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The standard unit for crude oil: 42 US gallons.
Billion cubic feet a day, the usual unit for natural gas production and use.
A widely quoted reference price, such as WTI for oil or Henry Hub for gas, that other sales are priced against.
A crude oil from the North Sea and the main reference price for oil traded internationally.
A measure of energy: the heat needed to warm one pound of water by one degree Fahrenheit. Natural gas is priced per million Btu (MMBtu), about the energy in a thousand cubic feet of gas.
Steel pipe cemented into a well to hold the hole open and seal it off from groundwater and other rock layers.
The work after drilling that makes a well ready to produce, including perforating the casing and hydraulic fracturing.
The government's measure of the prices consumers pay. This guide uses it to express past prices in today's dollars.
A well in rock porous enough for oil or gas to flow without large-scale fracturing. Its output usually declines more gradually than a shale well's.
Unrefined liquid petroleum as it comes out of the ground, before it is made into gasoline, diesel and other products.
A pipeline and storage hub where the WTI price is set.
The pattern in which a well's output falls over time as pressure in the rock drops.
A federal tax deduction that recognizes oil and gas in the ground being used up. Under percentage depletion, qualifying independent producers may be able to deduct 15% of the gross income from a property, subject to limits. Not tax advice.
How much a local price is above or below a benchmark such as WTI, reflecting quality and the cost of getting oil or gas to market.
An area of combined leases, set under state rules, that a well or group of wells is drilled to produce.
Natural gas after liquids such as ethane and propane are removed: the gas that flows through pipelines to homes, factories and power plants.
A well that does not find enough oil or gas to be worth completing. Its owners still pay their share of the drilling cost.
The U.S. Energy Information Administration, the statistical agency of the Department of Energy and the source of most of the data in this guide.
Federal Reserve Economic Data, a free database run by the Federal Reserve Bank of St. Louis. This guide takes its inflation index from FRED.
A price agreed today for oil or gas delivered in a future month. It can differ from the spot price.
A pipeline junction in Erath, Louisiana, where many interstate pipelines meet. Its price is the US benchmark for natural gas.
Drilling down to the target rock and then turning the well to run sideways through it, often for a mile or more.
Pumping water and sand into a well at high pressure to open cracks in tight rock so oil and gas can flow. The sand holds the cracks open.
The parts of drilling and completing a well with no salvage value, such as labor, rig time and drilling fluids. A working interest owner may be able to deduct up to 100% of them in the year they are incurred. Not tax advice.
The monthly invoice an operator sends to the other working interest owners for their share of a well's costs.
The horizontal section of a well that runs through the target rock.
Liquefied natural gas: gas cooled to a liquid so it can be shipped by tanker to other countries.
Ethane, propane, butane and similar products that come out of the ground with natural gas and are separated from it at processing plants. They are counted separately from crude oil.
An owner's share of a well's revenue after the royalty owed to the mineral owner. It is slightly smaller than the owner's share of costs.
A working interest held by an owner who is not the operator: the owner pays a share of costs and receives a share of revenue without running the field work.
The Organization of the Petroleum Exporting Countries. With partner countries such as Russia, it coordinates production targets that can move world oil prices.
The company that runs a well for all of its owners: permits, drilling, completion, daily production, sales and reporting.
Federal tax rules that generally limit using losses from passive investments to offset other income. See working interest exception. Not tax advice.
An oil-producing region of West Texas and southeastern New Mexico and the largest source of US crude today.
Sealing a well with cement at the end of its life and restoring the site under state rules.
A past price converted into today's money using the Consumer Price Index, so prices from different years can be compared fairly.
The share of a well's production revenue owed to the owner of the mineral rights, free of drilling and operating costs. It is why a working interest owner's revenue share is smaller than their cost share.
Dense rock that holds oil or gas but does not let it flow on its own. Horizontal drilling and hydraulic fracturing made it productive.
The price for oil or gas delivered now, rather than in a future month.
The federal government's emergency stockpile of crude oil, held in underground salt caverns on the Gulf Coast.
Equipment with salvage value, such as casing, the wellhead, tanks and pumps. These costs are depreciated over several years rather than deducted at once. Not tax advice.
A typical decline pattern built from nearby wells in the same rock, used to estimate a new well's future output. Actual wells can come in above or below it.
A share of a well that carries a share of the costs to drill, complete and operate it and a share of the revenue from what it produces.
A federal rule under which income and losses from a working interest held directly, or through an entity that does not limit the owner's liability, are generally not treated as passive. Not tax advice.
A light, low-sulfur crude oil priced at Cushing, Oklahoma, and the US benchmark for oil prices.
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