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B. Background Regarding Deepwater Drilling in the Gulf of

Mexico

The goal of deepwater drilling operations is to locate and extract oil and
gas (collectively referred to as “hydrocarbons”) from reservoirs located beneath
the sea floor. In some reservoirs, the hydrocarbons become trapped beneath
impermeable rock; when this happens, the hydrocarbons seep into surrounding
porous rock. Drilling operations seek to penetrate the impermeable rock to get to
hydrocarbon‐bearing reservoirs or “pay zones.”

The Gulf of Mexico is home to a large number of hydrocarbon reservoirs.
Since 1947, more than 50,000 wells have been drilled in the U.S. Gulf of Mexico.
Approximately 97% of the oil produced on the U.S. Outer Continental Shelf
(“OCS”) is produced in the U.S. Gulf of Mexico. There are currently nearly 7,000
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active leases in the U.S. Gulf of Mexico, 64% of which are in deepwater.

Since 1995, deepwater drilling activity has increased significantly in the
Gulf. In 2001, U.S. deepwater offshore oil production surpassed shallow water
offshore oil production for the first time. As of May 2010, operators drilled
approximately 700 wells in water depths equal to or greater than 5,000 feet, the
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approximate depth of the Macondo well. Deepwater reservoirs can yield a high
volume of oil and gas. Production rates for deepwater wells are typically much
higher than in shallow water wells.

The initial well or wells drilled into a formation are referred to as
“exploratory wells,” which an operator drills to determine whether a reservoir
contains sufficient volumes of hydrocarbons to warrant investment in the

12 See Department of Interior, Increased Safety Measures for Energy Development on the Outer
Continental Shelf, (May 27, 2010). Although there is no single accepted definition of
“deepwater,” a common use of the term is to refer to locations where the water depth is at least
1,000 feet.
13 Id. “Operators” are the persons the lessee(s) designates as having control or management of
operations on the leased area or a portion thereof. An operator may be a lessee, the MMS‐
approved designated agent of the lessee(s), or the holder of operating rights under an MMS‐
approved operating rights assignment. “Lessee” means a person who has entered into a lease
with the United States to explore for, develop, and produce the leased minerals. The term lessee
also includes the MMS‐approved assignee of the lease, and the owner or the MMS‐approved
assignee of operating rights for the lease. 30 CFR § 250.105.

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