The battle over hydraulic fracturing in Colorado is a demonstration of a unique advantage that the U.S. has in exploiting its shale resources. A number of the state’s cities have enacted moratoriums on fracking, citing environmental concerns over the controversial drilling process. But for many property owners, whose land rights also include ownership of underground hydrocarbons, these bans are an unwelcome barrier between them and a potentially life-changing payday. The National Review reports:
For Colorado’s mineral-rights owners, [recent fracking bans] are a disturbing trend, says Dan Stroh, a businessman who owns property throughout the state. “When I buy property, I buy a bundle of rights, and my bundle of rights includes the minerals,” he says. “I should have the right to explore and take the minerals. I should be able to, because I own it, I paid for it, I paid property taxes on it, and the public did not…. It’s not right for them to preclude me from exploring, under controlled circumstances, my full bundle of rights on my own property.”
Greens will contend that property rights mean little if and when activities on your land affect your neighbor’s, and to an extent they’re right—localities need to ensure that wells are sited smartly, cement casings are installed correctly, and wastewater is disposed of responsibly.But the fact that Americans are afforded mineral rights is a key factor in what has been, so far, an inimitable formula for shale success. Many in the U.S. take it for granted that they have ownership of more than just the surface of their property, but in other countries, these mineral rights default to governments. That’s made it difficult for drilling companies to make headway, because landowners don’t have the same incentive to sign off on disruptive drilling. In the U.S., individuals are compensated by these companies for the risks they assume. Compare that with the UK, where a lack of mineral rights has led to local protests so vociferous that they’ve managed to block drilling altogether.A wide variety of factors—from favorable geology to deep capital markets to mineral rights for property owners—helped the shale boom take off in the U.S., and have made this energy revolution devilishly tricky to replicate abroad.