The purpose of this paper is to apply a region-specific- hybrid model of oil and gas reserve additions to determine whether the negative impact of depletion on the finding rate of new reserves has been more than offset by the positive effects of technical progress and economic incentives in the US Gulf of Mexico OCS region. Our model results confirm expectation of diminishing returns in the rate of change of drilling productivity with respect to basin maturity. We also found strong evidence, to suggest that as technology improves over time, better drilling choices are made and the rate of change of drilling productivity with respect to incremental drilling rises with time. Overall, we found strong statistical evidence to suggest that the positive influence of technical progress and economic incentives on drilling productivity has been strong enough to offset the negative impact of resource depletion on the finding rate of oil and gas reserves in the US Gulf of Mexico OCS during our study period.

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