Modeling Petroleum Productivity in the U.S. Gulf of Mexico Outer Continental Shelf (OCS) Region


  • Omowumi O. Iledare
  • Allan G. Pulsipher
  • Williams O. Olatubi



Productivity generally refers to the amount of output that can be produced with a given input. However. because measures of inputs and outputs can vary considerably, several indicators of productivity in petroleum resource development are possible. The more meaningful indicators of productivity that relate directly to upstream activities include drilling success rates, average discovery size, finding rates, and yield per effort. In this paper, we examine the performance of the oil and gas upstream industry in the Gulf of Mexico OCS region using these indicators. Further, using econometric modeling techniques, we determine empirically the effects of depletion, technical progress, economic and policy incentives, structural changes and market conditions on the returns to exploration activities in the u.s. Gulf of Mexico OCS. The model results confirm expectations of diminishing returns to wildcat drilling on the OCS due to resource depletion, while the combined effects of economic incentives, institutional restructuring, and technical progress have mitigated significantly the declining trend in wildcat drilling productivity in the region.