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Absorption is the ability of liquids and solids to soak up water or other fluids, including unwanted gases, in natural gas processing.

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 alsoCommon CarriageLimited AccessNegotiated AccessThird Party Access.

Acid Gas isNatural Gascontaining a proportion of gases such as Carbon Dioxide or Hydrogen Sulphide which, when combined with moisture, form acidic compounds.

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 theDaily Contract Quantity. In practice, many contracts are written in forms which allow the Buyer to take considerably below the stated ACQ. See alsoDownward Quantity Tolerance.

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.

An Aquifer is a body of porous rock saturated with water. Gas fields are usually underlain by an aquifer which often provides pressure known asWater Driveto 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 alsoReservoirUnderground Storage.

Arbitrage is buying and selling the same product in two different locations or markets to take advantage of differences in price.

Associated Gas is gas which coexists with oil in a predominantly oil field. It may beCap GasorSolution 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 thanNon Associated Gas.

Autogeneration is the generation of electricity by an industrial concern primarily to meet the needs of its own operations See alsoCombined Heat and Power.

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 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 users 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 is an alternative name forCushion Gas.

Base load is the rate of delivery (or demand) below which sendout (or demand) is not expected to fall during a given period.

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.

Gas produced as a by product from the use of coke in traditional blast furnaces. This gas was of lowCalorific Value(roughly a quarter to a third that of natural gas) but was used mixed withManufactured Gasin the days before natural gas.

A block is a geographical area defined in aConcessionagreement, 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.

A method of producing a gas/condensateReservoirby letting the reservoir pressure fall as gas is produced over time without re-injecting any gas. With this method of production someCondensatemay condense within the reservoir, where its recovery is no longer a practical proposition.

Boil off is a term used inLNGprojects. 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 plants own low pressure fuel system. On LNG tankers driven by steam turbines the gas is normally used as a fuel to drive the ships.

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.

, usuallyButaneorPropanestored in the liquid state at moderate pressure in steel containers for use in small residential and commercial applications.

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 alsoUnbundling.

A member of the alkane group ofHydrocarbonswith 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.

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 alsoGross Calorific Value,Net Calorific Value.

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 aSupply Contractwhere 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.

Gas found in aGas Capin association with oil but not commingled with it.

A capacity charge is the payment made for reserving capacity in a pipeline, a gas store or other piece of infrastructure. Often used interchangeably withDemand Charge.

The buying and selling of acquired rights to move gas through the pipelines of a Transporter.

The capture of carbon emissions to the atmosphere and their storage in carbon sinks, which cam be natural, or may be depleted hydrocarbons fields.

A systematic procedure for exchanging permits to produce carbon emissions. SeeEU ETS.

A provision within a long termTake or PayContract under which a Buyer which takes more than itsAnnual Contract Quantityin 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.

An alternative name forCondensatesand especially for those dropping out at or close to the well head. Mainly used in North America.

Churning is a term used in gas trading to indicate the number of times on average that gas is traded between initial sale and ultimate consumption.

CityGas 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 alsoTown Gas.

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 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 aSealbut 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. SeeCoal Mine Methane.

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.

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.

Confirmation of Intent SeeMemorandum of Intent.

Coke oven gas is produced as a by-product of the coking of coal and was at one time a main ingredient ofManufactured Gas.

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 aGas 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) 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 throughGas Turbinesor another prime mover. The exhaust heat is harnessed for requirements other than electricity generation. Also known as Cogeneration and Total Energy.

Tariffterm for a charge made for each unit of gas actually taken or transported. May be in volumetric or heat units. Distinguish fromStanding ChargeandDemand Charge.

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 arms-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 Accessand 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 alsoLimited Access.

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 withLiquefied Petroleum Gas.

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.

A license awarded either by a Government or State Oil company. It defines an area, often referred to as aBlock, 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 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 lightHydrocarbonswhich remain liquid at normal temperature and pressure. There will be some propane and butane dissolved in it. UnlikeCrude 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.

A condensing boiler is a water heating device designed for increased efficiency by using flue gases otherwise vented to atmosphere to pre-heat water in the boiler.

Sometimes used as a synonym forStanding Chargebut more correctly defined as an amount to be paid by the customer in a lump sum or by instalments for a connection to the suppliers system.

An alternative term forCommon Carriageused in the US.

A term having a specific meaning in aProduction 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.

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 gas is the gas which aContractoracquires under aProduction Sharing Agreementto 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 alsoProfit Gas.

The minimum pressure which must be applied to a gas before it can be liquefied.

The temperature above which a gas will not liquefy, irrespective of the pressure applied.

A mixture ofHydrocarbonsthat 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.

The process of producing, maintaining and utilising very low temperatures (below -46ºC / – 50ºF). Relevant in theLNGbusiness.

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 anAquiferand 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.

Total volume of gas delivered during a period of time, divided by the total number of days in the period.

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 theAnnual Contract Quantityif 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.

The Daily Delivery Rate (DDR) is the rate at which the Sellers 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.

Daily Peak is the maximum volume of gas which can or must be delivered/required on any one day during a given period (usually one year).

A Dedication Contract is the correct term for aDepletion Contract, under which the entire production from a gas field is bought and sold.

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 5C on a day is 2 degree days warmer than an expected average temperature of 3C. Can also be used to measure cumulative cold weather over a period. Thus if theSeasonal Normaltemperature for a month is 18C and the average actual temperature through the month is expected to be 8C, the month will be 10 x 30 = 300 degree days colder than normal.

A term used mainly inLNGshipping 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 sellers risks are greater in a delivered transaction because the buyer only pays for the landed quality/quantity, and theBoil Off Gasis the sellers 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 isEx 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 countrys 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.

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 withCapacity Chargealthough it can be argued that in strict logic Demand Charge should apply to a gas sale and Capacity Charge to a transportation arrangement.

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 expectedPlateauand 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 alsoDedication ContractandSupply Contract.

A gasReservoirfrom 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 factorsof up to 90% of the gas in place can be achieved. In such reservoirs there is noWater Drive.

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 withLiberalisationwhich may require the introduction of transparent regulatory processes.

Derivatives are financial instruments ultimately based on trading a physical commodity, including gas and other forms of energy. See alsoFutures,Swaps.

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 aPigthough 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 formHydrates. Therefore, at theTreatmentstage, water is normally removed from the gas stream to reduce the Dew Point to somewhere around -10C at standard pipeline pressures.

The final phase in the transportation of gas (and electricity) and its sale to end consumers through medium-sized pipelines and small diameter low pressureReticulationgrids.

Literally, daily storage. The short-term or peak storage of gas in pipelines or gas holders, to meet local, within-day fluctuations in demand, as opposed to seasonal storage.

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 alsoLoad Factor.

Those activities in the gas chain closest to final customers. SeeUpstream.

The Downward Quantity Tolerance (DQT) is the amount by which a buyer may fall short of its fullAnnual Contract Quantityin aTake or Paygas 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 alsoMake GoodandMake Up.

An alternative name forLean Gas. It does not mean free of water, though in some cases it may be.

A reservoir which will yield dry/lean gas and very small quantities ofCondensate; 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.

: A borehole that cannot produce commercial volumes of oil or gas. Conventionally the termWellis restricted to a borehole that can produce oil or gas.

The European Federation of Energy Traders. A pressure group of European energy trading companies dedicated to stimulating and promoting energy trading.

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 alsoGross Calorific Value,Net Calorific Value.

The consumer of gas, in the residential, commercial or industrial sector. The final player in the gas chain.

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.

The European Regulators Group for Electricity and Gas. ERGEG is the European Commissions 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. ERGEGs members are the heads of the national energy regulatory authorities in the EU Member States.

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.

Also known as Ethene. A colourless gas (C2H4) produced by crackingHydrocarbonssuch asEthaneor naphtha and used as a feedstock for petrochemicals, such as fibres and many plastics. Boils at -103.7ºC.

The European Union Emission Trading System. The largest multi-national, emissions trading scheme in the world, and a major pillar of EU climate policy.

Excess Gas is either: a) Gas taken at a rate in excess of theDaily Delivery Rateat a premium price; or b) Gas taken in excess of theAnnual Contract Quantity. Depending on the terms of the contract and the status of deliveries such gas may qualify asCarry Forward,Make GoodorMake Upgas.

An alternative name toDelivered, used inLNGshipping.

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.

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 (seeGas 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 alsoMiddle Distillate Synthesis.

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.

Gas which a supplier commits to supply to a purchaser under terms defined in the contract, without interruption. See also:Interruptible Gas.

A chemical process to convertSynthesis Gasto 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 convention