inch – common US/English unit of pressure, 14.5psi = 1 bar.
scf Standard cubic foot - The conditions for measuring the scf are in fact very close to, but not identical with, those for the standard cubic metre (scm). Despite its name, there is no single accepted standard for the standard cubic foot but the one most used is 60°F and 30 in Hg, dry.
scm Standard Cubic Metre - A cubic metre measured at 15°C and 1013.25 mbar, dry. The unit of volume recommended by the IGU but not in normal use. See also ncm.
Short ton 2000 lb. Used in the US.
SI Multiples The SI system uses the following prefixes for multiples of the base units: 103 kilo (k), 106 mega (M), 109 giga (G), 1012 tera (T), 1015 peta (P), 1018exa (E).
tce Ton of coal equivalent - Like the barrel of oil equivalent (boe) a measure of general energy requirement but now largely supplanted by the boe. Generally taken to have a value of approximately 27 MMBtu.
Tcf Trillion (1012) cubic feet.
Tcm Trillion (1012) cubic metres.
Therm 100,000 British Thermal Units is still occasionally used as a unit for pricing gas, particularly in the UK.
Thermie A term virtually identical to 1 Megacalorie but having 15°C as its base, used primarily in Spain.
toe Tonnes of oil equivalent - A metric measure used to quantify general energy requirements for practical purposes, an alternative to the barrel of oil equivalent , usually taken as representing 10,000 kilocalories net.
Ton (t) A term covering a variety of measures: The metric tonne (1000 kg); The long ton (2240 lbs); The short ton (2000 lbs). The metric tonne is the one increasingly used.
W Watt - The basic unit of electrical power, defined as one joule per second.
Water Drive In a porous rock, as gas is withdrawn from the reservoir, water expands into the region formerly occupied by the gas as pressure is released. This often has the result of trapping gas so that it cannot be produced, thus reducing recovery from the reservoir. Water drive is not a problem with a Depletion Drive Reservoir. See also Reservoir.
Water Gauge A measure often used to express the pressure of gas in distribution systems, using water instead of mercury. Distribution systems normally operate at about 300mm (12 inches) water gauge (i.e. 300mm above atmospheric pressure). For comparison, atmospheric pressure is a little above 10metres of water. See also Gauge Pressure.