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Glossary:Barrel equivalent

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A laboratory measuring scale for expressing mixtures of products used to formulate muds. One gram of material added to 350 cc of liquid is equivalent to 1 lb of material added to a 42 gallon barrel.

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[1]A barrel of oil equivalent (BOE) is a term used to summarize the amount of energy that is equivalent to the amount of energy found in a barrel of crude oil, natural gas liquids and natural gas. Natural gas volumes are converted to barrels based on energy content. By encompassing different types of energy resources into one figure, analysts, investors, and management can assess the total amount of energy the firm can access. This is also known as crude oil equivalent (COE).

Many oil companies produce both oil and gas, among other petroleum products, but the unit of measure for each is different. Oil is measured in barrels and natural gas is measured in billions of cubic feet (BCFE). To help facilitate like-for-like comparisons, the industry standardized natural gas production into "equivalent barrels" of oil. One barrel of oil is generally deemed to have the same amount of energy content as 6,000 cubic feet of natural gas. So, this quantity of natural gas is "equivalent" to one barrel of oil. BOE can be compared with natural gas equivalent, which translates the energy in an amount of oil (or other energy product) into that of gas.

Converting assets to BOE is fairly simple. In terms of volume, oil is represented per barrel, and natural gas is represented per thousand cubic feet (Mcf). There are 42 gallons (approximately 159 liters) in one barrel of oil. The energy contained in a barrel of oil is approximately 5.8 million British thermal units (MBtus) or 1,700 kilowatt-hours (kWh) of energy. This is an approximate measure because different grades of oil have slightly different energy equivalents. One Mcf of natural gas contains approximately one-sixth of the energy of a barrel of oil; therefore, 6,000 cubic feet of natural gas (6 Mcf) have the energy equivalent of one barrel of oil. For large quantities of energy, BOE can be represented at kilo-barrels of oil equivalent (kBOE), which is 1,000 BOE.