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Deepwater in the Gulf of Mexico: Continuing Work toward a Model Form Operating Agreement

R. Thomas Jorden, Jr., Oil & Gas Development on the Outer Continental Shelf (1998)

The 90s will be remembered as the frontier days of deepwater exploration and development. This decade has witnessed an intense focus upon the oil and gas potential of the deepwater areas of the Outer Continental Shelf (“OCS”) underlying the Gulf of Mexico. This increased interest and activity prompted the American Association of Professional Landmen (“AAPL”) in 1996 to begin work on what will be the first model form operating agreement specifically intended for deepwater application. This paper is intended to briefly outline the factors contributing to the revitalization of exploration and development activities in the Gulf of Mexico, describe the efforts of the AAPL in promulgating a model form, and discuss some of the many conceptual and operational issues that must be faced in drafting a model form deepwater operating agreement intended for general application.

Oil and natural gas have been produced from the Gulf of Mexico OCS for fifty years, and this production has contributed to a significant portion of the total United States oil and gas production. Nonetheless, according to the MMS, a long, slow decline had been forecast for production from the Gulf of Mexico because it was thought that all of the most promising shallow water fields had already been found and were approaching or past their peak production levels. The thoughts of declining Gulf of Mexico product