What is the definition of a Barrels of Oil Equivalent (BOE)?
Barrels of oil equivalent is a measure of the amount of energy contained in a barrel of oil. BOE is primarily a measure of energy. The volume of oil contained in a barrel of oil is equivalent to 159 liters (i.e. 42 US gallons). It is used by oil exploration and production companies to report their reserves. Analysts, investors, and company management can properly measure the amount of energy the company has access to by providing the equivalence of the amounts of other primary energy such as coal, uranium, and natural gas.
A barrel of oil is significantly heavy as it contains a lot of energy The energy amount greatly depends on the energy density of oil.
Since BOE covers all aspects of primary energy, it would be inappropriate to limit it to only crude oil as many oil exploration and production companies produce both oil and gas. Both elements are measured differently, as earlier stated that analysts can measure the amount of energy a company has by providing the equivalent of other units of primary energy. This, therefore, indicates that the unit for measurement in all primary energy sources differs. Natural gas is measured in cubic feet while oil is measured in barrels. It is said that the amount of energy contained in one barrel of oil is equivalent to the amount of energy contained in 6,000 cubic feet of natural gas. Therefore, the amount of energy found in 6,000 cubic feet of natural gas is “equivalent” to one barrel of oil.