Oil and Gas Glossary: P Terms
22 oil and gas terms start with the letter P. Each one is defined below, in alphabetical order.
P&A or Plug & Abandon
Plugging and abandoning a well. After a well’s productive life, it is usually plugged and abandoned with cement and heavy mud. The wellhead is removed, and the casing cut off 3-6 feet underground, and a steel plate welded over the top.
Paid Up Lease
An Oil and Gas Lease where rental payments are paid along with bonus.
Participating Royalty Interest
A royalty interest giving its owner the right to “participate” in bonuses received and in any oil or gas found.
Percentage Depletion
One of the two calculation methodologies allowed by the IRS for calculating the depletion allowance on oil and gas mineral and royalty production. Generally, this allowance is calculated by multiplying 15% times the gross value of the annual production, but is limited to certain levels of production. You can read more at Mineral Web’s Depletion Allowance Article.
Perforations
Holes within and through casing and cement into the productive formation.
Permeability
Ability of rock to transmit fluids through pore spaces.
Play
A set of oil or gas accumulations sharing similar geologic, geographic properties, such as source rock, hydrocarbon type, and migration pathways.
Pooled Unit
Unit created by combining separate mineral interests under the pooling clause of a lease or agreement.
Porosity
Percentage of the rock volume that can be occupied by oil, gas or water.
Possible Reserves
Possible reserves are less certain than Probable reserves and can be estimated with a low degree of certainty. Used to refer to reserves that have a greater than 10% chance of being recovered (P10).
Pounds Per Square Inch, PSI
An English system of measure of the amount of pressure on an area that is 1 inch square.
Primary Term
The initial period provided in an oil and gas lease to develop the property. Oil & gas leases ofter have a secondary term referred to as an extension.
Probable Reserves
Probable reserves are less certain than Proved reserves and can be estimated with a degree of certainty sufficient to indicate that they are more likely to be recovered than not. Used to refer to reserves that have a 50% or greater chance of being produced (P50).
Processing Plant
A plant to remove liquefiable hydrocarbons. Processing plants strip out condensate and NGLs from the gas production stream, as well as other gases or impurities.
Producer
A producer of oil and gas, also sometimes referred to as an Operator, or the Oil Company.
Producing Mineral Interests
A mineral interest upon which production is actively taking place and minerals being removed and marketed. Oil & gas leases often have stipulations that require “commercial quantities” for continuation of a lease.
Producing Mineral Owner
An owner of minerals that are currently being produced and sold. Payments made to producing mineral owners are known as royalty payments or royalties.
Progressing or Progressive Cavity Pump
A type of artificial lift pump used in situations where formation liquids (both oil and water) will not flow to the surface under the influence of reservoir pressure.
Proration Unit
Acreage allocated to a well, usually by a government authority, that can be drained by a well in a specific formation or depth.
Proven Reserves
Oil or gas which has not yet been produced but has been located and is economically recoverable. Used to refer to reserves that have a 90% (P90) or better probability of being produced in the current environment.
Pugh Clause
A clause often added to an oil lease to limit holding non producing lands or depths beyond primary term of a lease. Also known as a Freestone rider.
Pumper, Lease Operator, Gauger
An employee of an Operator who is responsible for maintaining and reporting the daily production.