Hostname: page-component-cd9895bd7-dzt6s Total loading time: 0 Render date: 2024-12-23T10:01:48.215Z Has data issue: false hasContentIssue false
  • English
  • Français

Private Contracts as Regulation: A Study of Private Lease Negotiations Using the Texas Natural Gas Industry

Published online by Cambridge University Press:  15 September 2016

Ashley Vissing
Ashley Vissing*
Affiliation:
Dept. of Economics at Duke University
*
Correspondence: Ashley Vissing ▪ Department of Economics ▪ Duke University ▪ 213 Social Sciences Building ▪ Box 90097 ▪ Durham, NC 27708-0097 ▪ Phone 919.660.1800 ▪ Email [email protected].
Get access Rights & Permissions [Opens in a new window]

Abstract

This study explores factors driving tract-level heterogeneity in the quality of leases executed by property owners who transfer their mineral rights to firms that drill for and extract natural gas. The data set consists of tract-level aggregates of lease terms, our measures of lease quality, and tract-level census data from the leases. We find that higher-quality leases are negatively correlated with higher concentration of minority households when controlling for census-tract-level characteristics. Based on the findings, we propose policies to reduce observed heterogeneity in the quality of leases and, subsequently, to reduce residents' exposure to negative effects of nearby well sites.

Keywords

hydraulic fracturinglease qualitynatural gas
Type
Selected Papers
Information
Agricultural and Resource Economics Review , Volume 44 , Issue 2: Special Issue: Unconventional Gas and Oil Development: Economic and Environmental Impacts , August 2015 , pp. 120 - 137
Copyright
Copyright © 2015 Northeastern Agricultural and Resource Economics Association 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Boxall, P.C. Chan, W.H. and McMillan, M.L. 2005. “The Impact of Oil and Natural Gas Facilities on Rural Residential Property Values: A Spatial Hedonic Analysis.” Resource and Energy Economics 27(3): 248–269.Google Scholar
Fambrough, J. 1997. “Recovery of Surface Damage and Remediation Costs.” Letter of the Law, Real Estate Center, Texas A&M University 11(2): 1163–1166.Google Scholar
Fambrough, J. 2015. “Hints on Negotiating an Oil and Gas Lease.” Technical Report 229, Real Estate Center, Texas A&M University, College Station, TX.Google Scholar
Fitzgerald, T. 2010. “Evaluating Split Estates in Oil and Gas Leasing.” Land Economics 86(2): 294–312.Google Scholar
Gopalakrishnan, S. and Klaiber, A. 2014. “Is the Shale Boom a Bust for Nearby Residents? Evidence from Housing Values in Pennsylvania.” American Journal of Agricultural Economics 96(1): 43–66.Google Scholar
James, A. and James, J. 2014. “A Canary near a Gas Well: Gas Booms and Housing Market Busts in Colorado.” Working paper, Department of Economics and Public Policy, University of Alaska, Anchorage.Google Scholar
Klein, B. Crawford, R. and Alchian, A. 1978. “Vertical Integration, Appropriable Rents, and the Competitive Contracting Process.” Journal of Law and Economics 21(2): 297–326.Google Scholar
Libecap, G. and Smith, J. 1999. “The Self-enforcing Provisions of Oil and Gas Unit Operating Agreements: Theory and Evidence.” The Journal of Law, Economics, and Organization 15(2): 526–548.Google Scholar
Libecap, G. and Wiggins, S. 1985. “The Influence of Private Contractual Failure on Regulation: The Case of Oil Field Unitization.” Journal of Political Economy 93(4): 690–714.Google Scholar
McFarland, J.B. 2014. “Checklist for Negotiating an Oil and Gas Lease.” Graves, Dougherty, Hearon, and Moody, P.C., Austin, TX. Available at www.gdhm.com/images/pdf/jbm-ogleasechecklist.pdf (accessed March 2014).Google Scholar
Merrill, R. and Merrill, F. n.d. “Ownership of Mineral Rights under Texas Law.” Fabio and Merrill, Houston, TX. Available at www.fabioandmerrill.com/Ownership-of-Mineral-Rights-Under-Texas-Law.pdf (accessed March 2014).Google Scholar
Muehlenbachs, L.A. Spiller, E. and Timmins, C. 2014. “The Housing Market Impacts of Shale Gas Development.” NBER Working Paper 19796, National Bureau of Economic Research, Cambridge, MA.CrossRefGoogle Scholar
New York Times. 2011-2012. “Drilling Down” series. Available at www.nytimes.com/interactive/us/DRILLING_DOWN_SERIES.html.Google Scholar
Porter, R. 1995. “The Role of Information in U.S. Offshore Oil and Gas Lease Auctions.” Econometrica 63(1): 1–27.Google Scholar
Texas Administrative Code: Oil and Gas Division, Chapter 3. Available at http://texreg.sos.state.tx.us/public/readtac$ext.ViewTAC?tac_view=4&ti=16&pt=1&ch=3&rl=Y (accessed March 2014).Google Scholar
Throupe, R. Simons, R.A. and Mao, X. 2013. “A Review of Hydro ‘Fracking’ and Its Potential Effects on Real Estate.” Journal of Real Estate Literature 21(2): 205–232.Google Scholar
Timmins, C. and Vissing, A. 2015. “Shale Gas Leases: Is Bargaining Efficient and What Are the Implications for Homeowners If It Is Not?” Working paper, Economics Department, Duke University.Google Scholar
Watson, R. 2008. “State Surface Owner Protection Laws: Tales of Preemption, Federalism, and a Changing West.” Hogan & Hartson LLP, Denver, CO. Available at www.wsmtlaw.com/assets/downloads/pdf/State-Surface-Owner-Protection%20Laws-2-2008.pdf (accessed June 2015).Google Scholar
Williamson, O.E. 1971. “The Vertical Integration of Production: Market Failure Considerations.” American Economic Review 61(2): 112–123.Google Scholar