DAILY BALANCING
Balancing, on a day-by-day basis, the amount of gas a shipper puts into a pipeline system.

DAILY CONTRACT QUANTITY (DCQ)
In a buyer’s nomination contract this is the average amount the buyer can have in its daily nominations. The maximum rate at which the buyer can ask the seller to deliver function of the DCQ and the swing. A similar rule exists in a seller’s nomination contract where it is called the estimated daily contract quantity.

DAILY METERED (DM) SITES
Supply points/sites with meters which read gas volume either on a continuous or on a daily basis. This gives the daily volume consumption which is needed for daily balancing.  The sites are at large input and offtake points on a gas system, typically for large industrial gas users.

DEFERRED SWAP
A swap under which the payments are deferred for a specified period, usually for tax or accounting reasons.  A forward swap, on the other hand, is where the entire swap is delayed.

DEGREE-DAY
A measure of the variation of one day’s temperature against a standard reference temperature, typically 65 degrees Fahrenheit (18 degrees Centigrade). There are both cooling degree-days (CDDs) and heating degree-days (HDDs).
By way of example, a company takes out a 30-day CDD swap with a reference temperature of 65 degrees Fahrenheit, and the average temperature on each day is 70 degrees Fahrenheit. The company is then due 150 (30X5) degree-days multiplied by the sum of money agreed for each degree-day. If the company had taken out an HDD swap, it would have owed the same amount of money.

DELIVERABILITY
The rate at which gas can be supplied from a reservoir (eg, salt cavity storage) in a given period. In a salt cavity storage facility for example, the rate would depend on a number of factors including reservoir pressure, reservoir rock characteristics and withdrawal facilities such as pipeline capacity. The term is also used for the volume of gas which a field, pipeline, well, storage or distribution system can supply in a single 24-hour period.

DELIVERY CAPACITY
The maximum rate at which a gas buyer can request the seller to deliver gas, other than excess gas, into the pipeline and which the seller has a firm obligation to deliver.

DELIVERY FACILITY OPERATORS
Companies which operate the gas processing facilities at gas terminals before it is passed on either into storage or to the National Transmission System.

DELTA
Option risk parameter which measures the sensitivity of an option price to changes in the price of its underlying instrument.

DELTA-HEDGING
An option is delta-hedged when a position has been taken in the underlying that matches its delta. Such a hedge is only effective instantaneously, because the option’s delta is itself altered by changes in the price of the underlying, interest rates, the option’s volatility and time to expiry. A delta-hedge must, therefore, be rebalanced continuously to be effective.

DERIVATIVE
Financial instrument derived from a cash market commodity, futures contract, or other financial instrument. Derivatives can be traded on regulated exchange markets or over-the-counter. For example, energy futures contracts are derivatives of physical commodities, options on futures are derivatives of futures contracts.

DISPATCHABLE GENERATION
Generation available physically or contractually to respond to changes in system demand or to respond to transmission security constraints.

DISPLACEMENT
Where gas is input into a pipeline system at one end and the same amount of gas is delivered at another point, although the gas may not have been transported between the two points.

DIURNAL MATCHING
The daily balancing of the difference between a shipper’s gas input volume and its customers’ offtake.

DIURNAL STORAGE
Storage located close to all gas demand centres which is used to meet the daily peaks in demand. This storage is provided in the form of gasholders and line-packing.

DIVESTITURE
The process of requiring monopolistic utilities to spin off one segment of their business; this is done to ensure that uncompetitive advantages created by former government actions are removed so that competition can develop. A utility with generation, transmission and distribution facilities, for example, might be forced to sell off its generation. Divestiture is also known as vertical disaggregation.

DOMESTIC MARKET
The section of the energy market which covers energy requirements for domestic premises.

DONE
Term used to indicate that a deal has been completed – eg, a broker might tell a trader that he is "done", meaning his buy/sell requirements have been matched precisely.

DOUBLE-DOWN
A swap with an embedded option which permits the writer of the swap to halve the agreed volume once, and once only, at or before an agreed date. In return the buyer of the swap obtains a more favourable price.

DOUBLE-UP
The exact reverse of double-down, with the writer of the swap having the option to double the agreed volume.

DOWNSTREAM
Activities in the oil and gas industry from a refinery onwards – ie, the distribution and marketing of hydrocarbon products.

DRY GAS
Gas with a low liquid content, usually below two gallons per 1000 cubic feet. This may happen naturally, as in most of the fields in the southern North Sea, or the water content may be reduced by a dehydration process. Also known as lean gas.

DUAL-FIRING
Where two different fuels – eg, gas and oil – can be used to generate energy in one piece of equipment. 

DYNAMIC REPLICATION
Replication of an option payout by buying or selling the underlying (or futures, where cheaper) in proportion to an option’s delta. Dynamic replicators are exposed to increases in volatility, which may increase the costs of the necessary hedge.