Energy Resource Library - IGS Energy

Energy Terms and Definitions Glossary

Energy Resource Library >> Energy Terms and Definitions Glossary


 

To make informed decisions about your energy needs, consumption, and services, you need to know the lingo of the energy industry. IGS Energy’s glossary gives you the definitions you need to understand everything from natural gas to green energy in your home, business and the market.

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

A

Absolute Pressure

Gauge pressure plus barometric pressure. Absolute pressure can be zero only in a perfect vacuum.

Absolute Viscosity

The measure of a fluid’s tendency to resist flow, without regard to its density. By definition, the product of a fluid’s kinematic viscosity times its density.

Affiliated Marketer

A marketer that is owned either by a distribution or transmission company, or by a corporation that also owns a distribution or transmission company.

Agent

A legal representative of buyers, sellers or shippers of natural gas in negotiation or operations of contractual agreements.

Air-Gas Ratio

The ratio of the air volume to the gas volume. A specified ratio is necessary to achieve a desired character of combustion.

Allocation

The process of determining ownership rights to the gas delivered to a meter.

American Gas Association (AGA)

Trade group representing natural gas distributors and pipelines.

Annual Gas Consumption (Sales) Per Customer

Average gas used annually per customer in Btu’s or therms by class of service; annual Btu’s or therms sales to a class divided by the average number of customers for that class of service.

Aquifer Storage

The storage of gas underground in porous and permeable rock stratum, the pore space of which was originally filled with water.

Atlantic-Seaboard Classification Method

A method of classifying costs as demand or commodity costs promulgated by the FPC in Opinion 225, April 25, 1952. Generally, this method allocates 50% of the pipeline’s fixed storage and transmission costs to the demand component and 50% to the commodity component of the rates.

Automatic Meter Reading (AMR)

“Real time” monitoring of natural gas quantities and characteristics as it passes through a specific location.

 

B

Barrel (Oil)

A volumetric unit of measurement equivalent to 42 U.S. gallons, 9,702 cubic inches, 5.6146 cubic feet, 34.9722 Canadian Imperial gallons, 158.99 liters, or .15899 cubic meters. It is the unit of measurement commonly used to measure oil production and oil reserves within the U.S.

Base Contract Price

The stated per unit price for natural gas in a contract between a producer and a purchaser.

Basic Air or Gas Time

The time required to pass one cubic foot of air or gas through a given orifice in a flow prover at stated base conditions. This time is stamped on the prover orifice in seconds.

Basis or Basis Differential

The difference in price between the NYMEX natural gas futures contract at the Henry Hub and the cash price at other market points. The basis primarily represents transportation cost, although regional supply and demand factors are also important.

Below the Line vs Above the Line

A decision that is made to determine whether an item should be included in cost of service for establishing rates (above the line) or should not be included (below the line). The “line” referred to is utility net operating income on the income statement. “Above the Line” refers to revenues collected for and costs included in providing utility service.

Benefit-Cost Ratio

The ratio of the value of a measure’s savings to its cost.

Best Efforts

An agreement by a contracting party to do its best to complete some specified result. In a gas transportation contract, it might represent a pledge by the transporter to use best efforts to transport the shipper’s gas. BESS is the acronym for best efforts storage service.

Billing Cycle

The regular, periodic interval used by a utility for reading the meters of customers for billing purposes. Usually billing cycles are monthly or bi-monthly.

Bi-Monthly Billing

A customer billing procedure in a distribution company where bills are rendered every month, but meters are read every other month. An estimate is made of the volume of gas used in months when meters are not read.

Broker

One who sells or assigns firm transportation (or storage) capacity rights on an interstate pipeline to another entity. Also, an individual or company that buys or sells stocks, commodities, or services for others for a fee. A broker provides the function of bringing a buyer and seller together. A lease broker leases oil and gas leases for others or for the broker’s own account for later sale.

Brokerage of Gas

The term applies to the activities and compensation in arranging for the sale of gas between producers and buyers.

Btu

British Thermal Unit. The quantity of heat required to raise one pound of water (about one pint) one degree Fahrenheit at or near its point of maximum density.

Btu Adjustment Clause

A clause in a gas purchase contract that may adjust the contract price if the heat content of the gas delivered does not fall within a specified range.

Bundled Sales Service

Natural gas sold on an as-needed basis, without prior scheduling, to the local distribution company at FERC-approved rates. Prior to implementation of various transportation programs, this constituted all gas delivered to an LDC.

Burnertip

The point at which gas is consumed by the end-user. The end-user’s meter.

 

C

Capacity Release

Sale and assignment of Firm transportation on an interstate pipeline. Owners of Firm transportation capacity (usually LDC’s) release this capacity to other parties where such capacity is not being fully utilized (i.e. summer months)

Cash Out

The reconciliation process by which the sum of the volumes of gas available for redelivery by the LDC is compared to the sum of all volumes actually delivered to the customer during the customers billing cycle. This may create either a positive or negative imbalance volume, with associated penalty charges.

Ceiling Price

The maximum lawful price which may be charged for regulated gas.

City Gate

The physical location where gas is delivered by an interstate pipeline or from gas wells to a local distribution company. Typically, the delivery point under a Natural Gas Sales agreement.

Class of Service

Defines the type of customer. 1.Residential Service: Covers service to customers for domestic purposes (single, multifamily, or mobile homes, etc.). In residential service, the number of housing units within a structure determines the customer classification. 2.Commercial Service: Covers service to customers engaged in wholesale or retail trade, agriculture, communications, finance, fisheries, forestry, government, insurance, real estate, transportation, etc., and to customers not directly involved in other classes of service. 3.Industrial Service: Covers service to customers engaged primarily in a process that either involves the extraction of raw materials from the earth or a change of raw unfinished materials into another form or product.

Combination Utility

Utility which supplies both gas and some other utility service (electricity, water, etc.). For purposes of A.G.A. statistics, a combination utility derives at least 5 percent but less than 95 percent of its total operating revenues from gas operation.

Commingled Gas

A homogeneous mix of gas obtained from various physical and contractual supply sources.

Compressed Natural Gas (CNG)

Natural gas in high-pressure surface containers that is highly compressed (though not to the point of liquefaction). CNG is used extensively as a transportation fuel for automobiles, trucks and buses in some parts of Italy, New Zealand, and in Western Canada, and has recently begun to penetrate some regions of the United States. Small amounts of natural gas are also transported overland in high-pressure containers.

Compressor Stations

Locations along the interstate pipeline at which large (thousands of horsepower) natural gas-powered engines increase the pressure of the market natural gas stream flowing through the station by compression.

Consumer

The ultimate user of gas, as opposed to a “customer” who may purchase gas for resale.

Cost of Service

A term used in public utility regulation to mean the total number of dollars required to supply any total utility service (i.e., revenue requirements); it must include all of the supplier’s costs, an amount to cover operation and maintenance expenses, and other necessary costs such as taxes, including income taxes, depreciation, depletion, and amortization of the property not covered by ordinary maintenance. Included also is a fair return in order that the utility can maintain its financial integrity, attract new capital, and compensate the owners of the property for the risks involved.

Cubic Foot

The most common unit of measurement of gas volume. The amount of gas required to fill a volume of one cubic foot under standard conditions of temperature, pressure and water vapor.

Customer’s Billing Cycle

For delivery points equipped with electronic gas measurement equipment, the calendar month is used for billing purposes; for delivery points not equipped with EGM equipment , the customer is billed for the period that takes place between meter readings.

 

D

Deregulation / Decontrol

The act of ending federal government control over the wellhead price of new natural gas sold in interstate commerce.

Devonian Shale

Geological formations, typically hundreds of feet thick, that underlie much of the Appalachian Basin. It is known to contain much natural gas, but usually lacks sufficient natural permeability for ordinary production.

Distribution Company

Gas Company which obtains at least 90 of its gas operating revenues from the operation of a retail gas distribution and sales to ultimate customers, and which operates no transmission system other than incidental connections within its own system or to the system of another company.

Dth

Dekatherm. A unit of heating value equal to 10 therms or one million Btu’s (1 MMBtu).

 

E

End-User

The ultimate consumer for natural gas. An end-user purchases the gas for heating or production, but not for resale purposes.

 

F

Federal Energy Regulatory Commission (FERC)

A federal agency created in 1977 to regulate, among other things, interstate wholesale sales and transportation of gas at “just and reasonable” rates. The FERC establishes uniform ceiling prices for each of several categories of natural gas, and these prices apply to all sales on a nationwide basis.

Field Price

The price paid for natural gas at the wellhead or outlet of a central gathering point in a field.

Firm Service

The highest quality sales or transmission service offered to customers under a filed rate schedule, which anticipates no planned interruption. Usually associated with distribution companies that serve residential customers and other “high priority end-users” but can also apply to upstream pipelines and other customers.

Force Majeure

A superior force, “act of God” or unexpected and disruptive event, which may serve to relieve a party from a contract or obligation.

Fracking or Fracturing

The process of opening up underground channels in hydrocarbon-bearing formations by force by pumping a liquid or other substance into a well under pressure to crack (fracture) and prop open the gas-bearing formation in order to increase the deliverability of a production or underground storage well.

Futures Market

A market trading in contracts to buy and sell natural gas contracts for delivery on a specified future date. Trading is carried out through open yelling and hand signals in a trading pit, as well as electronically.

 

G

Gas Day

A period of twenty-four (24) consecutive hours commencing at a specified hour on a given calendar day and ending at the same specified hour on the next succeeding calendar day.

GCR

Gas Cost Recovery rate. The rate the LDC charges their sales customers for natural gas at the city gate. It is a pass through charge, representing what the LDC paid for gas supplies. This rate is regulated by PUCO and is typically adjusted quarterly.

 

H

Hedging

A method by which a purchaser or producer of natural gas uses a derivative position to protect against adverse price movements in the cash market by “locking in” a price for future delivery.

Henry Hub

A pipeline interchange near Erath, LA, where a number of interstate and intrastate pipelines interconnect. The standard delivery point for the New York Mercantile Exchange natural gas futures contract.

Human Needs Customer

Any customer who uses natural gas for heating a residence, governmental agency or other entity which provides emergency or life-support services. Human Needs Customers include hospitals, nursing homes and residential correctional institutions. Excluded are hotels, motels and nonresidential educational facilities.

Hydrocarbon

A chemical compound composed solely of carbon and hydrogen. The compounds having a small number of carbon and hydrogen atoms in their molecules are usually gaseous; those with a larger number of atoms are liquid, and the compounds with the largest number of atoms are solid.

 

I

Imbalance

Discrepancy between the amount a shipper contracted to use or transport, and actual volumes used or transported. Shippers may be forced to pay an imbalance penalty for variances greater than an established percentage. Marketers may take responsibility for monthly or daily balancing.

Interruptible Service

Gas service which is subject to interruption on short notice (both sales and transportation). Rates are typically cheaper than firm service.

Interstate Gas

Gas transported in interstate pipelines to be sold and consumed in states other than that state in which the gas was produced.

Intrastate Gas

Gas sold and consumed in the state where it is produced and not transported in interstate pipelines.

 

J

Jurisdiction

Portion of the company’s activities that are subject to the rules and regulations of the particular government entity which regulates it. Generally, the Commission has (1) rate jurisdiction over transportation and sales of gas for resale in interstate commerce and (2) certificate jurisdiction over those facilities (except purely gathering) used to transport gas across state lines in interstate commerce.

 

K

Kilowatt (KW)

A unit of electrical work equivalent to 1,000 watts, 1.3414 horsepower, or .9478 Btu/sec.

 

L

LDC

Local distribution company. A gas utility. A retail seller of gas or transporter of gas to end users.

LPG (Liquefied Petroleum Gas)

A gas containing certain specific hydrocarbons which are gaseous under normal atmospheric conditions but can be liquefied under moderate pressure at normal temperatures. Propane and butane are the principal examples.

 

M

Market-Based Pricing

The basing of a longer-term contract or rate schedule on published current market prices of competing supplies of natural gas or alternate fuels. Also known as market-responsive pricing.

Marketer

A company, other than a pipeline or LDC, that buys and resells gas for a profit. Marketers also perform a variety of other services associated with moving their product to buyers, including arranging transportation, monitoring deliveries and balancing. An independent marketer—as opposed to an affiliated marketer—is not affiliated with a pipeline or LDC.

Mcf

One thousand cubic feet. The common unit of measurement for gas by LDC’s. The average residential user consumes about 200 Mcf annually.

Mixed Gas

Fuel gas in which natural or LP gas is mixed with manufactured gas.

MMBtu

One million Btu’s. The common unit of measurement for interstate gas. Generally accepted as a rough equivalent of an Mcf.

MMcf

One million cubic feet.

 

N

Natural Gas

A naturally occurring mixture of hydrocarbon and nonhydrocarbon gases found in porous geologic formations beneath the earth’s surface, often in association with petroleum. The principal constituent is methane.

NYMEX

New York Mercantile Exchange

 

O

Off-Peak Service

Service made available on special schedules or contracts but only for a specified part of the year during the off-peak season.

Operator

An entity which manages and controls a facility and the gas moving through that facility. The operator performs the day-to-day operations, contract scheduling, communications, and routinely monitors, tests, and repairs facilities and/or measurement equipment. The operator is not necessarily the owner. A producer/operator operates a well. A transportation operator operates a gathering system, pipeline or local distribution company. A plant operator operates a processing or extraction plant. A consumer/operator operates an end user facility.

 

P

Peak Day

The one day (24 hours) of maximum system deliveries of gas during a year. Peak day data is used to, among other things, determine the allocation of certain costs between classes of service. The Commission sometimes required allocation based on an average of three continuous days of maximum deliveries (i.e., three-day peak).

Peak Hour

The one-hour period of greatest total gas sendout or use.

Pig

A device used to clean the internal surface of a pipeline. Pigs are usually barrel-shaped, made of metal, and covered with metal brushes. They may also have rubber or plastic cups and be made entirely of plastic. They are inserted into the pipeline by means of a device called a pig-trap and pushed through the line by pressure of the flowing fluid, usually gas. Its name derives from the squealing sound made by the forward movement and rotation of the device as it cleans the rust, liquids, and other undesired substances from the pipeline; also called a go-devil.

Pipeline

All parts of those physical facilities through which gas is moved in transportation, including pipe, valves, and other appurtenances attached to pipe, compressor units, metering stations, regulator stations, delivery stations, holders, and fabricated assemblies.

Price Ceiling

Statutory maximum lawful prices for various categories of natural gas, including gas destined for both the intrastate and interstate markets.

Processing Plant

A plant in which liquefiable hydrocarbons, such as propane, butane, ethane, or natural gasoline, which are initially components of the gas stream, are extracted or removed.

Processor

A legal entity which processes or treats natural gas in a gas plant of any type.

Producer

Any party owning, controlling, managing, or leasing any gas well and/or party who produces in any manner natural gas by taking it from the earth or waters.

PUCO

The Public Utilities Commission of Ohio.

 

Q

Quad

An energy quantity of one quadrillion Btu, which is approximately the energy equivalent contained in one trillion cubic feet of natural gas.

 

R

Rate Base

The investment value established by a regulatory authority upon which a utility is permitted to earn a specified rate of return. Generally, this represents the amount of property used and useful in public service and may include plants held for future use and may or may not include all or part of construction work in progress. The rate base may provide for the inclusion of working capital with positive allowances for cash-working capital, materials and supplies including fuel supplies and gas stored underground, bank balances, prepayments, and deductions for expense items such as property taxes and income taxes which are expensed currently but not paid until a later date. Rate base may also be adjusted to reflect customer payments for construction, company payments for advances, accumulated deferred income tax, and accumulated deferred investment tax credits to the extent the tax laws permit rate base adjustments.

Rate of Return

The return allowed to be earned (generally based on a cost of capital determination) or earned by a utility enterprise, generally calculated by dividing the net operating income (as defined) by the rate base.

Reservoir

That portion of a resource that has been actually discovered and that is presently technically and economically extractable. Also, a rock stratum that forms a trap for the accumulation of oil and gas. Also, a natural, subsurface container of fluids.

 

S

Seasonal Gas

Seasonal gas is gas sold during certain periods of the year. It may be sold either on a firm or on an interruptible basis.

Shrinkage

Gas that is lost or unaccounted for during transportation on a pipeline, due to pipeline leakage or used as fuel in compressor stations.

Storage Reservoir

That part of the storage zone having a defined limit of porosity and/or permeability which can effectively accept, retain, and deliver gas.

Supplier

A party that sells the commodity of natural gas.

Sweet Gas

Natural gas not contaminated by corrosion inducing impurities such as hydrogen sulfide, or with a low level of impurities.

 

T

Tariff

Compilation of all the effective rate schedules for an interstate pipeline or LDC, along with general terms and conditions of service. Typically used to describe the rate charged at the burnertip by the LDC, it includes the GCR and transportation charges.

Therm

A unit of heating value equivalent to 100,000 British thermal units (Btu).

Third-Party Natural Gas Supplies

Natural gas supplies that are purchased from an entity other than the Company.

 

U

Underground Storage

The utilization of subsurface facilities for storing gas which has been transferred from its original location for the primary purposes of load balancing. The facilities are usually natural geological reservoirs such as depleted oil or gas fields or water-bearing sands sealed on the top by an impermeable cap rock. The facilities may be man-made or natural caverns.

Utility

A company that is primarily a distributor of natural gas to ultimate customers in a given geographic area.

 

V

Valley Filling

Building up of natural gas loads during off-peak periods for distribution during peak periods.

 

W

Weighted Average Cost of Gas or WACOG

Average cost of gas purchased during a given time period, usually a month. This includes gas injected or withdrawn from storage.

Wellhead

The assembly of fittings, valves, and controls located at the surface and connected to the flow lines, tubing, and casing of the well so as to control the flow from the reservoir.

Wellhead Price

The cost of gas as it comes from the well excluding cleaning, compression, transportation, and distribution charges.

Working Gas

Gas in an underground storage field that is available for market.

 

Z

Zone

A geographical area. A geological zone, however, means an interval of strata of the geologic column that has distinguishing characteristics from surrounding strata.

Zone-Gate Method

A method of developing zoned rates. This method involves first segregating costs by zone as if each zone were a separate entity, then developing the unit costs of gas flowing through each zone. The customers in downstream zones pay the costs associated with their gas flowing through the upstream zones.