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Brief Review of General and Special Provisions in Offshore Operating Agreements

Darrel L. Black, Offshore Exploration, Drilling and Development (1975)

Of late energy has become one of the most written and spoken about words in our language — the need of it, the shortage of it, and the forecasts of its usage in the future. In all of this rhetoric, there seems to be one common thread -America needs and will continue to need more energy to fuel a successful industrialized economy.

A realistic definition of energy for today and the immediate future is oil and gas. The ability to develop economically new supplies of power from such sources as nuclear, oil shale, tar sands, solar, etc., in the next decade is simply not achievable.

Although the opportunity exists for finding significant amounts of oil and gas onshore, both in virgin areas and in older productive areas by the application of new technology, the greatest potential for immediate success lies in the offshore.

The results of a recent survey reveal that in the free world today 34% of the continental shelves are now under exploration contracts. (In the U.S. less than 3% of the continental shelf area is leased.) The frontier — the future area of major development of new reserves — is truly underwater.

In order to properly conceive and implement a program for an offshore project, prior knowledge of the physical setting of the undertaking and the magnitude of the project in terms of both technical skills and dollars is required.