Risk management program which, usually in exchange for an up front premium, offers a price ceiling for various size purchases of fuel. Caps are most commonly offered by suppliers who utilize petroleum futures options.
Also referred to simply as a “call.” Refers to an option that gives the buyer the right but not the obligation to buy a futures contract at a specific strike price.
An auxiliary piping arrangement, generally to carry gas around specific equipment or an integral section of a piping system. A by-pass is usually installed to permit passage through the line while adjustments or repairs are made on the section which is by-passed. Also used to describe the circumvention of a local distribution company’s distribution system to supply gas to a specific customer.
In negotiating situations where the seller of gas has the right to solicit third-party bids for his gas, a right of first refusal provision gives the buyer of the gas the option of meeting the third party bid price and continuing the contract on such terms.
Payments made by pipelines to producers to extinguish (buy-out) outstanding take-or-pay liabilities under existing contracts, or to reform (buy-down) the contracts.
An olefinic hydrocarbon recovered from refinery processes.
A normally gaseous straight-chain or branch-chain hydrocarbon extracted from natural gas or refinery gas streams. It includes normal butane and refinery-grade butane and is designated in ASTM specification D1835 and Gas Processors Association specifications for commercial butane.
A heavier residual fuel oil used in a ship’s boilers.
A market where prices are rising.
A facility used primarily for the storage and/or marketing of petroleum products which has a total bulk storage capacity of 50,000 bbls or more and/or receives petroleum products by tanker, barge or pipeline.