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OESAGuides

Guide

Glossary: energy, the shelf and shipping

The terms you meet on the field pages, on the analysis page and in the news about energy and shipping, with the Norwegian term in brackets.

Updated · about 6 min read · Written by OESA

Shelf and resources

Appraisal well (Avgrensningsbrønn)
Exploration well drilled after a discovery to find out how large it is and how far it extends.
Contingent resources (Betingede ressurser)
Recoverable quantities that have been discovered but not yet decided for production. Resource classes 4–7 at the Norwegian Offshore Directorate.
Block (Blokk)
Part of the map grid over the shelf. The shelf is divided into quadrants and each quadrant into blocks; wells and licences are tied to the blocks.
Wellbore (Brønnbane)
The drilled path from the surface into the subsurface. One well can have several wellbores, for example sidetracks.
Field (Felt)
One or more discoveries for which the authorities have approved a plan for development and operation (PDO), or granted an exemption.
FPSO
Floating production, storage and offloading vessel: a ship that receives, processes and stores oil from the wells and offloads it to tankers.
Discovery (Funn)
One or more petroleum deposits proven in the same wellbore, where testing, sampling or logging has shown mobile petroleum to be probable.
Subsea tie-back (Havbunnsutbygging)
Development with wells and equipment on the seabed connected to a nearby existing platform or production ship, instead of a platform of its own.
Condensate (Kondensat)
Light hydrocarbons that are gas in the reservoir but become liquid as pressure and temperature fall on the way up.
NGL
Natural gas liquids: the heavier gases ethane, propane, butanes and naphtha, separated from the dry gas.
Oil equivalents (o.e.) (Oljeekvivalenter (o.e.))
A common measure that lets oil, gas, NGL and condensate be added up. 1,000 Sm³ of gas counts as 1 Sm³ o.e.
Operator (Operatør)
The licensee that runs the day-to-day work in a production licence or on a field: drilling, development and operations. Appointed by the ministry.
PDO and PIO (PUD og PAD)
A plan for development and operation (PDO) must be approved before a discovery can be developed. Pipelines and onshore plants need a plan for installation and operation (PIO).
Reserves (Reserver)
Recoverable quantities that have been decided for production. Resource classes 1–3 at the Norwegian Offshore Directorate.
Reservoir (Reservoar)
Porous, permeable rock with oil or gas in its pores, trapped beneath a tight rock.
Licensee (Rettighetshaver)
A company that owns a share of a production licence or a field. Pays its share of the costs and receives its share of the production.
Sm³
Standard cubic metre: volume measured at standard pressure and temperature so figures from different fields can be compared. 1 Sm³ of oil is about 6.29 barrels.
Norwegian Offshore Directorate (Sodir) (Sokkeldirektoratet (Sodir))
The government directorate for resource management on the shelf. Called the Norwegian Petroleum Directorate until 2024. Publishes FactPages and FactMaps.
APA (TFO)
Awards in predefined areas: the annual licensing round for mature areas of the shelf.
Wildcat well (Undersøkelsesbrønn)
Exploration well drilled to find out whether a new structure contains petroleum.
Unitisation (Unitisering)
Coordination when a deposit extends across several production licences: the licensees agree on common shares in the deposit.
Undiscovered resources (Uoppdagede ressurser)
Oil and gas assumed to exist but not yet proven by drilling. Resource classes 8–9.
Production licence (Utvinningstillatelse)
A licence granting exclusive rights to surveys, exploration drilling and production in a defined area. Often abbreviated PL.

Prices and economics

Backwardation
When futures prices for later delivery are lower than the price for delivery now. A sign of a tight market.
Breakeven price (Breakeven-pris)
The oil or gas price that gives a project a net present value of zero at a chosen discount rate. Definitions vary between companies.
Brent
Benchmark price for light North Sea crude, in USD per barrel. The futures contract trades on ICE Futures Europe.
Capex and opex (Capex og opex)
Capital expenditure (investments) and operating expenditure (running costs).
Contango
When futures prices for later delivery are higher than the price for delivery now. Common when supply is ample and storage pays.
Discount rate (Diskonteringsrente)
The rate used to convert future cash flows into value today.
Barrel (Fat)
Volume unit for oil: 42 US gallons, about 159 litres.
Henry Hub
A gas pipeline hub in Louisiana and the main US gas price, in USD per MMBtu.
MMBtu
One million British thermal units, the energy unit US gas is priced in. 1 MMBtu is about 0.293 MWh.
NBP
National Balancing Point: the virtual gas trading point in the UK, priced in pence per therm.
Norm price (Normpris)
The price Norwegian oil is taxed at, set by the Petroleum Price Board. For gas the actual sales price is used.
Special tax (Særskatt)
An additional tax on income from petroleum activities. Together with corporate tax it gives a combined rate of 78 %.
Futures contract (Terminkontrakt)
A standardised agreement to buy or sell at a fixed price for future delivery. The “oil price” in the news is usually the nearest futures contract.
TTF
Title Transfer Facility: the virtual gas trading point in the Netherlands and the most widely used gas price in Europe, in EUR per MWh.
WTI
West Texas Intermediate: benchmark for light US crude, delivered at Cushing, Oklahoma. Trades on NYMEX.

Shipping

AIS
Automatic Identification System: radio signals in which ships broadcast position, speed and identity. The source of the ships on the globe on the analysis page.
Ballast
When a ship sails without cargo, for example back to the loading area.
Bareboat charter (Bareboat)
Hire of a ship without crew; the charterer operates the ship itself for the period.
Baltic Dry Index (BDI)
The Baltic Exchange index for dry bulk, calculated from time-charter rates for Capesize, Panamax and Supramax.
BDTI and BCTI (BDTI og BCTI)
The Baltic Exchange indices for tankers carrying crude and fuel oil (dirty) and clean products such as petrol and diesel (clean).
Charterer (Befrakter)
The party that hires a ship or buys freight, for example an oil company, a trader or a mining company.
Bunkers
Ship fuel.
Deadweight (dwt) (Dødvekt (tdw))
How much a ship can carry in tonnes, including cargo, fuel and stores.
Voyage charter (Reisecerteparti)
Hire for one voyage; paid per tonne or in Worldscale, and the owner pays fuel and port costs.
Shipowner (Reder)
The party that owns and operates the ship.
Shipbroker (Skipsmegler)
An intermediary who matches ships with cargoes and negotiates the contracts.
Ship sizes (Skipsstørrelser)
VLCC, Suezmax and Aframax are crude tankers; LR2, LR1 and MR are product tankers; Capesize, Panamax, Supramax and Handysize are bulk carriers. See the freight market guide.
TCE
Time charter equivalent: voyage income after voyage costs, converted to dollars per day so it can be compared with daily rates.
Time charter (Tidscerteparti)
Hire of a crewed ship for a period; paid per day, and the charterer pays fuel and port costs.
Tonne-miles (Tonnmil)
Cargo in tonnes multiplied by the distance carried. Longer voyages tie up more ships even if the cargo volume is the same.
Worldscale (WS)
A table with a nominal rate in USD per tonne for each tanker route. The market quotes freight as a percentage of it: WS 100 is the table rate.

Sources

The guides are written by OESA students to explain concepts and how things fit together. They are not investment advice. Figures that are not definitions carry a source and a date; if you find an error, let us know at styret@oesa.no.

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