Some oil wells also produce natural gas along with the oil. The produced gas is called associated-dissolved gas, or more simply, associated gas. The associated gas is either dissolved in the oil or formed as a free “gas cap” above the oil in the reservoir. After the oil is brought to the surface, the associated gas is separated from the oil and is then treated like any other type of raw natural gas in a gas production field. Associated gas commonly occurs in oil wells drilled in low permeability, tight rock formations.
The existence of associated gas raises a question of when a well is an “oil well” and when it is a “gas well” for statistical purposes. The definition depends on the gas-oil ratio (GOR) used by a specific entity. The U.S. Energy Information Administration uses a GOR of 6,000 cubic feet of natural gas to 1 barrel of oil to determine whether a well is categorized as an oil well or a gas well. If the GOR for a year of production is equal to or less than 6,000 cubic feet per barrel, then the well is defined as an oil well, and any natural gas produced from this well is called associated gas. If the GOR is greater than 6,000 cubic feet per barrel, the well is considered a gas well.
Associated gas often contains significant natural gas liquids (NGLs) such as ethane, propane, normal butane, isobutane, and natural gasoline. Thus it is often known as “wet gas”. Because of the existence of multiple valuable hydrocarbons in associated gas – oil, natural gas, and NGLs – the economics of producing associated gas will differ from those for non-associated gas wells.