The Role of Ownership in Environmental Performance: Evidence from Coalbed Methane Development

Abstract

One way coalbed methane production differs from traditional oil and gas extraction is in the large quantities of produced water. This water must be disposed of for production to occur. Surface discharge has proven to be a low-cost alternative; regulations are in place to protect surface water quality. This paper investigates the effects of alternative ownership regimes on regulatory compliance. A unique dataset linking coalbed methane wells in Wyoming to water disposal permit violations is used to explore differences in environmental performance across severed and unified minerals. Empirical analysis of these data suggest that ownership does impact environmental compliance behavior. Most violations occur on split estate. Federal split estate wells have more severe violations, though not necessarily more of them. Federal unified wells performed best, with fewer and less serious violations. Wells on private land have more, though not necessarily more severe, violations. These results suggest some room for policy proposals accounting for alternative ownership regimes.