Whose future, whose security?: Unconventional oil and gas extraction and the economic vulnerability and forced participation of small-scale property owners

Abstract

Since the ‘shale revolution’ of the late 2000s, unconventional oil and gas extraction (UOGE) has been hailed by many as a boon for local and regional economies, workers, and property owners. While energy social science has documented many realities that counter this narrative – natural resource dependent economies, ‘boom and bust’ cycles of the energy industry, and ‘resource curse’– there is less research examining economic impacts of UOGE for small-scale property owners. While some large-scale property owners lease their land, minerals, or water rights to oil and gas companies in exchange for royalties, other property owners are not able or do not wish to do so. Yet, nearby UOGE may negatively impact property values and thus threaten people's sense of economic stability. Several legal mechanisms – forced pooling, split estate, and rule of capture – significantly restrict the rights of many property owners while privileging other property rights. While property ownership represents a privileged status, it is the largest investment many Americans will make and is relied upon for retirement planning, financial stability, and transfer of generational wealth. Yet, despite the importance of property ownership, particularly home ownership, little is known about how proximity to oil and gas development impacts small-scale property owners. This paper analyzes how UOGE impacts property owners' sense of economic precarity. We conducted surveys of hundreds of affected households and interviews with 66 property owners in two Colorado towns that have experienced heavy UOGE. We find that the current regulatory regimes disempower small-scale property owners, create economic vulnerability, and ultimately privilege property rights of mineral owners and operators over others - creating uncompensated losses for small-scale property owners. We explore important implications, including the need for more responsive and community-based governance processes.