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It's hard to imagine a sector that's been the focal point of more public attention this year than energy.
Even before hurricane Katrina hit the Gulf Coast, high oil, gasoline and electricity prices were the subject of considerable scrutiny in the popular press. And since the storm, you can't turn on your local news without hearing at least some mention of the oil business.
But like any other business, energy has its own set of terminology and slang; much of this lexicon isn't in common use outside the oil patch. And undoubtedly, you'll see or hear plenty of this oil patch lingo during the next few months as the sector remains on the front page.
Fortunately, a few definitions can go a long way in helping you understand the latest from the industry. Here's our brief guide to some of the most commonly used terms:
Barrel: A barrel of oil equals 42 gallons.
Bitumen: A heavy form of crude oil that's solid or nearly solid in its natural state. The Canadian oil sands are a classic example.
BTU: Short for British thermal unit, it's the amount of energy required to heat one pound of water one degree Fahrenheit. There are approximately 1,030 BTUs in a cubic foot of natural gas.
Catalytic Cracking: Sometimes simply referred to as "Cat Cracking," this is a refining process that involves breaking heavier crude oil molecules into lighter molecules such as gasoline. Cat cracking units allow refiners to process heavier grades of crude oil.
Crack Spread: A measure of refiners' profitability. This spread compares the price of gasoline and heating oil (a distillate) to the cost of crude oil. Refiners buy crude oil and sell gasoline and heating oil. The higher the number, the more profitable the refiners.
Distillates: One class of products of the refining process. The main distillates in use today are diesel fuel and heating oil.
Downstream Operations: The refining and marketing of oil and gas. This means turning crude oil into gasoline and other useful products and selling those products to the public or other companies.
Drilling Rig: The actual equipment used to drill the hole through which oil and gas are produced. On land, rigs are usually truck-mounted; offshore, they're either mounted on a floating platform called a floater or on a mobile platform that rests on the bottom called a bottom-supported rig.
Heavy, Light: Terms applied to crude oil. Heavy oils contain large molecules and are more difficult to refine into products like gasoline and jet fuel. Some refineries can't process these crudes. Light oils are easier to refine.
Henry Hub: A hub for several major pipeline systems located on the Louisiana Gulf Coast. Serves as the designated delivery point for New York Mercantile Exchange natural gas futures.
Jack-up Rig: A common bottom-supported, shallow-water drilling rig. Several were damaged or destroyed by Katrina in the Gulf; one was widely reported as having washed ashore in Florida.
LNG: An abbreviation for liquefied natural gas. Natural gas becomes a liquid at –260 degrees Fahrenheit and can be transported by tanker ship. LNG must be re-gasified before use.
Midstream Operations: The processing, transport and storage of oil and natural gas. This includes the tanker, pipeline and natural gas processing industries.
Naptha: A product of the refining process commonly blended to make jet fuel. Kerosene is also used for this purpose.
NGLs: An abbreviation for natural gas liquids. Natural gas is mainly composed of methane but often contains several other gases that liquefy at atmospheric pressure. The list includes butane, propane and condensate (natural gasoline).
Production Platform: Sometimes simply called a platform, this isn't a drilling rig. Platforms are located offshore and collect and separate oil and gas produced by many subsea wells. Oil and gas collected on a platform can be loaded onto a tanker or pipeline for transport to shore.
Semisubmersible Rig: A deeper-water, floating offshore oil rig unit. These rigs have air chambers that are partially flooded, submerging the lower part of the unit. This offers stability in rough seas. Some platforms are also designed as semisubmersibles. The rigs pictured in the Gulf are semisubmersibles.
Sour, Sweet: Terms applied to both oil and natural gas. Sour hydrocarbons have a high concentration of sulphur, a corrosive pollutant. Sweet hydrocarbons are relatively free of sulphur.
Suezmax Tankers: A mid-sized crude oil tanker ship. The name comes from the Suez canal; this is the largest size tanker capable of fitting through the Suez Canal.
The LOOP: A common abbreviation for Louisiana Offshore Oil Port. This is one of the largest import terminals for crude oil in the US.
Upstream Operations: Any activities related to the exploration and production of oil and natural gas. That means finding energy reserves and removing them from the earth.
VLCC Tankers: Abbreviation for very large crude carriers. One of the largest common classes of tanker ship, they're generally used to transport oil long distances.
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