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Glosarium Industri Penyerapan Absorpsi adalah kemampuan cairan dan padatan untuk menyerap air atau cairan lainnya, termasuk gas yang tidak diinginkan, dalam pemrosesan gas alam. Akses Akses adalah sistem dimana pelaku pasar diizinkan untuk menggunakan kapasitas dalam jaringan pipa, jaringan, toko gas atau fasilitas gas lainnya. Akses merupakan pusat penerapan liberalisasi pasar gas dan kontras, oleh karena itu, dengan model tradisional dimana pemilik sistem transportasi, menyimpan dan menyimpan seluruh gas yang mengalir melalui peralatan mereka dan bertindak sebagai pedagang eksklusif untuk itu. Lihat juga Common Carriage. Akses terbatas . Akses yang dinegosiasikan Akses Pihak Ketiga. Acid Gas Acid Gas adalah Gas Alam yang mengandung proporsi gas seperti Karbon Dioksida atau Hidrogen Sulfida yang bila dikombinasikan dengan uap air, bentuk senyawa asam. Kuantitas Kontrak Tahunan Kuantitas Kontrak Tahunan (ACQ) adalah volume gas yang harus diserahkan oleh Penjual dan Pembeli harus mengambil dalam tahun kontrak tertentu. Ini dapat dinyatakan sebagai nomor rahasia atau sebagai kelipatan dari Total Kontrak Harian. Dalam prakteknya, banyak kontrak ditulis dalam bentuk yang memungkinkan Pembeli untuk mengambil jauh di bawah ACQ yang dinyatakan. Lihat juga Toleransi Kuantitas Bawah. Program Pengiriman Tahunan Program Pengiriman Tahunan (ADP) adalah jadwal volume gas yang akan dikirimkan pada tanggal-tanggal tertentu atau dalam periode-periode tertentu dalam tahun kontrak yang akan datang dalam kontrak jangka panjang. Dalam prakteknya ini akan sering berbentuk jadwal rinci yang mencakup beberapa bulan pertama, dengan angka lebih longgar untuk sisa tahun yang kemudian menguat pada waktu yang ditentukan dalam kontrak. Aquifer Aquifer adalah badan batuan berpori yang jenuh dengan air. Ladang gas biasanya dilapisi oleh akuifer yang sering memberikan tekanan yang dikenal dengan Water Drive untuk membantu produksi gas. Penyimpanan gas di bawah tanah dapat dicapai dengan memompa gas ke dalam akuifer di bawah batuan cap kedap air sehingga secara efektif membuat reservoir gas. Lihat juga Reservoir. Penyimpanan Bawah Tanah. Arbitrase Arbitrage adalah membeli dan menjual produk yang sama di dua lokasi atau pasar yang berbeda untuk memanfaatkan perbedaan harga. Associated Gas Associated Gas adalah gas yang hidup berdampingan dengan minyak di ladang minyak yang didominasi. Mungkin Cap Gas atau Solution Gas. Perilaku dan perlakuan yang berbeda. Gas yang terkait biasanya akan dijual sebagai penjual nominasi gas, yaitu penjual menominasikan volume gas yang ada. Di pasar gas tradisional gas tersebut akan memerintahkan harga yang lebih rendah daripada Non Associated Gas. Autogeneration Autogeneration adalah pembangkit listrik oleh industri yang terutama memperhatikan kebutuhan operasional sendiri. Lihat juga Combined Heat and Power. Backhauling Backhauling adalah pengangkutan gas yang tampaknya mengarah ke arus utama pipa. Hal ini biasanya dicapai dengan pengaturan swap daripada gerakan fisik. Juga dikenal sebagai Reverse Flow. Balancing Agreement Balancing Agreements digunakan untuk mendefinisikan prosedur penggunaan kapasitas pada jaringan pipa atau produksi dari lapangan gas: 1) Pipa: Kesepakatan penyeimbangan untuk pipa adalah kesepakatan antara pemilik pipa dan pengguna pipa lainnya mengenai prosedur untuk Diadopsi untuk memastikan volume gas masuk dan dikeluarkan dari pipa sama selama periode waktu tertentu. Pipa umumnya memerlukan penyeimbangan harian, namun beberapa memerlukan penyeimbangan selama periode yang lebih pendek, hingga satu jam, terutama bila ada beban pembangkit listrik yang berat pada pipa. Lainnya mungkin mengizinkan waktu yang lebih lama mis. 3 hari sampai bulanan Penyeimbangan bulanan hanya sesuai bila beban pihak ketiga sangat kecil (beberapa persen) dalam kaitannya dengan muatan pengguna utama. 2) Cadangan: Kesepakatan penyeimbangan untuk cadangan adalah kesepakatan antara pemilik lapangan gas yang memasarkan saham mereka secara independen satu sama lain. Karena setiap pembeli mungkin memiliki pola permintaan yang berbeda, pemilik sepakat antara mereka bahwa mereka tidak akan menarik cadangan pada tingkat yang akan menyebabkan ketidakseimbangan dalam kepemilikan cadangan yang tersisa melebihi toleransi yang disepakati tertentu. Kesepakatan tersebut juga mendefinisikan pemulihan yang harus dilakukan jika toleransi ini dapat terlampaui. Tujuannya adalah untuk memastikan bahwa bagian kepemilikan dari sisa cadangan tetap konstan untuk semua tujuan praktis. Basis Beban Beban dasar adalah tingkat pengiriman (atau permintaan) di bawah mana pengiriman (atau permintaan) tidak diperkirakan akan turun selama periode tertentu. Harga Pantai Harga pantai adalah sebuah istilah, terutama digunakan di Inggris, untuk menentukan harga di mana gas lepas pantai ditransfer oleh produsen di pintu keluar dari pabrik pengolahan darat, pada saat mana kepemilikan dipindahkan sebelum pengiriman atau penggunaan selanjutnya. Blast Furnace Gas Gas diproduksi sebagai produk sampingan dari penggunaan kokas di tanur tinggi tradisional. Gas ini memiliki Nilai Kalor yang rendah (kira-kira seperempat sampai sepertiga dari gas alam) namun digunakan dicampur dengan Gas Produksi pada hari-hari sebelum gas alam. Block A block adalah wilayah geografis yang didefinisikan dalam sebuah perjanjian Konsesi, sering diawali dengan Exploration, Development or Production. Sering didefinisikan dalam bentuk garis lintang dan bujur, namun bisa juga didefinisikan dengan mengacu pada sistem grid lokal, misalnya di Teluk Meksiko. Blowdown Metode pembuatan Reservoir gascondensate dengan membiarkan tekanan reservoir turun karena gas dihasilkan dari waktu ke waktu tanpa menyuntikkan kembali gas apapun. Dengan metode produksi ini beberapa kondensat dapat mengembun di dalam reservoir, di mana pemulihannya tidak lagi menjadi proposisi praktis. Boil Off Gas (BOG) Rebus adalah istilah yang digunakan dalam proyek LNG. Namun tangki penyimpanan LNG terinatur dengan baik, LNG selalu berada pada titik didihnya, dan sejumlah kecil akan terus mendidih. Pada tanaman pencairan, sejumlah kecil gas mendidih diperlukan untuk memastikan agar suar tanaman beroperasi. Rebus yang tidak dibutuhkan untuk tujuan ini biasanya akan digunakan pada tanaman yang memiliki sistem bahan bakar bertekanan rendah. Pada kapal tanker LNG yang digerakkan oleh turbin uap, gas biasanya digunakan sebagai bahan bakar untuk menggerakkan kapal. Border Price Harga di mana gas dijual di perbatasan antara dua negara. Biasanya berdasarkan pada bea cukai atau data impor impor lainnya. Sering digunakan, terutama di Eropa, sebagai acuan dalam kontrak gas. Botol Gas LPG. Biasanya Butana atau Propana disimpan dalam keadaan cair pada tekanan moderat dalam wadah baja untuk digunakan dalam aplikasi perumahan dan komersial kecil. Bundled Penyediaan berbagai layanan, seperti transportasi, penyimpanan dll dalam paket wajib yang harus diterima pembeli secara total, tanpa bisa memilih elemen mana yang dibutuhkannya. Lihat juga Unbundling. Butane Anggota kelompok alkana Hidrokarbon dengan empat atom karbon dalam molekulnya (C4H10, sering disingkat menjadi C4 dalam penggunaan non teknis). Butana adalah gas tak berwarna dan mudah terbakar pada suhu dan tekanan normal namun mudah dicairkan oleh tekanan untuk penyimpanan dan transportasi. Ada dua bentuk isomerik, normal dan iso-butana. Pada tekanan atmosfir iso-butana pada 1200C dan butana normal di -100C. Kalorific Value (CV) Kalorific Value adalah jumlah panas yang dihasilkan oleh pembakaran bahan bakar secara sempurna. Hal ini dapat diukur kering atau jenuh dengan uap air dan bersih atau kotor. Lihat juga Gross Calorific Value. Nilai Calorific Bersih. Cap 1. Klausa dalam kontrak penawaran dimana pembeli diyakinkan bahwa ia tidak perlu membayar lebih dari harga maksimum yang diberikan. Jenis kontrak ini analog dengan opsi panggilan. 2. Dalam Kontrak Pasokan dimana pembeli memiliki fleksibilitas dalam volume yang dapat diminta, maksimum yang berhak selama satu periode (misalnya satu tahun) atau selama masa kontrak. Cap Gas Gas ditemukan di Cap Gas yang berasosiasi dengan minyak namun tidak menyala dengan itu. Kapasitas Charge Biaya kapasitas adalah pembayaran yang dilakukan untuk memesan kapasitas dalam pipa, toko gas atau infrastruktur lainnya. Sering digunakan secara bergantian dengan Permintaan Tagihan. Kapasitas Perdagangan Pembelian dan penjualan hak yang diperoleh untuk memindahkan gas melalui jaringan pipa Transporter. Pengambilan dan penyimpanan karbon Penangkapan emisi karbon ke atmosfer dan penyimpanannya di tempat penyerap karbon, yang menjadi alami, atau mungkin merupakan ladang hidrokarbon yang habis. Perdagangan Karbon Prosedur sistematis untuk pertukaran izin menghasilkan emisi karbon. Lihat EU ETS. Carry Forward Ketentuan dalam Kontrak Take or Pay jangka panjang dimana Pembeli yang mengambil lebih dari Kuantitas Kontrak Tahunannya setiap tahun diperbolehkan, dalam kondisi yang ditentukan dalam kontrak, untuk mengimbangi hal ini terhadap usaha di tahun-tahun berikutnya yang mungkin telah terjadi Beberapa bentuk sanksi, seperti Take or Pay. Terkadang dikenal sebagai Advance Make Good. Casing Head Petroleum Spirit (CHPS) Nama alternatif untuk Kondensat dan terutama untuk yang putus di atau dekat dengan kepala sumur. Terutama digunakan di Amerika Utara. Churning Churning adalah istilah yang digunakan dalam perdagangan gas untuk menunjukkan berapa kali rata-rata gas tersebut diperdagangkan antara penjualan perdana dan konsumsi akhir. Gas City Gas City adalah istilah yang digunakan di beberapa belahan dunia, misalnya Mesir, India, Jepang, Korea, untuk merujuk pada gas yang didistribusikan ke pelanggan melalui sistem distribusi lokal, di hilir Gerbang Kota. Pelanggan seperti itu akan menjadi campuran perumahan, komersial dan industri tergantung pada keadaan lokal tertentu namun biasanya, tidak termasuk pembangkit listrik. Di masa lalu gas kota mungkin adalah gas yang diproduksi dari batubara dan minyak tapi sekarang didominasi gas alam. Lihat juga Town Gas. Gerbang Kota Titik di mana sistem distribusi lokal, yang sering didasarkan pada satu kota atau kota, menerima gas dari perusahaan atau sistem transmisi. Harga transfer pada saat ini disebut City Gate Price. Metana Batubara Metana Batubara (CBM) Coal bed methane adalah metana yang dapat atau sudah dapat dipulihkan dari lapisan batubara. Juga dikenal sebagai Coal Seam Gas. CBM dipulihkan dengan cara mengebor sumur menjadi lapisan batubara yang sesuai dan kemudian mengurangi tekanan di batuan, biasanya dengan memompa air, yang mungkin mengandung garam dan menimbulkan masalah lingkungan, sampai metana dapat diserap dari batubara. CBM, tidak seperti gas alam konvensional, tidak terjebak di bawah Seal namun teradsorpsi ke dalam batubara. Oleh karena itu dapat terjadi deposit batubara yang bersifat lateral sangat luas. Tingkat produksi biasanya jauh lebih rendah daripada untuk gas konvensional. Tingkat deplesi biasanya cukup lambat dan sumur bisa menghasilkan selama bertahun-tahun. CBM juga dapat diproduksi sebagai ukuran pengaman sebelum batubara ditambang untuk mengurangi kejadian campuran gas yang berpotensi meledak selama operasi penambangan. Lihat Coal Mine Methane. Gas Batubara Gas Batubara adalah gas yang diproduksi dengan destilasi destruktif batubara bituminous. Komponen utama adalah hidrogen (lebih dari 50), metana (10 sampai 30) karbon monoksida dan hidrokarbon yang lebih tinggi. Uap air di gas batubara membuat sambungan pipa tua ketat, sehingga meminimalkan hilangnya gas. Jika gas alam dimasukkan ke dalam pipa yang sama tanpa tindakan perbaikan, kemungkinan besar akan terjadi. Karbon monoksida tentu saja beracun. Menghirup gas batubara merupakan cara yang disukai untuk melakukan bunuh diri di kota-kota dengan distribusi gas batubara. Metana Batu Bara Metana (CMM) Metana yang dipulihkan dari tambang batu bara, baik saat aktif maupun setelah ditinggalkan, dapat digunakan dalam pembangkit listrik lokal atau produksi panas. Hal ini jarang tersedia dalam jumlah yang cukup untuk membenarkan pemrosesan ke kualitas pipa untuk dikirim ke sistem pipa. Lihat: Coal Bed Methane. Gas oven Coke Oven Gas Coke diproduksi sebagai produk sampingan dari coking coal dan sekaligus merupakan bahan utama dari Manufactured Gas. Turbin Turbin Gas Gabungan Turbin Turbin Gas Gabungan (CCGT) adalah jenis pembangkit listrik dimana panas yang dihasilkan dari pembakaran gas digunakan dua kali. Pertama, gas dibakar untuk menggerakkan Turbin Gas. Kemudian gas buang panas melewati penukar panas untuk menaikkan uap untuk unit turbin uap sekunder. Pabrik siklus gabungan memiliki efisiensi termal sekitar 50 lebih besar dari turbin sederhana atau terbuka normal. Combined Heat and Power (CHP) Combined Heat and Power (CHP) adalah penggunaan satu sistem terpadu untuk memasok kebutuhan panas dan daya suatu proyek, meminimalkan pemborosan panas. Kekuatan diproduksi melalui Turbin Gas atau penggerak utama lainnya. Panas knalpot dimanfaatkan untuk kebutuhan selain pembangkit listrik. Juga dikenal sebagai Kogenerasi dan Energi Total. Tarif Komoditas Tarif untuk biaya yang dikeluarkan untuk setiap unit gas yang benar-benar diambil atau diangkut. Bisa di unit volumetrik atau panas. Bedakan dari Biaya Berdiri dan Biaya Permintaan. Common Carriage Common Carriage adalah istilah yang sering digunakan secara bergantian dengan Akses Terbuka dan Akses Pihak Ketiga namun sebenarnya lebih spesifik. Dalam sistem kereta umum semua pemohon untuk kapasitas (misalnya di jaringan pipa atau toko) diberi akses dengan persyaratan yang sama. Jika total volume yang diminta melebihi kapasitas yang tersedia, penggunaan semua pihak dikurangi secara pro rata: kapasitas dijatah di antara pengguna. Di bawah Open Access, jika pemohon mencari kapasitas lebih dari yang tersedia, kapasitas dibagi berdasarkan standar datang pertama, pertama dilayani atau sistem bayar-ke-buku yang memungkinkan kapasitas dikontrak dan diperdagangkan seperti menyewa dan menyewakan ruang di gedung . Pemilik pipa atau toko yang juga ingin menggunakan beberapa kapasitas untuk dirinya sendiri harus, di bawah Open Access, melakukannya melalui afiliasi lengan panjang yang hubungan komersialnya dengan penyedia kapasitas secara transparan identik dengan pengguna lain. Akses Terbuka diperlukan pada jaringan pipa antarnegara bagian AS, yang dikenal dengan Kontrak Carriage. Di Eropa, istilah Open Access kadang-kadang digunakan secara longgar sebagai identik dengan Akses Pihak Ketiga, untuk menentukan hak pihak ketiga untuk menggunakan jaringan pipa atau peralatan perusahaan lain. Dalam bentuk umumnya mencakup Open Access, Common Carriage, Akses Negosiasi dan Akses Teratur. Salah satu aspek Akses Pihak Ketiga adalah bahwa hal itu tidak dengan sendirinya menyiratkan adanya solusi terhadap isu diskriminasi antara para pihak dengan menggunakan fasilitas tersebut. Lihat juga Akses Terbatas. Compressed Natural Gas (CNG) CNG adalah gas alam yang dikompres menjadi tabung gas, terutama digunakan sebagai alternatif bahan bakar cair pada kendaraan jalan. CNG tetap merupakan gas terlepas dari jumlah tekanannya. Jangan dikelirukan dengan Liquefied Petroleum Gas. Stasiun Kompresor Gas kehilangan tekanan saat menempuh jarak jauh melalui jaringan pipa. Untuk memastikan aliran yang sama, dan tekanan yang memadai pada titik off-take, harus dikompres ulang di stasiun kompresor, biasanya berada pada jarak 60 km sampai 100 km di sepanjang jalur transmisi darat. Lepas pantai dan di daerah terpencil, mungkin lebih mudah dan lebih baik untuk mempertahankan tekanan yang lebih tinggi dan memungkinkan jarak yang lebih jauh antara stasiun kompresor. Pada kompresor pipa besar biasanya didorong oleh turbin gas. Jaringan pipa yang lebih kecil bisa menggunakan mesin diesel. Konsesi Izin diberikan oleh perusahaan Pemerintah atau Negara Minyak. Ini mendefinisikan suatu daerah, sering disebut sebagai Blok. Diberikan kepada perusahaan atau kelompok perusahaan untuk eksplorasi, produksi atau pengangkutan minyak andor gas dengan syarat dan ketentuan tertentu dan untuk jangka waktu tertentu. Area konsesi biasanya diberikan untuk eksplorasi. Jika ini berhasil maka area yang lebih kecil didefinisikan, di dalam blok eksplorasi, menjadi blok produksi. Mungkin juga diterapkan pada izin untuk membangun jaringan pipa, pembangkit listrik, dll Kondensat Kondensat adalah cairan gas alam dengan tekanan uap rendah, yang dihasilkan dari reservoir dengan tekanan dan suhu tinggi. Kondensat akan terpisah secara alami dalam pipa atau pemisahan tanaman melalui proses normal kondensasi. Dapat merujuk pada campuran Hydrocarbons yang relatif ringan yang tetap cair pada suhu dan tekanan normal. Akan ada beberapa propana dan butana yang dilarutkan di dalamnya. Tidak seperti minyak mentah. Ini berisi sedikit atau tidak sama sekali hidrokarbon berat yang merupakan bahan bakar minyak berat. Ada tiga sumber utama kondensat: a) Hidrokarbon cair yang dihasilkan dari reservoir gascondensate. Ini mungkin hanya sedikit dibedakan dari minyak mentah yang stabil. B) Hidrokarbon cair yang dipulihkan di permukaan dari gas yang tidak terkait. C) Hidrokarbon cair yang dipisahkan saat gas mentah diolah. Kondensat ini biasanya terdiri dari C5 sampai C8. Kondensor boiler Boiler kondensasi adalah alat pemanas air yang dirancang untuk meningkatkan efisiensi dengan menggunakan gas buang yang jika tidak dilepaskan ke atmosfer untuk menahan panas air di boiler. Connection Charge Terkadang digunakan sebagai sinonim untuk Standing Charge namun lebih tepat didefinisikan sebagai jumlah yang harus dibayar oleh pelanggan secara sekaligus atau dengan angsuran untuk koneksi ke sistem pemasok. Kontraktor Istilah yang memiliki arti khusus dalam Production Sharing Agreement. Kontraktor adalah perusahaan (biasanya perusahaan penghasil) yang berusaha untuk mengeksplorasi dan / atau memproduksi untuk pemerintah tuan rumah dengan imbalan volume gas atau minyak yang ditentukan yang ditentukan. Konvergensi Istilah longgar didefinisikan yang mengacu pada meningkatnya penggunaan gas alam dalam pembangkit listrik. Jika pembangkit menjadi sepenuhnya atau sebagian besar bergantung pada gas alam, kepentingan pemasok gas dan pembangkit listrik bertemu, dan kemungkinan timbulnya perpindahan gas antara pembangkit dan pasokan langsung, tergantung pada harga yang tersedia untuk masing-masing outlet. Harga konvergen bila tidak ada manfaat dalam switching. Gas Biaya Gas adalah gas yang diperoleh seorang kontraktor berdasarkan Perjanjian Bagi Hasil untuk menutupi biaya operasinya berdasarkan kontrak. Biasanya Kontraktor beroperasi dengan risiko sendiri dan, jika tidak ada hidrokarbon yang ditemukan, biayanya sepenuhnya untuk akunnya. Lihat juga Profit Gas. Tekanan Kritis Tekanan minimum yang harus diaplikasikan pada gas sebelum bisa dicairkan. Suhu Kritis Suhu di atas yang gas tidak akan mencair, terlepas dari tekanan yang diterapkan. Minyak Mentah Campuran Hidrokarbon yang ada sebagai cairan di waduk bawah tanah alami dan tetap cair pada tekanan atmosfir setelah melewati fasilitas pemisah permukaan. Minyak mentah adalah bahan baku yang disuling menjadi bensin, minyak pemanas, bahan bakar jet, propana, petrokimia, dan produk lainnya. Kriogenik Proses memproduksi, memelihara dan memanfaatkan suhu yang sangat rendah (di bawah -46C - 50F). Relevan dalam bisnis LNG. Cushion Gas Cushion Gas adalah gas yang tertinggal di sebuah toko gas untuk memberi tekanan yang dibutuhkan untuk menghasilkan gas yang tersimpan, namun tetap tidak diproduksi. Ini biasanya dari urutan 50 dari total volume yang tersimpan untuk bidang Aquifer dan habis, tapi kurang untuk jenis penyimpanan lainnya. Ketika toko tersebut awalnya didirikan Cushion Gas, kecuali jika cadangan yang tidak diproduksi ditinggalkan di ladang yang sebagian habis, mungkin sebagian besar dari biaya modal. Cushion Gas akhirnya bisa digunakan saat toko tersebut dinonaktifkan. Juga dikenal sebagai Base Gas. Rata-rata Harian Kirim-Out Total volume gas yang dikirimkan selama periode waktu tertentu, dibagi dengan jumlah hari dalam periode tersebut. Kuantitas Kontrak Harian (DCQ) Jumlah gas yang Pembeli secara nominal bersedia untuk membeli dan Penjual berjanji untuk menyampaikan dalam jangka waktu 24 jam yang ditentukan. Meski menampilkan banyak kontrak, dalam praktiknya ekspresi ini tidak banyak artinya. Ini dapat berfungsi sebagai alat untuk mengekspresikan Kuantitas Kontrak Tahunan jika yang terakhir dinyatakan sebagai jumlah hari dikalikan dengan DCQ. Ini juga dapat menentukan tingkat di mana Penjual harus dapat memasok gas. Lihat juga: Tarif Pengiriman Harian. Tarif Pengiriman Harian Tarif Pengiriman Harian (DDR) adalah tingkat di mana fasilitas Penjual harus mampu mengirimkan gas, yang dinyatakan sebagai volume gas per hari, atau sebagai kelipatan dari Kuantitas Kontrak Harian. Juga dikenal sebagai Jumlah Harian Maksimum. Puncak Harian Puncak Harian adalah volume maksimum gas yang dapat atau harus dikirim pada satu hari selama periode tertentu (biasanya satu tahun). Kontrak Dedikasi Kontrak Dedikasi adalah istilah yang benar untuk Kontrak Deplesi. Dimana seluruh produksi dari ladang gas dibeli dan dijual. Gelar Hari Suatu hari derajat adalah ukuran suhu rata-rata lebih dari satu hari, dan biasanya berhubungan dengan ambang suhu. Misalnya, suhu rata-rata aktual 5C per hari adalah 2 derajat hari lebih hangat dari suhu rata-rata 3C yang diharapkan. Bisa juga digunakan untuk mengukur cuaca dingin kumulatif dalam suatu periode. Jadi jika suhu Seasonal Normal selama satu bulan adalah 18C dan suhu aktual rata-rata sepanjang bulan diperkirakan 8C, bulan akan menjadi 10 x 30 300 derajat hari lebih dingin dari biasanya. Disampaikan Suatu istilah yang digunakan terutama dalam kontrak pengiriman LNG untuk pengaturan dimana penjual bertanggung jawab untuk mengatur dan membayar pelayaran gas, dan hakikat melewati pelabuhan pengiriman. Umumnya, risiko penjual lebih besar dalam transaksi yang disampaikan karena pembeli hanya membayar untuk kualitas barang yang layak, dan Boil Off Gas adalah penjual tanggung jawabnya. Penjual bertanggung jawab atas pembersihan melalui bea cukai dan pembayaran semua tugas kecuali jika kontrak memberikan sebaliknya. Nama alternatif untuk kontrak Disampaikan adalah Ex Ship. Sangat mirip dengan Delivered yaitu Cost, Insurance and Freight (CIF). Ini adalah pengaturan yang Penjual mengatur dan membayar untuk pengiriman dan asuransi, seperti untuk kontrak Disampaikan, namun risiko dan hak kepemilikan ditransfer dari penjual ke pembeli dengan cara yang ditentukan dalam perjanjian (misalnya pengiriman atau pengiriman Bill of lading kepada pembeli). CIF dan Disampaikan sering, tapi keliru, diperlakukan seolah-olah identik karena biaya untuk penjual sama. Dengan kontrak CIF, penjual dapat menghindari kepemilikan kargo dalam yurisdiksi pemerintah negara pembeli. Ini mungkin penting untuk alasan fiskal atau hukum. Pengaturan ketiga yang sering ditemui dalam pengiriman LNG adalah Free on Board, (FOB), yang digunakan untuk menunjukkan pengiriman dimana pembeli mengatur pengiriman dan ada pengiriman dan perubahan judul pada saat muatan dimuat ke dalam Kapal di pelabuhan pemuatan. Permintaan Permintaan Biaya bulanan atau tahunan yang dibayarkan oleh Pembeli untuk puncak yang dicalonkan atau yang dipesan atau untuk volume puncak aktual gas yang diambil dalam satu jam atau hari dalam periode tertentu. Dengan demikian, ungkapan khasnya mungkin berupa Dolar per seribu kaki kubik dari kapasitas per jam puncak per bulan. Sering digunakan secara bergantian dengan Kapasitas Charge meskipun dapat dikatakan bahwa dalam logika ketat Permintaan Permintaan harus berlaku untuk penjualan gas dan Kapasitas Charge ke pengaturan transportasi. Kontrak Deplesi Kontrak penipisan adalah kontrak penjualan produksi dimana volume penjualan pada dasarnya diatur oleh karakteristik kinerja dari lapangan gas tertentu. Pola penumpukan, Plateau yang diharapkan dan metode untuk menentukan volume penurunan akan didefinisikan pada awalnya, namun dapat diubah karena kemampuan produksi di lapangan lebih baik dipahami melalui pengalaman operasi. Dengan demikian pembeli menanggung sebagian besar risiko produksi. Lihat juga Kontrak Kontrak dan Kontrak Dedikasi. Reservoir Pelepasan Drive Reservoir gas tempat gas pulih dengan ekspansi karena tekanan gas turun dengan produksi gas yang semula ada. Oleh karena itu reservoir dapat diperlakukan seolah-olah itu adalah tangki tertutup. Faktor pemulihan hingga 90 gas di tempat bisa tercapai. Di waduk seperti itu tidak ada Water Drive. Deregulasi Deregulasi adalah pengurangan peran badan pengatur yang biasanya dikaitkan dengan peningkatan persaingan terbuka, dan dicapai dengan penyederhanaan kerangka peraturan. Deregulasi tidak boleh disalahartikan dengan Liberalisasi yang mungkin memerlukan pengenalan proses regulasi yang transparan. Derivatif Derivatif adalah instrumen keuangan yang pada akhirnya didasarkan pada perdagangan komoditas fisik, termasuk gas dan bentuk energi lainnya. Lihat juga Futures. Swap. Titik Embun Suhu di bawah mana hidrokarbon (titik embun hidrokarbon) atau air (titik embun air) akan mulai mengembun dari aliran gas yang diberikan. Kondensasi mengurangi keakuratan metering dan menciptakan gangguan siput cair di jaringan pipa, yang perlu dibersihkan secara berkala dengan melewatkan Babi meskipun pipa. Sebagai tambahan, air dapat bereaksi dengan karbon dioksida atau hidrogen sulfida dalam aliran gas untuk membentuk asam, dan dengan metana itu sendiri, dalam kondisi yang sesuai, untuk membentuk Hydrates. Oleh karena itu, pada tahap Pengobatan, air biasanya dikeluarkan dari aliran gas untuk mengurangi Titik Embun ke suatu tempat sekitar -10C pada tekanan pipa standar. Distribusi Tahap akhir dalam pengangkutan gas (dan listrik) dan penjualannya ke konsumen akhir melalui jaringan pipa berukuran sedang dan jaringan remisi tekanan rendah dengan diameter kecil. Penyimpanan Diurnal Secara harfiah, penyimpanan harian. Penyimpanan gas atau gas jangka pendek atau puncak, untuk memenuhi fluktuasi permintaan lokal, dalam sehari, yang bertentangan dengan penyimpanan musiman. Faktor Keanekaragaman Rasio jumlah permintaan maksimum individu dari beberapa konsumen atau beban, terhadap permintaan maksimum simultan mereka. Biasanya kurang dari 1 untuk mencerminkan bahwa tidak semua pelanggan diharapkan untuk mengambil permintaan maksimal mereka secara bersamaan. Lihat juga Load Factor. Hilir Kegiatan tersebut dalam rantai gas yang terdekat dengan pelanggan akhir. Lihat Hulu. Tolok Ukur ke Bawah Ke Bawah (DQT) Tolok Ukur ke Bawah (DQT) adalah jumlah dimana pembeli mungkin tidak memenuhi Kontrak Tahunan penuh dalam kontrak penjualan Take or Pay gas tanpa menimbulkan sanksi. Jika tidak ada ketentuan yang mengharuskan pembeli untuk mengambil volume pelengkap di tahun-tahun berikutnya untuk membuat kekurangan yang baik, Quantity Contract Tahunan menjadi berlaku ACQ dikurangi DQT. Lihat juga Make Good dan Make Up. Dry Gas Sebuah nama alternatif untuk Lean Gas. Itu tidak berarti bebas dari air, meski dalam beberapa kasus memang begitu. Lapangan Gas Kering Sebuah reservoir yang akan menghasilkan gas drylean dan sejumlah kecil Kondensat biasanya kurang dari 10 barel per juta kaki kubik. Ini setara dengan 350 barrelsMMcm atau 60 meter kubik minyak gasMMcm dengan asumsi 0,177 barrelscubic meter. Lubang Kering. Sebuah lubang bor yang tidak bisa menghasilkan volume komersial minyak atau gas. Secara konvensional istilah Well dibatasi pada lubang bor yang bisa menghasilkan minyak atau gas. EFET Federasi Pedagang Energi Eropa. Sebuah kelompok tekanan dari perusahaan perdagangan energi Eropa yang berdedikasi untuk merangsang dan mempromosikan perdagangan energi. Efisiensi Efisiensi, atau Efisiensi Panas, adalah rasio keluaran energi terhadap masukan energi dalam suatu proses. Salah satu penggunaan yang paling sering dijumpai dari rasio ini di industri gas adalah penggunaan gas untuk pembangkit tenaga listrik, di mana listrik dikirim dinyatakan sebagai persentase dari gas yang dikonsumsi, yang diukur berdasarkan unit umum mis. KWh. Perawatan perlu dilakukan untuk membedakan antara net dan gross efficiency. Lihat juga Gross Calorific Value. Nilai Calorific Bersih. Pengguna akhir Konsumen gas, di sektor residensial, komersial atau industri. Pemain terakhir dalam rantai gas. Masuk Keluar Sistem Entry-Exit adalah tempat pengirim gas diberi harga masuk untuk memasukkan gas ke jaringan transmisi atau distribusi di titik masuk yang ditentukan, dan harga keluar untuk mengeluarkan gas pada titik keluar yang ditentukan. Harga bisa mencerminkan kemacetan pada titik masuk dan keluar, namun sama untuk pengguna manapun. Sistem ini dapat dikontraskan dengan sistem point to point, dimana biaya transportasi bergantung pada jarak aktual atau teoritis yang ditempuh oleh setiap kiriman gas. Entry-Exit sangat disukai oleh UE sebagai sarana untuk mempromosikan liberalisasi gas. ERGEG Grup Regulator Eropa untuk Listrik dan Gas. ERGEG adalah kelompok penasihat energi formal Komisi Eropa. ERGEG didirikan oleh Komisi Eropa, pada bulan November 2003, untuk membantu Komisi dalam menciptakan pasar EU tunggal untuk listrik dan gas. Anggota ERGEG adalah kepala otoritas pengatur energi nasional di Negara-negara Anggota UE. Ethane Ethane (C2H6, sering disingkat menjadi C2 dalam penggunaan non teknis) adalah salah satu unsur penyusun utama gas alam bersama dengan metana. Bisul di -84.4C. Pada suhu normal, ini adalah gas kering, tidak berwarna dan tidak berbau. Bahan baku untuk produksi etilen. Ethylene Juga dikenal sebagai Ethene. Gas tak berwarna (C2H4) yang dihasilkan oleh cracking Hydrocarbons seperti Ethane atau naphtha dan digunakan sebagai bahan baku petrokimia, seperti serat dan banyak plastik. Bisul di -103.7C. EU ETS Sistem Perdagangan Emisi Uni Eropa. Skema perdagangan emisi multi nasional terbesar di dunia, dan pilar utama kebijakan iklim UE. Kelebihan Gas Gas Kelebihan adalah: a) Gas yang diambil dengan tarif di atas Tarif Pengiriman Harian dengan harga premium atau b) Gas yang diambil melebihi Kuantitas Kontrak Tahunan. Bergantung pada ketentuan kontrak dan status pengiriman gas tersebut mungkin memenuhi syarat sebagai Carry Forward. Membuat Bagus atau Make Up gas. Komisi Regulasi Energi Federal (FERC) Sebuah badan pemerintah federal AS yang bertanggung jawab termasuk mengatur industri gas antarnegara bagian. Tidak memiliki yurisdiksi atas pipa gas dan pasokan di mana perdagangan sepenuhnya berada dalam keadaan individu. Bahan umpan Hidrokarbon digunakan sebagai bahan baku dalam proses industri, bukan sebagai bahan bakar. Penggunaan gas alam sebagai bahan baku utama adalah pembuatan pupuk amonia dan amonia berbasis metanol. Potensi pasar utama adalah penggunaan gas untuk membuat produk minyak sintetis seperti bensin motor dan sulingan tengah (lihat Gas sampai Cair). Mungkin juga digunakan untuk menunjukkan bahan baku yang digunakan untuk menghasilkan listrik, namun ringkasan statistik konsumsi gas biasanya membedakan penggunaan ini dari penggunaan bahan baku kimia. Lihat juga Middle Distillate Synthesis. Penilaian Lapangan Proses kuantifikasi tingkat cadangan dan potensi produksi reservoir minyak dan gas (reservoir minyak dan gas) yang baru ditemukan, biasanya dengan mengebor satu atau lebih delineasi atau sumur penilaian. Perusahaan Gas Gas yang pemasoknya ingin memasok ke pembeli berdasarkan persyaratan yang ditentukan dalam kontrak, tanpa gangguan. Lihat juga: Gas Interruptible. Proses Fischer-Tropsch Proses kimia untuk mengubah Synthesis Gas menjadi parafin dengan polimerisasi. Awalnya dikembangkan pada awal abad 20 untuk membuat bensin dari batu bara. Penelitian terbaru telah mengidentifikasi katalis yang sangat meningkatkan efisiensi proses dengan menciptakan produk lilin yang sangat panjang, yang kemudian dapat diubah menjadi bahan bakar cair berkualitas tinggi dengan cara retak konvensional. Lihat Sintesis Distilasi Bawah. Flammability Limits Persentase minimum dan maksimum gas di udara dimana gas akan menyala. Untuk gas alam batas ini terletak kira-kira antara 5 dan 15. Flaring Proses pembakaran gas alam atau gas yang tidak diinginkan. In the case of gas, usually occurs when it is associated with oil and cannot be economically exploited or re-injected. Now less prevalent, as governments seek to profit from the increased value of gas and reduce the advert environmental impact of burning hudrocarbons. Floating LNG Floating LNG (FLNG) is the use of purpose built or converted ships to enable regasification of LNG (and liquefaction) to be carried out offshore. FLNG has the advantage that LNG production and importation can start more quickly than could happen onshore, where lead times are often lengthened by the local approval process. It also enables the processes to move location to satisfy short term demand. Force Majeure A contractual term used to define circumstances in which a party to a contract is not obliged to carry out its obligations because of major events outside its control. Force Majeure can mean very different things, depending upon the law under which the contract is written and the provisions of the clause, which can vary widely. Examples of force majeure could be war, extreme weather, industrial action. Forward Trading Buying and selling gas (and other commodities) to be delivered at a later date, not under a long term contract. See Futures . Fuel Cell Equipment used to generate electric energy directly from the reaction of hydrogen and oxygen in the presence of a catalyst, without combustion. Natural gas can be used as a feedstock from which to obtain the hydrogen. Carbon dioxide will then be produced in the reformation process. Fuel Gas Gaseous fuels, in particular low pressure natural gas used to fuel production or treatment facilities. Futures A future is a contract to buy or sell a specified quantity of gas (or any other commodity) for a specified price on a pre-arranged date. The contract is usually of standard form and can itself be traded at an exchange such as NYMEX or the IPE . Gas:Oil Ratio . The gas:oil ratio is the relationship between the volume of gas produced at atmospheric pressure and the volume of oil produced in a given field. This volume will normally vary considerably over the life of the field. May be expressed as a simple volumetric ratio e.g. 500:1 or as cu ftBarrel. See also Solution Gas. Gas and Electricity Markets Authority (GEMA) The body which determines strategy and takes major policy decisions for Great Britains gas and electricity regulation. Day to day management of policy, resources and operational issues is carried out by the Office of Gas and Electricity Markets ( OFGEM ). Gas Cap In a field where oil is saturated with gas, so that it can dissolve no more, some gas will collect at the top of the reservoir, where it is known as cap gas, and forms a gas cap. Cap Gas overlies the oil and thus provides additional pressure for oil production, but will therefore often be produced only after all the oil has been produced and will then be treated as Non Associated Gas . Unlike Solution Gas . it is not commingled with the oil. Gas Condensate Field A field consisting of one or more reservoirs containing a mixture of gases at reservoir temperature and pressure, but which at normal temperature and pressure separates out into natural gas and Condensates . A gas condensate field is richer in liquids than a Dry Gas field but there is no precise point at which one becomes the other. Sometimes a reservoir will be produced primarily to obtain the condensate the gas may be re-injected, used as a secondary product, e.g. for LNG production or, particularly in areas remote from the market, flared. The liquid in a gas condensate field is often more valuable than the gas. See also Gas Cycling . Gas Condensate Ratio The ratio of gas to condensate in a gascondensate reservoir, usually expressed in practice as the ratio of Condensate to gas. Typical units are barrels of condensate per million cubic feet of gas. Gas Cycling or Re-Cycling A process in which produced gas is re-injected into the reservoir after removal of the condensate. This is to maintain the reservoir pressure and prevent Condensate from condensing in the reservoir and then becoming difficult to recover. This contrasts with Blowing Down the gas condensate field. Gas Day A period of 24 hours starting and ending at a stated time (often 0600 hours). Gas Detector An instrument used to detect the presence of various gases, often as a safety precaution to guard against leakage of flammable or toxic gases. Gas Gathering System A gas gathering system is a network of pipelines from a number of fields, collecting gas and bringing it to a central point, often a processing system or the inlet to a major transportation pipeline. Sometimes built where individual fields are not big enough to justify investment in separate pipelines and processing plant. Gas Grid A gas grid or network is a connected set of pipelines for the transmission and distribution of gas in a region or country to industrial, commercial and domestic users. See Reticulation. Gas Holder Over ground structure used to hold gas for within-day Peak Shaving purposes in urban areas. Gas holders are relics of the manufactured gas era and are steadily disappearing, their function being largely usurped by Line Pack. Gas Lift Injection of gas into an oil reservoir in order to mix gas with oil, reduce the fluid density and so assist oil flow. Gas Marketer A company that supplies gas to end users. See also Shippers . and Local Distribution Companies . Marketers are also major users of transportation capacity. Gas Processing The separation of oil and gas, and the removal of impurities and natural gas liquids from natural gas to meet the delivery Specification of a gas transportation pipeline. Gas Supplier A company that sells gas to the end consumer (UK). Gas to Liquid Gas to Liquid GTL processes convert natural gas into Synthetic Gasoline or Middle Distillates . using the Fischer Tropsch synthesis method. Increasingly relevant where gas is found in fields remote from markets such that delivery by pipeline is likely to be uneconomic. Gas Turbine A turbine propelled by the expansion of compressed air, heated by the combustion of a fuel such as natural gas or gas oil. Widely used for power generation. See Combined Cycle Gas Turbine. Gas Well A borehole sunk into the ground with the objective of bringing natural gas to the surface. GNL The French language acronym for LNG . stands for Gaz Natural Liquifi. Greenfield Often used to refer to a planned development which must be built from scratch on a new site, hence green field, without existing infrastructure. Gross Calorific Value (GCV) The heat generated by the complete combustion of a unit volume of gas in oxygen, including the heat which would be recovered by condensing the water vapour formed. The preferred value for expressing gas calorific quality in gas contracts. Also known as Gross Heating Value, Higher Calorific Value (HCV) or Higher Heating Value (HHV). See also Net Calorific Value. Heads of Agreement A non-binding statement of the main elements of a proposed agreement. See Memorandum of Intent (MOI). Heel LNG LNG left in ship and shore storage tanks to maintain their cryogenic temperatures. Henry Hub Henry Hub is the largest centralized point for natural gas spot and futures trading in the United States. The New York Mercantile Exchange (NYMEX) uses Henry Hub as the notional point of delivery for its natural gas futures contract. NYMEX deliveries at Henry Hub are treated in the same way as cash-market transactions. Many natural gas marketers also use Henry Hub as their physical contract delivery point or their price benchmark for spot trades of natural gas. Henry Hub is owned and operated by Sabine Pipe Line, LLC, which is a wholly owned subsidiary of ChevronTexaco. Henry Hub is based on the physical interconnection of nine interstate and four intrastate pipelines in Louisiana. Hexane A colourless gas (C9H14) naturally occurring in gas fields and normally left as part of the Condensate stream after separation. Boils at -69C. High Sulphur Fuel Oil (HSFO) The bottom of the oil barrel. The lowest priced oil product now, for environmental reasons, often banned or only allowed to be used where rigorous control of emissions is practiced. In some countries with developing gas-to-oil competition it may represent the marker for power station fuel. Hourly Peak The maximum volume of gas delivered or demanded in any one hour during a given period (usually 24 hours). Hub A term, met most frequently in the U.S. but also now used in Europe, for a geographical point at which several pipelines meet, storage is often available, and opportunities for gas trading can be exploited. There are many hubs in the U.S. of which the most important is Henry Hub . In Europe the largest hub is the National Balancing Point in the UK. Hydrates Ice-like solids in which methane molecules are held within the molecular spaces of the water molecule. Can form in pipelines and wells under certain conditions of near freezing temperatures and high pressures. Their formation is averted by ensuring that water vapour levels in the gas are kept below specified levels. See also Treatment . Dew Point . Hydrates are found naturally beneath the ocean at depths greater than 300m in many areas, where they are estimated to have locked up many trillions of cubic metres of methane. There is speculation that these hydrates may provide a commercial resource in the future. Hydrates have also been proposed as a means of transporting natural gas by sea, possibly competing with LNG. Hydrocarbon An organic compound containing only the elements hydrogen and carbon. Hydrocarbons exist as solids, liquids and gases. Impurities At the wellhead, natural gas will probably contain methane and various heavier fractions. It may also contain a number of non-hydrocarbons, some or all of which will need to be removed. There may also be substances introduced into the well as a result of drilling operations, such as inhibitors, mud etc. The principal harmful impurities in the gas itself are likely to be carbon dioxide and sulphur compounds, notably hydrogen sulphide, which can create corrosion in the pipelines in the presence of water and can seriously damage chemical plant units built of aluminium. Hydrogen Sulphide is also extremely toxic. Excessive water vapour can lead to the formation of acids and Hydrates . Some impurities, such as sulphur or helium, can be recovered economically as by-products if in sufficient concentration in the gas. Other impurities, such as inert gases and nitrogen cause no directly harmful effects but dilute the Calorific Value of the gas and mean that pipeline capacity is being wasted. Whether or not they should be removed is simply a question of economics. See also Treatment . Natural Gas Liquids . Condensates. Independent Power Plant (IPP) An IPP is an electric power generation plant owned and operated independently of the major national or regional entity, producing electricity for an industrial complex andor for sale to the electricity grid. Inert Gas: A chemically inert gas, resistant to chemical reactions with other substances. Integrated Gasification Combined Cycle (IGCC) A means of generating electricity from coal and other low grade hydrocarbons by gasifying them at the electricity generation site thereby gaining some of the efficiency of Combined Cycle Gas Turbine generation. While the chemical amp engineering principles are well understood it has yet to be demonstrated as a commercial proposition. International Energy Agency A Paris-based organisation which co-ordinates the energy policies of its member countries. The IEA also compiles detailed energy statistics and country reports, including countries outside the organisation itself. An autonomous wing of the Organisation for Economic Co-operation and Development (OECD). International Gas Union The International Gas Union (IGU) was founded in 1931. A worldwide non-profit organisation of national gas industry associations whose objective is to promote the technical and economic progress of the gas industry. Organises the triennial World Gas Conference. International Petroleum Exchange The IPEis an energy futures and options exchange based in London. Gasoil futures have been traded since 1981, Brent crude futures from 1988, and natural gas futures since 1997. Absorbed into ICE, the InterContinental Exchange in 2005. See also New York Mercantile Exchange. Interruptible Gas Gas made available under agreements permitting the supplier to terminate, or interrupt deliveries, usually for a limited number of days in a specific period. Usually sold at a reduced price and used to boost salestransportation in slack seasons (normally the summer). Important in load balancing because (by reducing gas demand) it is an alternative to using stored gas. The converse of Interruptible Gas is Firm Gas. Into Plant Price (IPP) The price charged for gas at its entry to the plant. Joint And Several A contract term relating to responsibilities under a contract, usually for payment, often misunderstood. Where, for example, there are several buyers in one contract, a joint responsibility does not mean an equal or pro rata responsibility. It means that if one buyer defaults on its liabilities the other buyers will be liable to make good that default. Where responsibilities are several, each party is responsible only for its own default. Kyoto Japanese city which was the location for an international agreement on the need to reduce the level of emissions of greenhouse gases into the Earths atmosphere. Lean Gas Lean gas is gas high in methane content (typically 95 or more) and with few higher fractions. Hence of relatively low Calorific Value . Also known as Dry gas. The converse of Rich Gas. Liberalisation A term often confused with Deregulation but often meaning quite the reverse. Liberalisation is the process of freeing a market from what are perceived as undue monopolistic forces, to achieve which a high degree of regulation may be required, at least in early years. Limited Access Limited Access refers to a gas distribution system in which the host pipeline owner moves its own merchant gas under different rules to those applying to outsiders contracting for spare capacity. The system applies to local distribution companies and intrastate pipelines in the US and is analogous to but not identical with Negotiated Access . See also Common Carriage. Limited Liability A provision in very large gas contracts under which limits are set to the amounts payable by a defaulting party in a contract. Line Pack Line pack is a procedure for allowing more gas to enter a pipeline than is being withdrawn, thus increasing the pressure, packing more gas into the system, and effectively creating storage. The packed gas can subsequently be withdrawn when needed. A useful method of meeting short term (hourly or diurnal) peak demand requirements. In some areas, where there is a particularly high peak demand, a series of additional pipeline loops may be laid near the entry to a network to provide additional line pack. Such systems are effectively a modern version of the traditional Gas Holder. Liquid Market A trading market characterised by the ability to buy and sell with relative ease, usually because there are many buyers and sellers. Liquefied Petroleum Gas Liquefied Petroleum Gas (LPG) is Propane . Butane . or propane-butane mixtures which have been liquefied through pressure, mild refrigeration, or a combination of both. Usually a derivative of refinery operations but often stripped out of natural gas streams, if rich enough. Conventionally sold in steel containers as Bottle Gas . Not to be confused with LNG. LNG (Liquefied Natural Gas) LNG is Natural Gas which has been cooled to a temperature, around the boiling point of methane (-162C), at which it liquefies, thus reducing its volume by a factor of around 600. The exact boiling of any gas mixture and the reduction in volume will depend on its composition. The process of Liquefaction is carried out in a liquefaction plant. Mostly these are very large scale plants built for projects transporting gas by sea, but in many countries small LNG plants have been built to liquefy gas during the seasons of low demand to provide Peak Shaving when required. LNG Plants consist of one or more LNG Trains, each of which is an independent gas liquefaction unit. It is more cost effective to add a train to an existing LNG plant, than to build a new LNG plant, because infrastructure built for early trains, such as ship terminals and other utilities, may be capable of being used or expanded for new LNG trains. The term Train is sometimes extended loosely to embrace the relevant shipping, storage and other facilities required to bring the resultant LNG to market. Liquefied gas is transported and stored as a boiling liquid under slight positive pressure until required for use, when it is warmed and allowed to re-gasify. In the case of Peak Shaving, the gas will normally be regasified at the plant itself or possibly transported for short distances by road, but large scale transportation is by sea, in specially designed insulated LNG vessels and delivered to LNG terminals, which have the requisite facilities for storage and regasification - the process by which LNG is warmed, usually through a heat exchanger, in order to become once more gaseous before emission into the Gas Grid. Load Duration Curve A visual and statistical expression of a number of (daily) demands over a long period, most often a year. Demands are normally ordered with the highest to the left and the lowest to the right, so that the horizontal scale bears no relation to calendar timing. Can be used, among other things, to measure volumes of demand (or supply) above a given threshold. The area beneath the curve and between horizontal thresholds represents the volume required to supply a particular market segment. The approach is used in both electricity and gas industries. Load Factor A measure of utilization for plant, or of the relationship between average and peak demand or supply, as determined by the formula: Average x 100 Peak. For supply and demand calculations average and peak most often refer to daily demand within a year, but any other periods are possible. The resulting figure is usually expressed as a percentage but, where the period covered is a year, the percentage is sometimes multiplied by 8760, so that the load factor is expressed as a number of hours. Thus a 50 Load Factor can also be expressed as 4380 hours. See also Swing. Local Distribution Company (LDC) A company that distributes natural gas primarily to small, residential and industrial end-users. Looping Increasing the capacity of a pipeline system, by adding parallel piping along part or whole of the route. Does not apply to the addition of compression facilities. Low Sulphur Fuel Oil (LSFO) Fuel oil with a low sulphur content. Usually less dense than High Sulphur Fuel Oil . In new markets with gas-to-oil competition this often represents the marker fuel for large segments of the industrial market. Madrid Forum The Madrid Fotum, otherwise known as the European Gas Regulatory Forum, set up to discuss issues regarding the creation of a true internal European gas market. The participants include national regulatory authorities, Member State governments, the European Commission, transmission system operators, gas suppliers and traders, consumers, network users, and gas exchanges. Make Good Make Good Gas is gas which a buyer must take in a later year because it has failed to take its full Annual Contract Quantity obligation in an earlier year, but has not used its full Downward Quantity Tolerance . It must nevertheless take excess gas in subsequent years to make good its deficiency, before it is entitled to claim any Make Up Gas to which it is entitled through shortfalls greater than the Downward Quantity Tolerance. Make Up Make Up Gas is gas for which a buyer has paid under Take or Pay obligations but not taken, and may have rights to receive in subsequent years for no further charge or at reduced prices after it has taken gas in excess of an agreed threshold volume. This is commonly the Annual Contract Quantity but may, for example, be ACQ minus Downward Quantity Tolerance . Make up gas should not be confused with Make Good Gas. Memorandum of Intent (MOI) Also known as Confirmation of Intent and Letter of Intent. A half way house to the signing of a full contract. Its legal status is rather unclear and its value lies largely in how it is viewed by the parties concerned. It will normally be a fairly brief document setting out the principal framework of the contract and specifying a date by which it is expected that a full contract will be completed. An MOI will often have a relatively brief validity, but in some cases they have served to govern active operations over a period of years. Also known as a Memorandum of Understanding (MoU) and Heads of Agreement (HoA). Merchant Pipeline A pipeline system which itself buys and sells part or all of the gas it transports, in contrast to a pipeline which simply carries gas on behalf of others. See also Open Access . Negotiated Access . Common Carriage. Meter Measuring devise, usually located at a point where ownership is transferred, for example at the entry to a customers premises, city gate, national border or gas processing plant. Note that to determine the energy content of the gas it will be necessary to monitor the composition amp hence calorific value of the gas. This is done at high pressure meter stations but not normally downstream of a city gate. Depending on the size of flow, meters may be: Flow meters, measuring gas throughput using a rotor which is made to revolve by the gas flowing through them Ultrasound meters, more sophisticated, based on the principle that sound waves travel faster with than against the flow. By measuring the difference in travelling time between the two sets of measurements the gas flow rate can be measured to an accuracy of more than 0.5 Orifice plate meters, older, and less accurate than other meters. Calculate flow rates by measuring the drop in pressure over a pierced obstructing plate placed in the pipeline. See also Telemetry. Methane A colourless, odourless flammable gas, lighter than air under normal conditions (CH4, often abbreviated to C1 in non technical usage). Methane is the first member in the alkane (paraffin) series and is the chief constituent of Natural Gas . At atmospheric pressure, it liquefies at -162C. Methanol Methyl alcohol, produced from natural gas via Synthesis Gas . Used as a chemical in the resin and paint industry and in the manufacture of Methyl Tertiary Butyl Ether, (MTBE) and acetic acid, but also of interest as a possible total or partial substitute for motor gasoline in cars. Very toxic. Middle Distillate Synthesis (MDS) A chemical process using the Fischer-Tropsch synthesis method for making synthetic middle distillates (principally naphtha, kerosene and gas oil) from natural gas. Midstream Those activities in the gas chain concerned with moving gas between the source and local distribution. See Upstream. National Balancing Point (NBP) The NBP is an imaginary (notional, or virtual) point at which all gas that has paid the entry charge to enter the UK National Transmission System is deemed to be located. The point at which most UK gas trading takes place, and the largest gas hub in Europe. See Entry Exit. Natural Gas Natural gas (NG) is a mixture of generally gaseous hydrocarbons occurring naturally in underground structures. Natural gas consists mainly of Methane and variable proportions of Ethane . Propane and Butane . There will usually be some condensate andor oil associated with the gas. More specifically, the term is also used to mean treated natural gas which is supplied to industrial, commercial and domestic users and meeting a specified quality. Natural Gas Act (NGA) Seminal example of deregulation liberalisation in the USA. Natural Gas Liquids (NGLs) Heavier hydrocarbons found in natural gas production streams and extracted for disposal separately. Within defined limits ethane, propane and butane may be left in the gas to enrich the Calorific Value . Whether to extract them or not is largely a commercial decision. Heavier fractions which are liquids at normal temperatures and pressures will be removed. The terms Natural Gas Liquids and Condensates are in practice used virtually interchangeably. Rather confusingly, there is no agreement on whether the term NGLs includes or excludes LPGs and both usages are current. Natural Gasoline Butanes and heavier fractions extracted from rich natural gas which, after stabilisation (removal of the lighter fractions) may be blended into motor gasoline. Negotiated Access Negotiated Access is a restricted form of Third Party Access, which excludes the requirement for the access terms to be transparent or applied equally to all applicants. It has been proposed in the European Union as a compromise by opponents of Open Access. Sometimes abbreviated to nTPA. Broadly defines access by one party to another partys facilities through negotiation, the result of which is, by implication, confidential, and not necessarily consistent with negotiations between the facility owner and other parties. See also Access . and Limited Access. Net Calorific Value, (NCV) The heat generated by the complete combustion of a unit volume of gas in oxygen, excluding the heat which would be recovered by condensing the water vapour formed. Net Calorific Value is usually seen as a measure of the effective heat produced rather than the total heat in the gas. Also known as Lower Calorific Value or Lower Heating Value. For natural gas, typically 10 lower than the GHV or HHV. See also Gross Calorific Value. Netback The price or value of a gas, at e.g. the border or the wellhead, calculated by deducting the costs associated with getting it from that point to the eventual point of sale from its competitive value at that point of sale. Used to estimate the comparative value of selling gas to various markets, and the worth of producing gas at all. Network Code A detailed contractual regime governing access to a gas grid. Network Codes exist or are being developed in several countries, especially in Europe. In North America the rules of the system are referred to as The Tariff. In particular, the contractual regime for the gas grid in Great Britain operated by National Grid. It is continually amended through rules approved by the GB energy regulator, ( Ofgem ). See also Tariff and Rates. New York Mercantile Exchange (Nymex) The worlds largest physical commodity futures exchange. Has existed for 130 years and pioneered the development of energy futures and options contracts in the 1970s. Nitrogen Oxides Oxides of Nitrogen (NOx) resulting from the combustion of fuels, causing atmospheric pollution in the form of smog. Non Associated Gas Non-Associated is gas found in a reservoir which contains no crude oil, and can therefore be produced in patterns best suited to its own operational and market requirements. See also Associated Gas. Odorants Strong smelling chemicals injected into natural gas, which otherwise is odourless, in order to make its presence more easily detectable. See Mercaptans. Odorisation The process of giving odourless natural gas a smell for safety reasons by injecting small quantities of organic sulphur compounds, such as Mercaptans . typically at the rate of 30 ppm. Usually carried out at the city gate or at the exit from the high pressure transmission system. OFGEM Office of Gas and Electricity Markets, (OFGEM) The regulator for the gas and electricity industries in Great Britain. Governed by the Gas and Electricity Markets Authority . Its powers are provided by the Gas Act 1986, the Electricity Act 1989 and the Utilities Act 2000. Successor organisation to OFGAS and OFFER, the former separate Gas and Electricity Regulators. Offtake Point The point in a gas system where gas is taken by supply pipe to a consumer. Oil Gasification The conversion of oil or naphtha into gas to be used as a fuel. See also Manufactured Gas. On the day Commodity Market (OCM) System of within-day gas trading introduced into Great Britain in 1999. A screen-based system designed to allow shippers, traders and the system operator (then Transco, now National Grid) to resolve within-day demand and supply imbalances in an orderly fashion. Open Access A system offering all applicants access to specified infrastructure. See Common Carriage. Open Cycle Gas Turbine (OCGT) A gas turbine, often derived from aero-engines, used for peak generation of electricity. Also used in conjunction with a steam turbine in a combined cycle power plant. When only the gas turbine is used it may be termed single cycle. Open Season A procedure for demonstrating to a regulator that capacity is offered on a transparent basis. It is used principally where pipelines are required by regulation to offer only transportation services, for example in North America and the Southern Cone of South America. It is also being used elsewhere as a means of gathering information about potential interest in a pipeline. LNG, storage etc project to help the sponsors decide how and when to size the project. Off-Peak The period during a day, week, month or year when the load being delivered by a gas system is not at its maximum volume. Over the Counter Trading (OTC) Trading that takes place outside a formal Exchange. Peak Day The day in the year on which the demand for gas is highest. In temperate areas this is normally a cold day in mid winter. In warmer areas it may occur midsummer, when there is a high air conditioning load met either directly by gas or by gas-fired power. A crucial indicator in planning and sizing gas infrastructure. Peak Hour The hour in the day in which demand for gas is highest. Chiefly relevant to distribution systems. Is normally around the midday or evening meal time Peak Load The maximum load produced or consumed by a unit in a stated period of time. In some tariff systems it is an important component of the tariff design, since it defines the capacity that is booked in the gas delivery system and must be paid whether or not used. Peak Shaving Peak shaving is a means of reducing the Peak Load on the gas transportation and supply system by supplying some gas from sources at or close to the point of ultimate consumption, thus improving the average Load Factor . Peak shaving may be daily or seasonal and will be handled in a variety of ways: - Underground storage . peak shaving LNG plants, Line Pack . Gas Holders . propane-air plant and, occasionally, special peak shaving supply contracts. A non-storage alternative to peak shaving is to interrupt I nterruptible Gas supplies. Permeability A measure of the ease with which liquids or gas flow through a reservoir rock. Compare this with Porosity . Gas will flow more easily than oil, and so can be recovered from rocks with lower permeability. Permeability is measured in Darcies. Gas reservoirs may have permeabilities of only a few millidarcies. Petrochemical An intermediate chemical derived from petroleum, hydrocarbon liquids, or natural gas, such as ethylene, propylene, benzene, toluene, and xylene. Pig Equipment used to clean or flush out liquids and other accumulated and unwanted items from the inside of an oil or gas pipeline. It is inserted into the pipeline and carried along by the flow of oil or gas. An intelligent pig includes measuring and sensing equipment which can be used to inspect a pipeline internally, which is useful after it has been buried underground Pipeline A tube for the transportation of crude oil or natural gas between two points, either offshore or onshore. Pipeline Capacity The amount of oil or gas that can be passed through a pipeline over a given period of time. Plateau In long term gas contracts the period of years for which the Annual Contract Quantity remains flat. The Plateau will normally be preceded by a build up period, during which the volumes increase and, in the case of a Depletion Contract will be followed by a period of decline until further production is no longer economic. Porosity The proportion of a rock volume (expressed as a percentage) that is occupied by the voids between mineral grains. Used to help estimate the volume of hydrocarbons in a field. Compare this with P ermeability . Power Purchase Agreement (PPA) A contract between a power station and the electricity purchasing organisation for the sale of electricity. Primary Energy The gross amount of energy used, measured in the quantities of the original fuel produced (e.g. crude oil) before conversion to other forms (e.g. refined petroleum products or electricity). Thus hydroelectric power and nuclear power are Primary, but power from generating stations consuming fossil fuels is not. Production Sharing Agreement (PSA) An agreement between an international producing company and a host government or state oil company under which the international company acts as risk-taking contractor investing in exploration andor production facilities in return for the right to export or sell a quantity of gas or oil that may be produced from the Concession or Block . Sometimes known as a Production Sharing Contract. The terms are interchangeable and the use of one or the other depends on the country. Profit Gas Frequently used to signify the gas received by a Contractor in a Production Sharing Agreement to provide the profit in the operation. Normally the Contractor will receive Cost Gas to cover its costs and, after other minor provisions, the remaining gas will be split with the host government in agreed proportions. In some countries profit gas is also subject to income tax, in other jurisdictions the State Oil Company is assumed to pay the income tax liability of the contractor. The proportion of profit gas is adjusted depending on local practice. May be used to signify the totality of gas remaining after Cost Gas, Royalty and similar items, including therefore both the Governments and the Contractors shares. Project Financing A method of financing in which the lender makes loans directly to a project and may claim repayment only out of that project. In theory, the lender has no recourse to the project sponsors other assets (non-recourse financing) but in practice this is rare. More commonly the extent of the sponsors liability is strictly defined (limited recourse financing). Propane A member of the alkane (paraffin) group of hydrocarbons with three carbon atoms in its molecule ( C3H8, often abbreviated to C3 in non technical usage). A frequent component of natural gas, also sold as a form of Bottled Gas . Liquefies at -42C. Proven Reserves Those quantities of petroleum which, by analysis of geological and engineering data, can be estimated with reasonable certainty to be commercially recoverable, from a given date forward, from known reservoirs and under current economic conditions, operating methods, and government regulations. Proven (proved) reserves can be categorised as developed or undeveloped. Where probabilistic methods have been used to estimate reserves, proven reserves are those with a better than 90 chance of being economically recoverable. Sometimes abbreviated as P90. Reserves with a greater than 50 chance but less than 90 chance are defined as Probable, or P50. Reserves with a greater than 10 chance but less than 50 chance are Possible or P10. Reserves may be classified as proved, if facilities to process and transport them to market are operational at the time of the estimate or there is a reasonable expectation that such facilities will be installed. Reasonable expectation is usually taken to mean that a developer has taken the decision to build the necessary facilities and the development plan has been approved by the relevant authorities. Thus large resources, such as those known to exist in North Alaska, are not classified as proven because there is no route to market. Different countries have adopted many different definitions of reserves, but gas contracts often refer to the Society of Petroleum Engineers (SPE) definitions. These and similar definitions from the World Petroleum Council were harmonised in 1997. Public Service Obligation A Public Service Obligation (PSO) is a requirement imposed by government on a company or companies to provide services which might not otherwise be profitable but are judged to be in the public interest. These could, for instance, include supplying gas to small or poor consumers, ensuring that appliances and other infrastructure is operating efficiently and safely, and ensuring that there are sufficient back-up gas supplies to cover emergency interruptions in supply. Public Utility Commission (PUC) State commissions in the USA responsible for regulating gas, and other utilities that operate within the boundaries of the state. See Regulation. Ramping Rate The rate at which the level of production can be increased after a partial or complete interruption. Rates North American term for the charges for the use of pipeline and storage capacity, referred to in other parts of the English-speaking world as Tariff. The North American definition of Tariff is more nearly equivalent to Network Code. Raw Natural Gas Natural gas still containing impurities and unwanted substances, such as water, nitrogen, carbon dioxide, hydrogen sulphide gas and helium. See also Impurities . Treatment. Recovery Factor The percentage of gas or oil in place in the reservoir which can be economically recovered. Gas Recovery factors may be around 60-70 in reservoirs with water drive from an Aquifer and up to 90 in Depletion Drive Reservoirs. Regasification The reconversion of LNG into gas suitable for pipeline transportation. See LNG. Regulated Access Access to infrastructure under terms and conditions set by or agreed with a Regulator . Such access will usually be open to all qualifying customers. See Common Carriage. Regulator (1) A mechanical device for controlling the pressure of gas within acceptable limits. Typically installed when has enters a low pressure distribution system for final use by small customers. (2) The person or body appointed to oversee the operation of the regulated parts of a gas industry. See Regulation. Regulation Regulation is a substitute for free market operation typically, in the gas industry, where all or part of the operations are carried out by institutional or natural monopolies. Provides a temporary or permanent counterweight to the economic power of the monopoly. Often exercised politically by government departments, but in many countries independent regulation is thought preferable. In any case the rules governing regulation will normally have been laid down explicitly by government legislation. Regulation can be economic restricting the revenue and profits of operators - or legal policing legislation. Regulators are normally closely involved in the setting up of liberalised market systems, when they may use their central position to interpret and rule on the applicability of legislation either ex-ante or ex-post. See Common Carriage. Renewable Energy An energy form, the supply of which is partly or wholly regenerated in the course of the annual solar cycle. Thus solar and wind energy, hydropower and fuels of vegetable origin are regarded as renewable mineral fuels and nuclear power are not. Reservoir A reservoir is an accumulation of oil andor gas in a permeable and porous rock such as sandstone. A petroleum reservoir normally contains three fluids (oil, gas and water), which separate into distinct sections, owing to their varying specific gravities. Gas occupies the upper part of the reservoir as it is the lightest, oil the middle section, while water occupies the lower section. See also Permeability . Porosity . Gas Cap . Aquifer . Solution Gas . Proven Reserves. Reticulation A reticulation network is a small diameter, low pressure gas system serving residential and commercial customers. (From the Latin word reta, meaning net). See also Distribution. Retrograde Condensate A gas condensate which, in the reservoir, is close to the Dew Point of the fluid. A small reduction in pressure, by production of the field, leads to the condensation of higher hydrocarbons in the reservoir, causing a lower Recovery Factor . Royalty A tax on production volumes, often paid in kind, which is levied as a percentage of production. It is therefore not related to the profitability of the production project, merely to the volume of gas (or oil) produced. R:P Ratio The Reserves: Production Ratio is the number of years that current reserves would last at current production levels. Thus reserves of 100 divided by consumption of 20year gives an R:P ratio of 5, and implies a life of 5 years for the reserve. RPI-X A regulatory formula by which a regulated monopoly is allowed to increase its prices each year by the retail price index (RPI) minus a defined amount or percentage x (x is a variable). Gives consumers falling real prices and forces the utility to reduce costs if it is to maintain its level of profitability. Sales Gas Raw gas, after processing to remove LPG, condensate and carbon dioxide. Sales gas usually consists mainly of methane and ethane and is odorised. See Odorisation. Salt Cavity Storage The storage of gas in caverns leached out in gas-tight salt strata. Such caverns may be generated during the recovery of salt for commercial purposes, or may be purpose-built for gas storage. Scrubbing The process of purifying a gas or liquid by washing it with suitable chemicals in a contact vessel. Seal The layer of rock overlying a gas field which prevents the gas escaping from the reservoir. It is therefore of low Permeability . Salt and fine clays can provide good seal. Seasonal Normal The average (or normal) result for the time of year. Thus Seasonal Normal Temperature (SNT) is the average temperature on a calendar day, where the average has been measured over a suitably long period. Likewise Seasonal Normal Demand, Seasonal Normal Weather. SNT is an important factor in developing forecasts of gas usage. See Weather Correction. Seasonal storage Storage designed to be filled at times of low (season) demand and emptied at times of high demand, over months rather than days. Security of Supply Security of supply is a term with several meanings including: the provision of adequate infrastructure to cope with annual and peak demand the provision of sufficient gas to meet annual and peak demand ensuring that a country or area does not rely exclusively on one, or very few sources of supply. Seismic Survey A technique for establishing the presence of underground geological strata using sound waves. There are two main techniques - reflection or refraction. In the oil and gas industry by far the most common is reflection. In a reflection survey sound waves are sent into the ground and the echoes from boundaries between rock with different properties of density and sound velocity are recorded. The sound waves recorded at the surface can then be used to create maps of the rock layers in the subsurface to reduce the risk of drilling dry holes. A reflection seismic survey may be either 2D, in which the reflections are recorded along a line or 3D, in which the lines are very closely spaced to deliver a three dimensional view of the subsurface. A refraction seismic survey is a different technology in which the sound waves are refracted along rock boundaries rather than reflected from them. Send-Out The quantity of gas delivered by a plant or system during a specified period of time. Shipper A party negotiating for the transport of gas on its own behalf or as an agent for another. In liberalised markets shippers may not be allowed to operate transportation systems. Slug Catcher Plant installed in a gas pipeline system or gas processing plant to catch slugs of liquid. Usually this takes the form of a long section of pipe, inside which the pressure is allowed to drop by a controlled amount. See also Pig. Solution Gas Solution Gas, unlike Cap Gas is Associated Gas dissolved in oil. Produced inevitably with the oil and separated from it at the well-head. Solution Gas production is thus a function of oil production and of the GasOil Ratio . which changes over the life of the field. It is therefore an unreliable gas supply and difficult to market, unless the buyer or seller have large alternative sources. Has in the past largely been flared or vented but this is becoming less acceptable, largely for environmental reasons, although is still not uncommon in remoter areas. Separation is often carried out in two or three stages to maintain the gas pressure for pipelining as far as possible. Gas from the final stage separator is at low pressure and is normally used in the field or on the platform during production. The gas may be re-injected into the reservoir if it will not break through into the oil wells. Sour Gas Gas containing a high level of Carbon Dioxide or Hydrogen Sulphide, which are corrosive in the presence of water. They may therefore require drying or removal to preserve the pipeline. The converse of Sweet Gas. Spark Spread The spark spread represents the difference between the cost of fuel and the price of electric power produced. A positive spread indicates that the price of the power is higher than that of the fuel, and the spread is profitable. The spread can be calculated for any input fuel, such as natural gas, coal, or heating oil. Specification The technical description of the allowable limits of the chemical composition of gas which may be admitted into a pipeline or process. Specific Gravity The ratio of the density of gas to that of air, or the ratio of the density of a liquid to that of water, in both cases at the same temperature and pressure. Spot Trading A loose term covering the buying and selling of gas other than under a long term contract. Generally in trading parlance spot delivery means immediate delivery. Standing Charge Tariff term for a fixed charge, typically per quarter or per year, irrespective of the amount of gas actually taken. Synonymous with Connection Charge but to be distinguished from Demand Charge. Storage For natural gas storage facilities fall into several categories. Seasonal storage comprises depleted gas fields Aquifers S alt Cavity Storage mined caverns and disused mines. Peak storage includes Gas Holders . Line Pack . lengths of pipeline buried specifically for storage use, and LNG storage used either for base-load or peak-shaving duties, depending on the market. Increasingly used in liberalised markets to enable gas to be trade at any time of the year for reasons not related to peak demand. See also Peak Shaving . Straddle Plant A gas processing plant that straddles a gas transportation pipeline to remove NGLs from the gas stream. Because it is often more economic to transport Rich Gas a straddle plant is required to process the plant to final sales specification. The alternative location of a gas processing plant is close to the producing field. NGLs are then transported as liquids away from the field area either by separate pipeline or other means. Supply Contract A contract under which the seller undertakes to supply gas in guaranteed volumes over a fixed period of time. A Supply Contract is therefore in sharp contrast to a Depletion Contract as the seller assumes the volume risks. Whilst certain fields may be envisaged in the contract, the seller will normally have the right to substitute other suitable gas if necessary. Swaps (1) Arrangements under which gas destined for a market is delivered elsewhere, and substitute gas is supplied to the final market. For instance, Nigerian LNG contracted to Italy is delivered to France, and other gas contracted to France is delivered to Italy. (2) In trading, the exchange of a fixed price for a floating price for a future delivery. Sweet Gas Gas containing little or no Carbon Dioxide or Hydrogen Sulphide. Converse of Sour Gas. Swing The inverse of Load Factor . defined as: Peak volume transported (sold) Average volume transported (sold) Expressed as a percentage. Thus a load factor of 60 is a swing of 167. Often used to describe the flexibility of supplies over a year. Synthesis Gas Also known as Syngas, Synthesis Gas is a mixture of carbon monoxide and hydrogen produced from methane or other hydrocarbons and steam and used to produce various chemicals, notably methanol. It is also the basis for the Fischer Tropsch process. See also: Middle Distillate Synthesis. Synthetic Gasoline Motor gasoline produced from coal (by the Fischer Tropsch process) or from natural gas (by the Fischer Tropsch process or via methanol). See also Middle Distillate Synthesis. Take or Pay Take or Pay (TOP) is a common provision in gas contracts under which, if the Buyers annual purchased volume is less than the Annual Contract Quantity minus any shortfall in the Sellers deliveries, minus any Downward Quantity Tolerance . the Buyer pays for such a shortfall as if the gas had been received. The Buyer may have the right in subsequent years to take the gas paid for but not received, either free or for an amount to reflect changes in indexed prices. See also Make Up Gas. Tariff A schedule of rates or charges offered by a common carrier or utility. Tariffs are commonly available for all parts of the gas industry where third party access is enforced or offered, for example for gas transmission in pipelines, for the use of gas stores, for gas sales to residential customers. Telemetry A technique used in the gas industry for recording information at a distance from the Meter or other recording device, typically by radio transmission of the data. Temperature Demand Analysis The statistical analysis of the causal relationships between weather (and other) factors and the demand for gas. An essential prelude to forecasting demand. See Seasonal Normal and Weather Correction. Temperature Correction The process of adjusting actual gas usage to what it would have been at Seasonal Normal Temperatures, to allow comparisons to be made between results for different time periods, typically years. See weather correction. Title Transfer Title transfer is the transfer of which ownership of gas from the seller to the buyer. Typically this may occur somewhere between the well head and entry into the transmission system, at national border crossings, at the City Gate etc. In the world of traded gas, possible points of transfer become more numerous. A special case is the transfer of LNG at some specified point on the high seas. See Delivered. Trading Volume The number of contracts that change hands during a specified period of time. See also Churning. Transit The transportation of gas through a country or gas system en route to the final customer. For example, Russian gas may transit through Ukraine en route to customers in western Europe. Transmission The transportation of large quantities of gas at high pressures, often through national or regional transmission systems. The gas is then transferred into local distribution systems for supply to customers at lower pressures. Transmission Company The company responsible for operating a transportation system. In liberalised markets there is increasing pressure for such companies to be restricted to offering capacity in pipelines for sale, and to be barred from selling gas itself. The companies are also commonly known as Transmission System Operators (TSOs) a title which reinforces their restricted role. See Unbundling. Transmission Pipeline A network of pipelines moving natural gas from a gas processing plant via compressor stations, to storage centres or distribution points. Transparency A general term meaning open publication of information. In the gas industry it is generally used in relation to costs, prices and capacity, where information has traditionally been considered commercially confidential. Costs and prices generally reflect a number of elements, such as production, transportation, storage, service. Transparency generally involves separating out or U nbundling these elements, usually as a result of regulatory requirements. A further step towards transparency involves the publication of the methodology used to calculate the different elements of costs and prices. Transporter A gas pipeline company transporting gas belonging to other companies. Also the operator of LNG vessels. See Transmission Company. Trap A configuration of reservoir and seal rocks that can confine gas (or oil) which are lighter than water normally contained in the reservoir rock. Structural traps are formed by a closed structure of R eservoir rock overlain by a sealing formation (the Seal ). May also be formed by stratigraphic changes within a reservoir rock in which case it is known as a stratigraphic trap. Treatment Any gas purification process, but most generally applied to the treatment of gas immediately after production, to bring it to acceptable standard for the market in question andor to extract valuable components for separate sale. This may involve the removal of LPGs and will certainly involve stripping out Condensates . Carbon Dioxide and Hydrogen Sulphide and other sulphur compounds (see also Acid Gas ) mercury and excessive water which may be in the raw gas. Other impurities are occasionally encountered. Whether other inert gases such as nitrogen, helium etc are extracted will be a matter for economic evaluation. UKCS United Kingdom Continental Shelf. Unbundling Unbundling is a term with several meanings for the gas industry but more accurately, and originally, it was used to denote the separation of different services and the charges associated with them. Originally used in the US in restructuring the telephone industry. it was adopted in the gas industry to denote the separation of gas sales from transportation and storage services. This is still the most usual meaning of the term, particularly in North America, where large customers are now free to purchase gas and services separately. However the European Commission uses the term Unbundling to mean the financial disaggregation of different functions within integrated companies, such as transmission and marketing. Where companies perform multiple functions, the Commission has sought to require separate accounting for the functions. Its aim is therefore much more related towards Transparency and eliminating the potential for anti-competitive cross subsidisation activities. Underground Storage The storage of gas, for strategic or peak shaving reasons, in underground reservoirs. Depleted gas fields are often suitable. Other possibilities include depleted oil fields, Aquifers and Salt Cavity Storage . In the context of LNG, underground storage refers to normal LNG storage tanks which are, however, buried to provide greater safety in the event of leakages. Unitisation Agreement When a gas field extends over two or more production licences or leases with different ownership, most countries require that the field owners unitise their holdings i.e. decide how the reserves and production of the total field will be shared between the licensees, thus enabling the efficient depletion of the reserves. The Unitisation Agreement normally provides for the appointment of a field operator, a method of determining the reserves underlying each licence or lease and the frequency of reserve re-determination. Upstream Upstream, Midstream and Downstream are imprecisely defined terms used to separate activities along the gas and oil chain into homogenous groups. Upstream typically refers to exploration, development amp production of oil amp gas. Sometimes also defined to embrace Midstream, which typically covers transmission (as opposed to distribution) LNG shipping etc. Downstream typically refers to activities associated with delivery to final consumers, such as distribution systems and connections to customer premises. Water Drive In a porous rock, as gas is withdrawn from the reservoir, water expands into the region formerly occupied by the gas as pressure is released. This often has the result of trapping volumes of gas so that they cannot be produced, thus reducing the recovery of gas. Not a problem with a D epletion Drive Reservoir . See Aquifer. Water Gauge A measure often used to express the pressure of gas in distribution systems, using water instead of mercury. The gauge records how far up a gradated tube gas will lift a column of water. Distribution systems normally operate at about 300mm (12 inches) water gauge (i.e. 300mm above atmospheric pressure). For comparison, atmospheric pressure is a little above 10 metres of water. Wayleave The strip of land around a gas pipeline or other utility to which the utility has legal right of access for building and maintenance. Weather correction A procedure for estimating what customer demand would have been in S easonal Normal weather conditions. Thus in a cold year seasonal normal demand will be lower than actual demand and vice versa. Well A hole drilled into the ground, mostly by rotary rigs, in which a drill bit, which actually cuts the rock, is turned on the end of a drill string, made up of lengths of hollow steel pipe which are added to the string as the bit drills deeper into the ground. Wells have various descriptions depending on the stage of the production process at which they are drilled. Exploration wells are drilled to discover if gas (or oil) can be found Evaluation or appraisal wells are drilled to obtain more information about a previous discovery Development wells are drilled to produce gas from a field which is being developed, and are called Producing wells when the field enters commercial production. Wheeling Physically redirecting gas from one pipeline system to another at a Hub as opposed to changing the title by swap arrangements. Wobbe Index Occasionally referred to as the Wobbe number. A measure of the rate at which gas will deliver heat on combustion and hence of the compatibility of a gas with gas burning equipment. Working Gas In a gas store, the total volume of gas present less C ushion Gas . In other words the gas available for normal working. Hence working gas capacity - the total capacity of a storage facility minus cushion gas. GLOSSARY OF UNITS Absolute Pressure The sum of Atmospheric Pressure and Gauge Pressure i.e. pressure by reference to a vacuum Atmosphere: A measure of pressure, now largely superseded by the Bar to which it is nearly identical. Originally equal to 760 mmHg it has now been redefined as 101,325 pascals and consequently 1 atmosphere 1.01325 bars. Atmospheric Pressure The pressure of the weight of air and water vapour on the surface of the earth. Bar The most used unit for expressing gas pressure. It is equal to 100,000 pascals (Nm2), which is the official SI unit. 1 Bar is approximately atmospheric pressure. bbl A US barrel, 1 barrel 0.159 cubic metres 42 U.S. gallons (approx35 imperial gallons). The abbreviation is also sometimes written as B or b. bblday Barrels per day. Usually used to quantify a refiners output capacity or an oilfields rate of flow. Bcm Billion cubic metres (i.e milliard or 109 cubic metres). Billion In the US 109. Although elsewhere billion often signifies 1012, the Natural Gas industry has generally adopted the US usag e. Boe Barrels of oil equivalent - a frequently used number to quantify general energy requirements for practical purposes. One boe is usually taken as representing 5.8 MMBtu gross. British thermal unit A unit of heat still widely used in the gas industry, notably in North America and in LNG. Originally defined as the amount of heat required to raise the temperature of one lb of water from 60 to 61 Fahrenheit, it is now defined in relationship to a fixed number of Joules (1055.056 to three decimal points). The most common multiple is one million Btu, normally abbreviated to MMBtu and U.S. dollarsMMBtu is perhaps the most frequently used unit for comparing gas prices on a common basis. See also Therm. Cal Calorie. Formerly the SI unit of energy, now no longer part of the system but still extensively used in Europe. The calorie was nominally the amount of heat required to raise 1 gram of water by 1C at 1 standard atmosphere and starting from 14.5C, but is now defined arbitrarily as: 4.1868 J. The most common multiple used is the Megacalorie (Mcal). Cf Cubic feet. Measure of gas volume, referring to the amount of gas needed to fill a volume of one cubic foot at 14.73 pounds per square inch absolute pressure and 600F. cm Cubic metres. Note however that cm is also the official abbreviation for centimetre. Deca Therm Also deka therm. A term sometimes used in the U.S. in lieu of one million Btu. Gauge Pressure The amount of pressure shown by a gauge, i.e. the amount by which the pressure exceeds atmospheric pressure. See also Absolute Pressure. GJ GigaJoule. One GigaJoule is approximately equal to 9.478 MMBtu. One million Btu equals 1.055 GJ. GWh GigaWatts per hour. J Joule - The unit of energy in the SI system and the unit approved by the International Gas Union for the expression of heat in the gas industry. Its definition is one Newton metre. In practice the industry has been reluctant to embrace the Joule for commercial purposes and it is only current in Australia and New Zealand. For practical purposes the multiples most in use are the MegaJoule (MJ) and the GigaJoule (GJ), although Petajoule ( PJ ) is also seen. For quick calculations 1 GigaJoule is very close in value to 1 MMBtu. Kelvin Measurement of temperature equivalent to 1273.16 of the interval between absolute zero and the triple point of water. The official unit of the SI system. The Kelvin is identical to 1 degree Celsius, which is the term most often used in practice, but the scale is different (0C273.16 K). Note incidentally that the Kelvin is itself the unit of measurement and references to 1 degree Kelvin are incorrect. kW KiloWatt One thousand Watts. kWh KiloWatt hour - Together with its multiples, rapidly becoming the most used unit for energy in gas, although its use is not strictly in accordance with the SI system or with IGU preferences. Since 1 Joule 1 Watt per second, the conversion factor 1 kWh 3.6 MJ is exact. Long ton 2240 lb. The most usual form of non-metric ton. Mcf Thousand cubic feet. Mcm Thousand cubic metres. Milliard Synonymous with US billion - 109. MM Widely used in the gas industry to mean a million (106), although this usage is incorrect, according to the SI convention. Similarly M is often used to represent a thousand (103). When the lower case letters m and mm are used, these usually denote a thousand and a million respectively. In everything else M is correctly used to mean Million as in MWh. MMbbl Million barrels. MMcf Million cubic feet. MMcm Million cubic metres. MMscm Million standard cubic metres. Mtoe Million tonnes of oil equivalent. Mtpa Million tonnes per annum, a widely used unit of volume in the LNG industry. MW MegaWatt - one million Watts. ncm Normal Cubic Metre - A cubic metre measured at 0 C and 1013 mbar dry. The most used metric unit for measuring the volume of gas. It differs from the Standard cubic metre ( scm ) in the temperature at which the measurement is made. The Normal cubic metre thus contains about 5 more heat content than the Standard cubic metre. PJ PetaJoule - Standard unit in the Australian gas industry, equivalent to 1 million (106) GJ and therefore roughly equal to 1 million MMBtu . It is therefore close to 1 Bcf or some 30 million cubic metres. ppm Parts per million. Pressure The force exerted by one body on another, measured as force over area e.g. newtons per square metre. Psi Pounds per Square Inch common USEnglish unit of pressure, 14.5psi 1 bar. scf Standard cubic foot - The conditions for measuring the scf are in fact very close to, but not identical with, those for the standard cubic metre ( scm ). Despite its name, there is no single accepted standard for the standard cubic foot but the one most used is 60F and 30 in Hg, dry. scm Standard Cubic Metre - A cubic metre measured at 15C and 1013.25 mbar, dry. The unit of volume recommended by the IGU but not in normal use. See also ncm. Short ton 2000 lb. Used in the US. SI Multiples The SI system uses the following prefixes for multiples of the base units: 103 kilo (k), 106 mega (M), 109 giga (G), 1012 tera (T), 1015 peta (P), 1018exa (E). tce Ton of coal equivalent - Like the barrel of oil equivalent ( boe ) a measure of general energy requirement but now largely supplanted by the boe. Generally taken to have a value of approximately 27 MMBtu. Tcf Trillion (1012) cubic feet. Tcm Trillion (1012) cubic metres. Therm 100,000 British Thermal Units is still occasionally used as a unit for pricing gas, particularly in the UK. Thermie A term virtually identical to 1 Megacalorie but having 15C as its base, used primarily in Spain. toe Tonnes of oil equivalent - A metric measure used to quantify general energy requirements for practical purposes, an alternative to the barrel of oil equivalent. usually taken as representing 10,000 kilocalories net. Ton (t) A term covering a variety of measures: The metric tonne (1000 kg) The long ton (2240 lbs) The short ton (2000 lbs). The metric tonne is the one increasingly used. W Watt - The basic unit of electrical power, defined as one joule per second. Water Drive In a porous rock, as gas is withdrawn from the reservoir, water expands into the region formerly occupied by the gas as pressure is released. This often has the result of trapping gas so that it cannot be produced, thus reducing recovery from the reservoir. Water drive is not a problem with a D epletion Drive Reservoir . See also Reservoir. Water Gauge A measure often used to express the pressure of gas in distribution systems, using water instead of mercury. Distribution systems normally operate at about 300mm (12 inches) water gauge (i.e. 300mm above atmospheric pressure). For comparison, atmospheric pressure is a little above 10metres of water. See also Gauge Pressure.Stock Order Types: Getting to Know the Basics Key Points Stock order types can have a significant impact on the time, price and manner of your transactions. Orders are affected by three main factors: time in force, qualifiers and types. Learn more about order types by reviewing some examples. During volatile market environments, prices tend to move faster and bidask spreads tend to widenso its critical to understand and use the appropriate order types to help control your trades price, timing, and manner of execution. While many market factors are beyond your control, if you have a clear understanding of how the order you place will be received in the marketplace, you will be much more likely to get the results you desire. Here are some stock order basics: Order types These are guidelines that modify the execution conditions of an order based on volume, time and price constraints. A market order is an order to buy or sell a stock at the best possible price available at the time the order is received in the marketplace. A market order for a New York Stock Exchange or NASDAQ listed stock will generally be filled at or close to the National Best Bid and Offer (NBBO). The NBBO is a term that refers to the U.S. Securities and Exchange Commission (SEC) requirement that brokers attempt to provide customers the best available bid price when their customers sell securities and the best available ask price when they buy securities. It is important to remember that factors such as the size of your order, significant news reports and rapidly changing market prices can result in execution at a price different from the NBBO. Additionally, if the size of your order exceeds the number of shares available at the time your order is entered, your order may be split and executed at several different prices until filled. Market orders are normally placed with a day-only time in force, which means they will trade only on the business day and in the trading session in which theyre placed. Market orders placed after 4:00 p.m. ET will be entered for the next trading day at 9:30 a.m. ET. Because market orders are typically filled very quickly, once they are entered, they generally cannot be canceled. It is important to rememberparticularly with large orders or in fast market conditionsthat you are never guaranteed the NBBO youre quoted at the time your order is entered. Limit orders are best when your primary objective is to obtain a specific price rather than a quick execution. You can use limit orders to ensure that: A buy order is not executed above the maximum price you are willing to pay. A sell order is not executed at a price that is below the minimum price you are willing to accept. Although a limit order allows you to specify a price, there is no guarantee of an execution, even if the market moves and reaches your limit price. Because limit orders are typically executed on a first-come, first-served basis, orders received before yours may execute and remove all available shares at your price. Limit order executions occur in a similar fashion as a market order, except that all executions will occur at the limit price (or better) you specify, at which point the remainder of your order (if any) is entered into the limit order book and becomes part of the displayed quote. Although your entire order will typically be executed with market orders, thats not always the case with limit orders. Also, keep in mind that even though executions may occur at your price level or better, your order still may not be executed. Generally this occurs due to industry trading exceptions, price corrections, or executions that may have occurred at different market venues. Stop orders come in three main varieties: standard stop order, stop-limit order and trailing stop order. Stop and stop-limit orders are entered and held in the marketplace, while trailing stop orders are held on your brokerdealers server until execution is possible. The table below shows a comparison of the three stop-order categories. Source: Schwab Center for Financial Research. Stop orders are typically used to protect an unrealized gain on a position in your account. Alternatively, if a stock moves down and a specified price is reached, stop orders also help minimize losses by selling the position at the market. For example, if the current price of a stock is 190 and you want to protect against a significant decline, you could enter a sell-stop order at 185. If the bid falls to 185 or an execution occurs at 185 or lower (at the same venue where your order resides), your stop order is triggered and a market order is entered to sell at the next available market price. Although stop orders are much more common when selling securities, stop orders can also be used to purchase stocks. Buy-stop orders are typically used to purchase stocks above a particular threshold where the investor believes an upward trend may be established. Stop-limit orders are typically used to buy or sell a security at a specified limit price once the security has traded at or through a specified stop price. Therefore, it has two components: the stop price and the limit price, which may or may not be the same. In most cases, the stop price on a sell stop-limit order will be equal to or above the limit price. As the stock declines in value, if the stock trades at or below the stop price, the order will trigger and it will become a limit order rather than a market order. Because the order is now a limit order, execution cannot occur unless the stock can be sold at the limit price specified (or better). To increase your chances of execution on a stop-limit order, consider placing your limit price below your stop price. The farther below the stop price you place your limit price, the better chance you have of receiving an execution in a rapidly declining market. A trailing stop order is an order in which the stop price will trail either the current ask or current bid by the number of points or percentage you specify. As mentioned above, this order is held on a brokerdealers server until the trigger is reached and then sent to the marketplace. The primary benefit of a trailing stop order is that it doesnt have to be cancelled and re-entered as the price of the stock increases. Time-in-force orders These specify how long an order will remain active before being executed or expired. Day-only orders are good for the current trading session only. This does not include any extended-hours sessions that occur before 9:30 a.m. or after 4:00 p.m. Eastern Time (ET). Extended-hours orders must be specified as such. Good-until-cancelled (GTC) orders are good for 60 calendar days at Schwab. Like day-only orders, GTC orders apply only to the regular 9:30 a.m. to 4:00 p.m. ET trading session. Fill-or-kill (FOK) orders require that the order be immediately filled in its entirety. If this is not possible, the order is cancelled. This is one way to find hidden liquidity. Immediate-or-cancel (IOC) orders require that any part of an order that can be filled immediately is filled, and any remaining shares are cancelled. This is another way to find hidden liquidity. Order qualifiers These guidelines modify the execution conditions of an order based on volume, time and price constraints. They include: Minimum-quantity orders specify that you require a minimum number of shares to be executed in order to complete a transaction. If the minimum is not available, minimum quantity orders specify that none of the order should be executed. For example, if you enter an order to buy 5,000 shares with a minimum quantity of 1,000 shares, you are requesting that none of the order be executed unless at least 1,000 shares can be bought. While this order qualifier may help prevent a fill of 100 shares on a 5,000-share order, it may also prevent your order from being executed at all, as this type of qualifier is prohibited on orders sent to the limit order book. It would also require that at least 1,000 shares be executed at a single venue, which may not be possible, although 1,000 shares might be available if the order was broken up and sent to multiple venues. You should be careful with minimum-quantity qualifiers, as the disadvantages may outweigh the advantages. Do-not-reduce (DNR) orders specify that a broker not adjust the limit price of the order when the stock is adjusted on the ex-dividend date. For example, if you enter a GTC limit order to buy XYZ at 193 and, a week later, the stock reaches ex-dividend date for an upcoming dividend payment of 0.50, your limit order would normally be reduced to 192.50. All-or-none (AON) orders specify that the order you place must be executed in its entirety or not at all. Example: If you enter an AON order to buy 5,000 shares, you are requesting that none of the order be executed unless it is for the entire 5,000 shares. While AON order qualifiers may help prevent a partial fill, they may also prevent your order from being executed at all, because they cannot be held on the exchange limit order book. AON orders also require that the entire order be executed at a single venue, which may not be possible, although execution might be possible if the order were broken up and sent to multiple venues. As with minimum-quantity orders, be careful with all-or-nothing qualifiersthe drawbacks may outweigh the benefits. Bottom line Although this article is by no means exhaustive, its meant to help you understand the basics of order types and to provide ideas to help you trade with confidence. Next StepsUse of Debt-Related Derivatives Products A derivative - or swap 1 - is a financial instrument created from or whose value depends upon (is derived from) the value of one or more separate assets or indices of asset values. As used in public finance, derivatives may take the form of interest rate swaps, futures and options contracts, options on swaps and other hedging mechanisms such as rate locks. Derivative products have been used in the debt, risk and asset management programs of state and local governments and other debt issuing authorities. Although it is appropriate to retain a derivatives advisor to assist in a transaction, issuers are advised that they should have a level of in house expertise necessary to understand the core aspects and risks of a derivatives transaction. Simply stated if you do not feel you understand and can explain the transaction, it is probably not appropriate for your use. When used properly derivative products can be effective interest rate management tools, which can provide a governmental entity financial flexibility, opportunities for interest rate savings, alter the pattern of debt service payments, create variable rate exposure, or change variable rate payments to fixed rate and otherwise limit or hedge variable rate payments. However, as observed during and after the financial crisis of 2008 and 2009 (the Financial Crisis), there are significant risks involved with such transactions, especially when other related markets - such as the variable rate market - trigger events in swap contracts. Some governments have experienced collateral calls, and involuntary and voluntary termination of their swaps, which, for some, came at a substantial cost. As a result, governments have significantly curtailed engaging in these types of transactions since the Financial Crisis. To alert governments to the risks associated with derivative products, GFOA maintains an Advisory ( Use of Derivatives and Structured Investments by State and Local Governments for Non-Pension Fund Investment Portfolios - 2010 ) which specifically advises state and local government finance officers to exercise extreme caution in the use of derivatives and structured finance products. Governmental entities must learn about and understand the potential risks and rewards of derivative and structured products, before deciding if they should be used. Governments must understand fully the characteristics of these instruments and have the ability (internal staff and external advisors) to determine the fair market price and be aware of the market, legal, accounting, credit and disclosure risks involved. It is also recommended that issuers read and understand the most current rating agency guidance regarding the effect of derivatives on ratings, prior to execution of a derivatives contract. Following the Financial Crises, Congress and regulators took steps to regulate the derivatives market, both in the public finance and corporate sectors. Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) and subsequent Commodity Futures Trading Commission (CFTC) rulemaking have established Business Conduct Rules for dealers. The regulations provide for safe harbors which include issuer representations and the need for a governmental entity to have a Qualified Independent Representative (QIR) a professional that is independent from the swap dealer (the QIR has not been associated with a swap dealer within the past year and has not been recommended by the swap dealer). Additionally, Dodd-Frank contains other regulations that issuers should be familiar with if considering swaps (see reference section). Before a dealer will engage in any discussions or executions of derivative transactions with a municipal counterparty (or any issuer defined as a Special entity under the CFTC rules), the swap dealers are requiring issuers to adhere to the August 2012 and March 2013 Protocols, which effectively amend any existing ISDA Agreements to allow them to fulfill their obligations under the regulations. These protocols mandate the use of the new CFTC Interim Compliant Identifier (CICI) legal entity identifier system for each Issuer Counterparty. The August 2012 Protocol addresses the swap dealers Business Conduct Rules and suitability issues and requires issuers to select a QIR, make certain representations and maintain internal policies and procedures including swap policies and policies regarding the selection of the QIR. The March 2013 Protocol covers swap clearing requirements and provides for an End-User Exception that allows issuers an exception to the clearing requirements if the issuer meets certain criteria. Swap dealers will require adherence to March 2013 Protocol before transacting any derivative. Instead of adhering to the Protocols, Issuers may choose to execute Bi-Lateral Agreements with each swap counterparty. The Bi-lateral Agreements incorporate essentially the same representations under the Protocols. Adhering to Protocols typically is more efficient for issuers with multiple swap counterparties as it allows issuers to provide information, make elections and representations one time. The Government Finance Officers Association (GFOA) advises that state and local governments exercise caution in the use of derivative instruments. Unless your government has the appropriate expertise to understand and resources to monitor the transactions, prepare financial reports, and audit footnotes for swap transactions on an ongoing basis, as well as manage the variable rate instruments and liquidity facilities associated with the instrument, it should not enter into swaps. Issuers must understand fully the characteristics of derivative instruments, have the ability together with its QIR Advisor to determine a fair market price and be aware of the legal, accounting, credit, and disclosure issues involved. These instruments should not be used for speculation, but only to manage risks associated with an issuers assets or liabilities and only in conformity with financial policies that reflect the risk tolerances and management capabilities of the issuer. These products should only be used when the issuer has developed: A comprehensive derivatives policy that includes : Evidence of clear legal authorization to enter into swap contracts and guidelines for how derivative products fit within the overall debt management program. Documentation of the expected impact of the derivative on the issuers underlying bond ratings. Credit rating agencies evaluate the risks of a derivative and its impact on the issuers rating. An issuer should understand the impact if any, prior to entering into a transaction. A financial advisor or QIR should assist the issuer in evaluating the likely rating considerations. Policies and procedures in place for the hiring of a QIR. Determining the scope of work for the QIR. In addition to transaction assistance, an issuer should have the QIR assist with securing the CICI number for the transaction, ensuring that the transaction qualifies as an end user exemption, and adherence to other CFTC rules. Procurement of a written recommendation from the QIR that the transaction should be undertaken. A list of the types of derivative products that may be used or are prohibited. A requirement that the issuer work with the QIR to document the incremental value of the swap transaction versus the cash market, including a valuation of call option considerations. Call option considerations should include valuing the swap if non-callable versus a comparable non-callable bond and valuing the cost of imbedding a call option in the swap to provide some potential protection for the issuer to manage the termination costs. Prohibition or restrictions into taking upfront payments or premiums, and on selling options. The conditions under which these types of products can be utilized ( i.e. bidding procedures, minimum benefit thresholds, valuation of no call or call options 2. policy on collateralization, and terms of master agreements). The maximum allowable notional amount of derivatives contracts, or a means of determining such amount, e.g. . by reference to floating rate assets. Guidelines for selecting counterparties of high credit quality and addressing the risks. Prior to the execution of a transaction, a requirement that the issuer document that the transaction contemplated fits the requirements of the derivatives policy. A written fairness opinion from the QIR that the transaction was priced at market with a fair pricing. A sufficient understanding of the products . The GFOA encourages all financial officers to learn about the risks and potential benefits of using derivatives. A decision whether or not to use derivatives must be made on an informed basis. Training is essential both in evaluating the use of derivatives and in managing their use. The internal staffing and expertise to manage, monitor, and evaluate these products properly (either on their own or in combination with a QIR ). Tax counsel may also need to be consulted. Issuers must have in place: Methods for measuring, evaluating, monitoring and managing risks associated with derivative products, including: Basis risk - the mismatch between variable rate debt service and the variable rate index used to determine swap payments. Basis risk can also occur when a divergence arises between the index associated with the bonds, and that of the derivative, This divergence could be caused by a number of factors including but not limited to, changes in credit spreadstrading values, tax law changes, absolute levels of interest rate and supply and demand. This risk can be managed through the a matching of the bond index with that of the derivative index, creation of an interest rate reserve fund, or conservative budgeting strategies. Interest rate risk - how the movement of interest rates over time affects the market value of the instrument. Interest rate risk can arise as a.) cashflow risk which is the risk that any market factors (including interest rates or ratios) may increase cashflow from expectations, and b.) Mark-to-Market risk also affected by market factors depending on the trade (interest rates, ratios, yield curve, etc.). Collateral Posting risk the risk that market movements or an issuer downgrade will cause the market value of the swap to be negative enough that the issuer has to post collateral under a Credit Support Annex (CSA). Issuers should be mindful of the different rating standards applied to corporate and municipal credits when evaluating collateralization thresholds and understand that this is a negotiable requirement. Termination and collateral requirements should reflect relative comparable credit strengths of the parties determined on a corporate equivalent or global rating basis. Counterparty risk - the risk that the counterparty fails to make required payments, experiences rating downgrades, or files for bankruptcy protection. This is particularly important if an issuer has more than one swap with a counterparty and the documents contain cross-default provisions. This can be addressed through the establishment of ratings thresholds, guidelines for exposure levels and, particularly, collateralization requirements. Termination risk - the need to terminate the transaction in a market that dictates a termination payment by one of the counterparties. Market practice allows governmental issuers to limit the instances in which this can occur. This risk can also be mitigated through the identification of revenue sources for and budgeting of potential termination payments, structuring the swap so that refunding bond proceeds can be used for termination payments and subordinating the lien status of potential payments. Issuers are cautioned to understand the potential for termination costs to change over time in different interest rate environments and should document the sensitivity to these factors. Issuers are cautioned to ensure that counterparties do not impose excessive or unnecessary fees at termination in excess of amounts allowed for in the swap documents, and are urged to consult with their financial advisors about negotiating the terms of a termination payment. 3 Market-access risk - the risk that the markets may be closed or that an issuer may not be able to enter the credit markets due to its own credit quality deteriorating. For example, to complete a derivatives objective, a new money bond issuance or a refunding may be planned in the future. If at that time the markets are not functioning or an issuer is unable to enter the credit markets, expected cost savings may not be realized while the issuer will continue to be subject to its obligations required by the derivative contract. Amortization risk - the mismatch of the maturity of the swap and the maturity of the underlying bonds or a mismatch in the amortization of the swap and bonds. This should be eliminated by making the maturity and amortization of the swap match those of the bonds. Rollover risk the underlying variable rate bond related to the swap will typically have a liquidity feature or put feature that will require periodic remarketing, rollover or renewal. This requires transactions fees and the risk that a change in the issuers credit, or a change in market conditions may economically disadvantage the issuer. Credit risk - the occurrence of an event modifying the credit rating of the issuer or its counterparty. This should be addressed through minimizing cross defaults and the favorable negotiation of credit event triggers in the underlying documentation. Methods for selecting and procuring derivative products, including when competitive bids and negotiated transactions are warranted, and knowledge of pricing conventions and documentation standards. Guidelines governing the proper disclosure of material information relating to executed derivative products to the issuers governing body, in financial statements, to the rating agencies, to investors in connection with bond offerings, and through secondary market disclosure. Internal disclosure should include information about legal authority, risks, guidelines and market value. Official Statement and secondary market disclosure should comport with current market practice. Procedures and personnel responsible for internally managing and monitoring the issuers (i) obligations (also known as operational risk), such as monitoring rates, calculating and making payments, managing collateral, and budgeting and accounting for derivatives appropriately and (ii) exposure, such as counterparty credit, collateral posting levels, variable rate exposure levels and basis risk. Pursuant to applicable accounting requirements, these procedures must include the development of a methodology for providing periodic termination value analyses. Documentation Standards. The new regulatory framework dictates that all derivative transactions be documented using standardized forms, as standardized terms make it easier for market participants to analyze transactions, which minimizes costs. Documentation in the municipal swap market is accomplished through the negotiation and execution of the forms of documents published by the International Swaps and Derivatives Association, Inc. (ISDA) . 4 ISDA has updated these forms to conform to the new CFTC regulations. The GFOA also advises that many provisions in such forms are subject to negotiation and therefore recommends that finance officers have a QIR to advise on negotiations and amend ISDA documents as changing market conditions warrant. Specifically, the provision of collateral by one or both parties to a swap under certain circumstances is determined at the time the swap is executed. The form of that potential collateral may also be decided at the point of execution or may be postponed until such collateral is required. Collateral is identified in a Credit Support Annex (CSA), and while it will add legal costs to the original transaction and has the potential of never being used, the GFOA recommends it be completed simultaneous with the execution of the swap to avoid having to negotiate collateral arrangements under distressed circumstances. Ongoing Monitoring . Once an issuer has adopted a derivatives policy and executed a derivatives transaction, the issuer should monitor and, to the extent possible, take action to limit its exposure to the risks described above. Because opportunities in the derivatives market change frequently, the GFOA encourages finance officers to keep abreast of such market conditions. Governmental Debt Management 1 Commodity Exchange Act definition of a swap - any agreement. that provides on an executory basis for the exchange. of one or more payments based on the value or level of one or more. rates, currencies, commodities, securities, instruments of indebtedness, indices, quantitative measures, or other financial or economic interests or property of any kind. and that transfers, as between the parties to the transaction, in whole or in part, the financial risk associated with a future change in any such value or level without also conveying a current or future direct or indirect ownership interest in an asset (including any enterprise or investment pool) or liability that incorporates the financial risk so transferred. 2 The cost of many of the problems experienced by municipalities with swaps could have been reduced had the municipalities been able to terminate swaps at lower costs. One way to reduce the cost of termination is to imbed an issuer call option in the swap. Historically bonds have call options as a matter of course and historically most municipalities have not had call options imbedded in their swaps. It is important to evaluate the portion of the value in the swap that is being derived from the elimination of the call option versus the value being derived from other components of the swap transaction. When undertaking a swap, municipalities should evaluate the incremental value and or cost of imbedding a call option in the swap. Depending on market conditions, call options in swaps may increase costs which should be evaluated versus the risk reduction obtained. 3 Terminating Swaps and Re-indexing There may be opportunities to restructure or re-index a swap to obtain savings or a reduction in the size of the swap. When evaluating these types of transactions, Issuers should be aware that there are potential tax consequences to the modification of an existing swap. The issuer should get advice from a qualified bond counsel regarding any potential adverse tax consequences of a partial termination or re-indexing for example. 4 National Federation of Municipal Analysts, White Paper on Disclosure for Swaps (February 2004) SIFMAGFOA March 2013 Webinar: Municipal Swaps - Understanding the New World of Regulation GFOA Best Practice: Debt Management Policy , 2012 GFOA Advisory: Use of Derivatives and Structured Investments by State and Local Governments for Non-Pension Fund Investment Portfolios , 2010 GFOA Public Policy Statement: Regulation of Derivative Products. 1994 Swaps in the Aftermath of the Banking Debacle . Peter Schapiro, Government Finance Review, 22013 CICI identifier page -ciciutility.org ISDA Protocol - www2.isda.orgfunctional-areasprotocol-managementopen-protocols CFTC Regulations - cftc.govLawRegulationFederalRegisterFinalRules2012-1244 GFOA Publication: Elected Officials Guide to Debt Issuance , Patricia Tigue and J.B. Kurish, 2005 Understanding Municipal Derivatives , David Taub, Government Finance Review . 2005 GFOA Derivatives Checklist . 2010 GASB Derivative Instruments: A Plain-Language Summary of GASB Statement No. 53 Fitch Ratings: High DemandDiminished Supply Changing Dynamics of Bank Facilities Market Heighten the Risk Profile for Some Municipal Borrowers . 2010. Moodys U.S. Public Finance Potential Risks of Variable Rate Debt and Interest Rate Swaps for U.S. State and Local Governments are Heightened by Economic and Financial Crisis . October 2009. Standard amp Poors, Contingent Liquidity Risks In U.S. Public Finance Instruments: Methodology and Assumptions . 2012. Approved by GFOA039s Executive Board:
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