Gas/oil ratio refers to the relative amounts of petroleum and natural gas that are simultaneously removed from the ground. The natural gas may be located in a nearby deposit or exist in solution with the crude oil. When the oil is drawn to the surface, much of the natural gas escapes from the solution. The resulting volumes of the two substances can then be used to determine the gas/oil ratio. If the deposits present in an oil field have extremely high ratios of gas to oil, the resulting drill sites are typically referred to as gas wells.
Oil and natural gas are two fossil fuels that are highly associated with each other, and when one is found the other is often located as well. Most crude oil deposits have some amount of natural gas present, though the gas/oil ratio can vary widely between fields. In some cases an oil field will have very little natural gas, and in other situations gas fields can be located that do not have associated oil deposits. When natural gas is located in and around oil, it is referred to as associated gas. Separate deposits are known as non-associated gas, and they are often seen as more economically desirable.
When oil is drawn out of the ground, any associated natural gas will tend to escape from the solution. A great deal of the gas typically becomes free immediately, though the process can continue through each stage of transportation and processing. As the natural gas exits the solution and the gas/oil ratio drops, the volume of the oil is naturally reduced. This can result in less oil being available for export or processing than was removed from the ground if the volume numbers from immediately after extraction are examined. For this reason, it can be important to determine exactly where along the supply chain the volume measurement was taken.
In many cases, wells that have a high gas/oil ratio are seen as economically undesirable. Associated gas was historically flared off or burnt onsite because it was not economically feasible to capture and process it. Developments have been made in that area that have allowed high gas/oil ratio wells to monetize the natural gas or inject it back into the well to create additional pressure. In some cases, the gas is used as an onsite fuel to run generators rather than simply burning it to get rid of it.